After a summer of voting from Conservative party members, the next PM and succeeder to Boris Johnson has been announced. Liz Truss will be sworn into the top job in British politics, after only entering parliament back in 2010. She has held numerous cabinet positions under previous PMs such as David Cameron, Theresa May and Boris Johnson. This includes her most recent role as foreign secretary. Her climb to the top was expected by the bookies after defeating former Chancellor, Rishi Sunak.
Upon entering Number 10, she will no doubt have her work cut out. Not least with the impending energy price cap increase, which is likely to send 100,000s of people into poverty. Despite her popularity with Tory voters, Truss is a somewhat controversial figure. This is because of her being an active member of the Liberal Democrats party, Brexit U-Turns, and bizarre public rants about cheese, pork and apples.
Needless to say, the UK is in dire need of support and strong leadership as the recession crisis deepens. We break down what to expect from the incoming new PM and the potential impacts she will bring…
What Will Happen With The Cost Of Living Crisis?
Truss has stated that she will reassure people of ‘immediate action’ on the cost of living. The ways in which she will do this though, has been all speculation.
A full on energy price freeze was reported on Monday by The Independent. A source stated, “The plan is to introduce some kind of artificial price cap for consumers combined with a mechanism for reimbursing suppliers. Plans are reasonably well advanced and involve not just civil servants but also ministers lined up for jobs by Truss.”
As well as this, additional help is expected to be given to businesses who are struggling with rising energy bills. It’s predicted the cost of the support is likely to cost around £69bn, roughly the same as the furlough scheme.
What Will Happen With Tax Cuts?
Truss has publicly stated many times that there will be no new taxes should she win the leadership election. April’s National Insurance rise is said to be scrapped, introduced by her leadership rival Sunak. As well as this, Truss will temporarily ditch energy levies to help people cope with increased costs.
Any new windfall tax on energy firm profits is also said to be ruled out. Many analysts have also predicted she will cut VAT and corporation tax. Truss has stated there will be a ‘full review of our tax system’, as an emergency budget is expected soon.
What Will Happen To Cabinet Appointments?
Much of Boris’ cabinet is to be changed as Truss shakes things up when it comes to cabinet positions. The top jobs are to go to Tory party loyalists, with Kwasi Kwarteng announced as Chancellor. Likewise James Cleverly is to be Foreign Secretary.
Priti Patel and Rishi Sunak are to return to the backbenches, with Suella Braverman to take over as Home Secretary. Kemi Badenoch, who also was part of the leadership contest, is the new Trade Secretary. The outspoken Theresa Coffey is to take over as Health Secretary.
What Will Happen To Energy & Sustainability?
A lot of the criticism directed at Liz Truss is her failure to act on climate change. Speaking to the BBC’s Laura Kuenssberg, she advocated for the allowing of fracking for shale gas. As well as this, she also promoted the expansion to drill for oil in the North Sea. All of this this will likely compound Net Zero ambitions and worsen the climate change crisis.
What Does This Mean For Me?
In truth, Truss’ time as PM will be defined by what she does within her first weeks in the role. Not least the way she will react to the cost-of-living crisis. A freeze on energy prices would be a huge step in the right direction, helping to support millions of people.
Tax cuts are always a big winner in the eyes of Tories. However, as raised by BBC presenter Laura Kuenssberg the reversing of National Insurance rises would save low earners just £7. The wealthiest on the other hand would gain £2000. Truss responded by saying this was ‘fair’, and that redistribution of wealth will trickle down to low earning households. She believes this will benefit those low earners, and the economy, whilst high earners enjoy higher profits and tax cuts.
Her stance on climate change and energy will worry many people. Many have argued she will potentially cause more long-term problems and deepen an already sensitive global situation. Only the future will tell us how successful Truss will be, as the next few weeks will become clearer.
We hope this has outlined to you the potential policies and changes to government from the new Prime Minister, Liz Truss. If you’d like to know any further information on anything mentioned, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy talking you through your query.