'Solidarity Tax' Of 1% For All Earners Needed For Bill Help

Tory leadership hopefuls have been urged to reconsider their plans and bring in a “solidarity tax" of 1 per cent on all earners to help pay for extra support with soaring energy bills.

- Adam Forrest

The Resolution Foundation said it was time for Liz Truss and Rishi Sunak - who have promised tax cuts - to "think the unthinkable" and raise tax during the worsening cost of living crisis.

The think tank said a 1 per cent hike in income tax on all rates with 60 per cent paid by the wealthiest fifth of UK households – would raise £9.5bn a year for more support with gas and electricity bills. The foundation also urged the next prime minister to work with the energy companies on creating a new "social tariff" to reduce bills for hard-pressed Britons on low and middle incomes.

The intervention comes as consumer group Which? called on the next PM to raise the existing £400 energy bill discount by 150 per cent to £1,000 this autumn, or risk pushing millions of households into "financial distress".

Despite growing fears of hardship ahead, the Sunak and Truss camps have both rejected Labour's call a price cap freeze - and Scottish Power's proposed £100bn fund allowing companies to freeze prices for two years. Mr Sunak said he was "nervous and sceptical" about the Scottish Power plan for a state-backed fund to allow firms to access loans from commercial banks - a proposal supported by industry body Energy UK.

"We need to make sure that what we're doing in response is not only affordable but also isn't going to make inflation worse," the Tory contest underdog told BBC Radio 4's Today programme yesterday.

Defence minister James Heappey, a key Truss ally, said the fund could involve "eye-watering amounts of money". He told Sky News: "I don't think a universal freezing of everybody's energy bills really helps to get taxpayers money to people who need it most."