Liz Truss will pay no more than £2,000 in total for all her energy bills in Downing Street this winter because of state subsidies, Labour has calculated.
If Truss, as widely expected, is elected as Conservative leader and prime minister on Monday, she is expected to move into the four-bedroom flat above 11 Downing Street, the larger of the two official residences.
While the energy price cap will mean the average annual bill is expected to rise well over £4,000 during the winter, Truss will be insulated from price rises beyond a certain point because of the way her energy costs are paid for.
As set out in the Treasury’s annual accounts, the electricity and heating bills for the No 11 flat, and the smaller residence above No 10, which would be used by her chancellor, expected to be Kwasi Kwarteng, are paid for by the state.
These are then treated as a benefit in kind, meaning the costs are added to the person’s income and subject to tax. The amount of tax can vary, but even if Truss paid the highest rate of income tax on it, this would be 45% of the total.
In another perk, the Treasury rules set out that this benefit in kind is capped at 10% of the prime minister or chancellor’s salary.
Truss’s salary as PM would be £75,440, meaning that for the rest of this financial year, taking her to the end of March, the total amount on which she could be liable for extra tax for heating, electricity or other expenses, would be £4,000, or 10% of the seven months of pay. She also receives an MP’s salary but the benefit in kind would only apply to her duties as PM.
In turn, Truss would not have to cover this entire cost, just pay the tax on it. At the 45p highest rate, this would mean her energy costs are capped at £1,980 this winter. However much the energy cap might rise in the 2023-24 tax year, Truss would then pay no more than £3,400 in total from her full annual salary.
Abena Oppong-Asare, Labour’s shadow exchequer secretary, said: “While Truss may be able to rest easy knowing her energy bills won’t be soaring, the least she could do is offer the millions of families reassurance and clarity on what her plans are.
“Instead she has left people deeply anxious, worrying about making ends meet as the energy crisis escalates and only offering vague promises and lukewarm words.
“Families deserve a government ready to act and meet the scale of this national emergency. With Labour’s plan to freeze energy prices, households won’t pay a penny more this winter and we’ll be able to get a grip on this crisis.”
Downing Street and Truss’s campaign were contacted for comment.
• This article was amended on 5 September 2022. The 45% tax rate is the highest rate, not the “higher rate”, which is 40%.
