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New prime minister: what will Liz Truss do for small businesses?

3-minute read

Sam Bromley

Sam Bromley

5 September 2022

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Liz Truss will become the new UK prime minister tomorrow, following weeks of campaigning to win the Consertivate Party leadership race.

Conservative Party members voted on Boris Johnson's successor, and the winner was finally revealed at lunchtime on 5 September.

Truss beat Rishi Sunak with 57 per cent of the final vote, a result that was widely anticipated in opinion polls.

But how might Liz Truss leading the UK government affect your business? We examine what we know so far below.

How was the new prime minister chosen?

As the Conservative Party has a majority in parliament, Liz Truss winning the leadership race means she also becomes the country’s next prime minister.

Here's a reminder of the process:

  • Conservative MPs narrowed down the candidates to Rishi Sunak and Liz Truss in July
  • grassroots Conservative Party members voted on who they wanted to be the next leader throughout August

Truss will move into Downing Street and appoint her cabinet on 6 September.

What does Liz Truss mean for small businesses?

Liz Truss will leave her previous role as foreign secretary to become the next UK prime minister.

Key issues she'll be facing include:

  • rising energy bills across the UK
  • inflation rising – currently at 10 per cent
  • recession predicted by The Bank of England in October

She’s said that she has a “bold new economic plan that will cut taxes, grow our economy and unleash the potential of everyone in our United Kingdom.”

Dealing with the energy crisis

There's mounting pressure on the government to respond to the energy crisis, so we're likely to hear more from Liz Truss this week.

The Guardian has already reported that Truss is considering a price freeze for some energy bills to help people deal with rising costs, while Sky News reports she'll go "bigger than expected" on energy.

Alan Thomas, UK CEO at Simply Business comments: “With Liz Truss announced as the next prime minister, small businesses need assurances that the next government has clear and robust plans to support them through what is set to be a bleak winter and beyond. Rising energy prices and soaring inflation will have devastating effects on businesses across the UK, not least our SMEs."

Liz Truss wants to cut business taxes

Liz Truss says she wants to cut taxes. She claims that she'll reverse the National Insurance hike, halt the rise in corporation tax, and overhaul business rates.

But the country would need to borrow more to pay for those reversals, with her plans set to cost the Treasury billions.

She wants Number 10 to have more control over the Treasury, with reports suggesting that she’ll have a team of advisers to challenge Treasury ‘groupthink’.

Truss has indicated that she would bring forward the next Budget, currently planned for November, and cut taxes “from day one”. She’d pay the cost of our Covid response back over a longer time period.

She’s said that she wants the private sector to grow faster than the public sector and to reduce the size of the state.

She would also review inheritance tax as part of an overall look at the UK’s tax system.

Possible review of IR35 legislation

There have been claims that Truss will review IR35 in her new role as prime minister.

She's said in an interview with The Sun on Sunday that the system should reflect that the self-employed don't get the same benefits as big businesses.

Delivering on Brexit opportunities for business

Liz Truss campaigned to remain in the EU, but she positionrf herself as a Brexit candidate in the leadership race.

She wants to “continue to deliver on the vast opportunities that Brexit presents” and will continue with regulatory divergence from the EU.

As foreign secretary, she pushed changes to the Northern Ireland Protocol through to parliament, which are still being debated.

These changes would create different ‘lanes’ for goods entering Northern Ireland from the UK.

A cautious approach to net zero

Liz Truss has previously committed to net zero. But she’s cautious, saying we need to "find better ways to deliver net zero" that won't "harm people and businesses".

She’s said that she would scrap green levies temporarily on energy bills to help people with the cost of living crisis.

The levies on electricity bills help fund social and environmental ambitions, for example insulating homes and emission reduction.

iNews reports that this could cost the Treasury £5 billion.

Keep an eye on the Knowledge centre for updates on what the new prime minister means for small businesses.

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Sam Bromley

Written by

Sam Bromley

Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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