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All The Crises Liz Truss Faces As She Enters Downing Street

All The Crises Liz Truss Faces As She Enters Downing Street

Liz Truss faces a number of challenges after being elected as the UK's new prime minister (Alamy)

6 min read

Liz Truss will enter Downing Street on Tuesday as the UK's new Prime Minister facing a mountain of formidable challenges thanks to some of the worst economic conditions for a generation.

Truss won the support of the Conservative party to beat rival Rishi Sunak with 57 per cent of the vote, on the back of a pledge for a low-tax, low regulation economy that would prompt growth and get the economy back on track. 

But with spiralling energy bills as winter looms and a deepening cost of living crisis, she faces a quagmire of significant problems. 

These are the most urgent issues that will require her immediate attention:

Energy

The UK's energy crisis has deepened significantly since the leadership contest began in July. It is estimated that households could face bills of £5,000-per-year by the start of 2023.

Campaigners have described the situation as "catastrophic" situation for the country, warning that many households will end up facing extreme poverty as a result. 

Truss has been hesitant to pledge any detail for a package of support during the campaign, but has promised to confirm fresh help to offset increased energy bills within a week of taking office. She has already stated her intention to move to scrap the green levy on energy bills and reverse the increase in National Insurance contributions introduced by Boris Johnson and Rishi Sunak earlier this year.

But having likened support to offering "handouts" to households, she has faced increasing pressure to revise her position as the scale of the crisis eclipsed the relatively minor impact her tax cuts plans would have on the overall increase in bills.

Labour is likely to use their opening salvos against the new Prime Minister to urge her to back their plan of freezing Ofgem's energy price cap – which is expected to rise significantly in the winter –and providing a £28bn to the energy firms to stop them collapsing.

But Truss' supporters have indicated the most likely course of action will be a targeted increase in support for vulnerable households alongside an uplift in the £400 rebate already being offered to those on higher incomes.

Economy

Any move that Truss and her new Cabinet take to offset the energy crisis will need to be finely balanced to avoid adding further pressure to inflation rates, which are already hitting 40 year highs.

Warnings of a recession have also grown in recent weeks, and Truss is likely to face further criticism over her comments during the leadership race in which she suggested there had been "too much talk" about an economic downturn and claimed a "level of ambition" was needed to counter the forecasts.

Truss has already suggested she could review the Bank of England's mandate – which has independence over setting interest rates – with her key supporters citing their failure to keep a lid on inflation as a motive for altering the relationship.

The possibility of handing the new Chancellor stronger control over interest rate targets might be attractive to a new prime minister seeking to get a grip on inflation, but floating the policy during the leadership campaign proved controversial, with shadow chancellor Rachel Reeves warning it had created "huge uncertainty" for investors during a period of economic turmoil.

Health & Social Care

England's health service is still suffering from the effects of the pandemic as NHS and GP waiting times regularly breach record levels with warnings that additional winter pressures could push the doctors and nurses to breaking point.

Data from the Office for National Statistics shows a higher number of deaths have been recorded in recent months, with Covid, growing waiting lists for operations, and a backlog for tests and scans all reportedly contributing to the change.

That comes alongside the decade-long crisis facing the social care sector, which has only worsened since the Covid pandemic.

Truss has already stated that stopping an "exodus" of medical staff leaving jobs in the health service would be near the top of her priorities, with planned changes to the pension and tax system aimed at keeping senior doctors in the job.

But her decision to scrap the NI rise, introduced to help fund NHS and social care, as a measure to reduce energy bills risks robbing the health service of vital cash during a period of increased pressure.

She has also suggested that £30bn in funding aimed at reducing the Covid backlog in frontline health services could be redistributed to help fund social care, without setting out new funding plans to help support the NHS during the winter surge.

Brexit

A former Remain voter, Truss has since adopted a hardline pro-Brexit stance during her time in the Cabinet, vowing to realise the benefits of the UK's decision to leave the EU by turbo-charging deregulation for business and building on her work to establish free trade deals around the world.

But her Brexit boosterism will take a back seat to the immediate pressures to resolve friction in Northern Ireland, where a major disagreement between the UK and EU threatens to undermine the peace process.

As Foreign Secretary, Truss has pushed to unilaterally rip up the Northern Ireland Protocol, a contentious caveat to the Brexit trade deal that has caused political deadlock in the region, leading to legal threats from the EU, and prompting fears of a trade war with the bloc.

With a faltering economy, Truss faces a hard choice between pressing ahead with her controversial plans or adopting a more conciliatory approach with the EU – a move which could be unpopular with the more Eurosceptic elements within her party.

Party Unity

Entering Downing Street after a fractious leadership campaign, Truss faces an uphill battle to bring unity to her party ahead of a general election which must take place within two years.

Both Truss and Sunak launched broadsides against each other during the leadership hustings and TV debates, while their campaign teams and supporters exchanged blows daily through the press. Rishi Sunak has suggested the gap between them was so wide that he wouldn't accept a job in her Cabinet.

The looming party conference could offer an opportunity for Tory MPs to reconcile, but after months of blue-on-blue attacks, it will be on Truss and her new Cabinet to work overtime to ensure that both MPs and members are looking ahead to a future general election battle against Labour, who have largely managed to put aside their factional differences and focus their fire on the Conservative government.

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