London (AFP) -
Liz Truss on Wednesday faced her first parliamentary grilling as British Prime Minister, ruling out a windfall tax to fund any freeze on energy bills to offset huge rises in the cost of gas and electricity.
Truss, who formally took over from Boris Johnson on Tuesday, said she would spell out her plans on Thursday for an economic support package to forestall a growing crisis in the months ahead.
She is preparing measures reportedly worth upwards of £130 billion ($150 billion) to freeze energy bills for hard-pressed households and businesses, many of whom risk going to the wall this winter.
But when asked by opposition Labour leader Keir Starmer if this would be funded by a windfall tax on energy companies' profits, Truss responded: 'I am against a windfall tax.
'I believe it is the wrong thing to be putting companies off investing in the United Kingdom, just when we need to be growing the economy.'
She added: 'This country will not be able to tax its way to growth.'
The exchange set the tone for the debate over how to tackle the predicted economic pain ahead, with inflation already in double digits at 40-year highs.
Truss campaigned on a promise to cut taxes, despite warnings that it could further fuel inflation and questions over where funds will come from.
Truss was bullish about the economic outlook as she entered Downing Street for the first time as premier on Tuesday.
'I am confident that together we can ride out the storm,' she said.
But Starmer said that ordinary people faced paying for her policies.
- Biden call -
Truss convened her new-look cabinet earlier Wednesday, which includes the most diverse top team in British history: Kwasi Kwarteng as finance minister, James Cleverly as foreign secretary and Suella Braverman as interior minister.
Along with the urgent issue of energy prices, Truss's government must also navigate the combustible problem of post-Brexit trading arrangements in Northern Ireland.
In her first contacts with foreign leaders, the new Conservative leader spoke late Tuesday by phone to Ukraine's Volodymyr Zelensky and then US President Joe Biden.
According to Downing Street, she agreed with Biden 'on the importance of protecting' peace in Northern Ireland.
In parliament, Truss said she was 'determined' to break through the impasse, and favoured a 'negotiated settlement' with the EU.
To Zelensky, Truss vowed to maintain the full-throated support for Ukraine against Russia given by her scandal-tainted predecessor, Boris Johnson.
Truss, 47, won an internal ballot of Tory members on Monday, securing 57 percent of the vote, after a gruelling contest against former finance minister Rishi Sunak that began in July.
But the initial stage of the contest saw her net the support of less than a third of the parliamentary party.
She now faces a tough challenge reuniting the ruling Tories following a bitter leadership battle, but observers noted that she had expelled almost every Sunak supporter from the cabinet.
Ex-soldier Johnny Mercer said he was 'disappointed' to be sacked as veterans affairs minister.
His wife Felicity Cornelius-Mercer went further, calling Truss an 'imbecile' as she tweeted a picture mocking the new prime minister as a dim-witted character from 'The Muppets'.
Conservative MPs are 'almost ungovernable' and have 'no appetite to cope with difficult decisions', one government insider told the Financial Times.
'They did for Boris, and they may do for Liz, too,' the source told the paper.
The Times quoted one of her incoming ministers as saying: 'I doubt she'll last two years.'
Labour has a double-digit lead in the polls but may have to wait two years to test their popularity.
A general election is due by January 2025 at the latest. Truss on Monday vowed to lead the Conservatives to victory 'in 2024'.
- 'Dreadful policy' -
Truss pitched herself to the Tory grassroots as a tax-cutting free-trade champion ready to slash taxes immediately to turbo-charge growth.
Under her mooted plans, gas and electricity bills for both households and businesses would be capped near current levels for the coming winter at least.
The government would lend or guarantee private sector loans to energy providers to make up the difference they pay with soaring global wholesale prices.
It remains unclear whether the government will pay for the plan through extra borrowing or ask consumers to pick up the tab over the coming years through levies on their energy bills.
Paul Johnson, of the respected Institute for Fiscal Studies think-tank, said it was 'a dreadful policy' but likely necessary.