The former Chancellor had previously rejected calls for the scrapping of the 5 percent VAT rate on domestic fuel. In February Mr Sunak told MPs that removing VAT on domestic fuel bills “would disproportionately benefit wealthier households”.
However, the Richmond MP who is facing Liz Truss in the ongoing Conservative leadership contest is seeking to make up ground on the Foreign Secretary who is ahead of him in polling amongst Tory members.
During a televised debate between the candidates hosted by Talk TV on Tuesday evening, Mr Sunak said that “targeted and temporary” VAT cuts on domestic fuel would bring prices down.
He said: “As Chancellor I knocked £400 off everyone’s energy bill and provided support of £1,200 for the most vulnerable households.
“This additional VAT cut will help deal with the current emergency.”
It comes as a committee of MPs have argued that ministers need to offer bigger cost of living support payments as energy bills are expected to increase further.
The Business Committee’s report blasted energy regulator ofgem as “incompetent”.
They argued that financial help for the poor and vulnerable needs to be “updated” in line with the expected increase in bills in October.
In recent days millions of low income households on benefits have been receiving their first £326 instalment of payments to help with the cost of living.
READ MORE: Diane Abbott in huge swipe at Starmer over U-turn
This will push the cost of the average energy bill up to £3,244 a year from October followed by £3,363 a year from January.
At present bills are about £2000 a year following a £700 rise in April.
The report slammed the Government’s current support package as “no longer sufficient” as well as criticising ofgem.
They said: “The impact of the energy price crisis on households is likely to cause an unacceptable rise in fuel poverty and hardship this winter.
“The Government must immediately update its support, targeting this at customers who are on low incomes, fuel poor, and in vulnerable circumstances, and develop a scheme to support vulnerable customers to accelerate the repayment of energy debt resulting from this crisis.
“Ofgem has proved incompetent as the regulatory authority of the energy retail market over the last decade.
“It allowed suppliers to enter the market without ensuring they had access to sufficient capital, acceptable business plans, and were run by individuals with relevant expertise.”