The Iran war and Russia invasion of Ukraine has threatened to hit UK households hard in the pockets.
Eight announcements from Rachel Reeves cost-of-living package for UK households
Rachel Reeves has delivered her cost-of-living package statement in the Commons today, as she tries to help UK households amid global turmoil. The Iran war and Russia invasion of Ukraine has threatened to hit UK households hard in the pockets.
Addressing the Commons on Thursday, May 21, the Labour Party Chancellor began with figures suggesting the economy is performing well.
“I said I would grow the economy. And last week the Office for National Statistics confirmed that Britain’s economy was the fastest growing in the G7 for the first quarter of this year,” Ms Reeves said on Thursday, as she began her speech at around 12.20pm.
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Ms Reeves went on: “We beat the Office of Budget Responsibility’s forecast in the spring, with economic growth at 0.6% in the three months to March, and because of the resilience of our economy this week, the International Monetary Fund upgraded Britain’s forecast for this year.”
She went on: “The conflict in the Middle East poses a significant challenge to the world’s economy, including our own.
“I have not shied away from my criticism of the war. I believe it to have been a mistake.”
Ms Reeves says the economy has been harmed by the war in Iran – but she hopes these changes will help.
10p per mile increase in tax-free mileage rates
Reeves confirmed the 12-month road tax holiday for hauliers. The government is granting a 12 month road tax holiday for HGVs, saving the typical heavy lorry up to £912.
She says she is cutting the duty on red diesel by over a third until the end of this year.
“I can today announce a 10p mile increase in tax-free mileage rates, backdated to April 2026, benefiting those who need to drive for work from care workers to plumbers,” Ms Reeves said.
Help with energy costs for chemicals and ceramics sectors
Ms Reeves said: “We stand ready to act if market conditions worsen significantly later this year, and I have been leading cross-government contingency work on design of potential, future targeted and temporary support for businesses. Any support will also need to be carefully targeted at firms most exposed to the crisis.”
Ms Reeves announced a £350m critical chemicals resilience fund to help firms in the chemicals sector with energy costs.
She also confirmed a new £120m fund to help our historic ceramics in sector.
Tax changes for energy companies
Ms Reeves said she is announcing changes to the way energy companies are taxed.
She confirmed: “Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no corporation tax on their UK energy trading profits. Today we are putting an end to that practice.
“We expect these reforms to raise hundreds of millions of pounds a year and fund the package of measures set out today, with costings certified by the OBR forecast in the usual way.”
Tariffs to be cut on more than 100 food items, to reduce supermarket prices
She said tariffs on some food items will be cut, adding: “I know that the cost of the weekly shop is often one of the biggest worries for families.
“So last month I met with supermarkets to urge them to do all they can to keep prices low.
“And today I am taking action by suspending tariffs on over 100 different foods sold in supermarkets.
“And I am clear that I expect supermarkets to pass these savings on in full to their customers.”
Fuel duty freeze
Ms Reeves confirmed the fuel duty freeze would continue until the end of the year. It came ahead of Sir Mel Stride hitting back at the chancellor following her announcing a package of measures to help with the cost of living.
The shadow chancellor says the Tories “welcome” her decision to delay a planned rise to fuel duty due to come into effect in September.
“It has been a long time coming,” he says.
VAT cut on summer fun attractions
The chancellor has announced a temporary cut to VAT on some attractions, from 20% to 5%.
She said: “I recognise that what matters for families is not just getting by, but being able to enjoy time together without worrying about the next bill.
“That is why I am launching the Great British Summer Savings Scheme to help families and support our hospitality sector.
“So I can today announce a temporary cut in the rate of VAT on summer attractions from 20% to 5% over the summer holidays.
“This will apply to ticket prices for both adults and children, covering attractions such as fairs, theme parks, zoos and museums.
“It will include children’s tickets for cinemas, concerts, soft play and the theatre, and it will cut the cost of children’s meals in restaurants and cafes from 20% VAT to 5% as well.
“These changes will apply across the UK from the start of the Scottish school holidays on 25 June, and run until the end of school holidays in England, Wales, and Northern Ireland on 1 September.”
Free bus journeys
Ms Reeves also spelled out a number of other measures, announcing bus journeys for those 15 and under in England.
Ms Reeves also adds that she’s bringing “tough new powers” for the Competition and Markets Authority and other regulators, as the government “will not tolerate any company exploiting the current situation to make excess profits”.
New CMA powers to stop firms making excessive profits
Ms Reeves said she was giving the Competition and Markets Authority new powers to tackle profiteering.
She said: “I will not tolerate any company exploiting the current situation to make excess profits at consumers expense.
“So I am bringing forward tough new powers so that the Competition and Markets Authority and other regulators can take action.”