Chancellor Rachel Reeves has confirmed a significant change to supermarket VAT rates that will see shoppers pay less at the till. The Labour government's decision affects major UK grocers including Aldi, Asda, Morrisons, Tesco, Sainsbury's, Lidl, and Marks & Spencer.
New Cost of Living Package
While addressing the House of Commons on Thursday, May 21, Reeves detailed her latest cost of living measures. She stated: "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 consumers."
The changes will impact the country's largest supermarket chains, including the traditional "Big Four"—Asda, Morrisons, Sainsbury's, and Tesco—as well as budget retailers Aldi and Lidl.
Consumer Protection Measures
Reeves also warned against corporate exploitation: "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 when firms break the rules."
Great British Summer Savings Scheme
She added: "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."
Reeves emphasised the government's achievements: "We promised to grow the economy – and we have. We promised to cut inflation – and we have. And we promised to cut the cost of living – and we are. Promises made by a Labour Government. Promises delivered by a Labour Government."
Expert Caution
However, dietitian Duane Mellor cautioned that the government must be "careful" that tariff reductions do not have "unintended consequences." He said: "Although it seems like a good idea to reduce the cost of food, it is important that policies to help manage food costs should improve health. This could be achieved by using existing tools such as VAT alongside price reductions to incentivise healthier foods to make them cheaper, promoting uptake of foods such as vegetables."
