Chancellor Rachel Reeves has delivered her cost-of-living package statement in the Commons today, outlining eight key measures to support UK households amid global economic challenges. The ongoing conflict in Iran and Russia's invasion of Ukraine have threatened to strain household finances across the country.
Economic Context
Addressing the Commons on Thursday, May 21, the Labour Party Chancellor began by highlighting positive economic indicators. "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 stated as she commenced her speech around 12.20pm.
She added: "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."
Ms Reeves acknowledged the challenges posed by global conflicts: "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." She expressed hope that the announced changes would mitigate the economic impact.
Key Announcements
1. 10p per Mile Increase in Tax-Free Mileage Rates
Reeves confirmed a 12-month road tax holiday for hauliers, saving the typical heavy lorry up to £912. She also announced a cut in 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.
2. Help with Energy Costs for Chemicals and Ceramics Sectors
Ms Reeves stated: "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." She announced a £350 million critical chemicals resilience fund to assist firms in the chemicals sector with energy costs, along with a new £120 million fund to support the historic ceramics sector.
3. Tax Changes for Energy Companies
Ms Reeves announced changes to the taxation of energy companies. "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." These reforms are expected to raise hundreds of millions of pounds annually to fund the package, with costings certified by the OBR forecast.
4. Tariffs Cut on Over 100 Food Items
To reduce supermarket prices, Ms Reeves announced tariff suspensions on over 100 different foods sold in supermarkets. "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."
5. Fuel Duty Freeze
Ms Reeves confirmed that the fuel duty freeze would continue until the end of the year. This came ahead of Shadow Chancellor Sir Mel Stride's response, who said the Tories "welcome" her decision to delay a planned rise to fuel duty due in September. "It has been a long time coming," he remarked.
6. VAT Cut on Summer Fun Attractions
The Chancellor announced a temporary VAT cut on certain attractions from 20% to 5%. "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." This applies to ticket prices for fairs, theme parks, zoos, museums, and includes children's tickets for cinemas, concerts, soft play, and theatre, as well as children's meals in restaurants and cafes. The changes apply across the UK from 25 June to 1 September.
7. Free Bus Journeys for Under-15s in England
Ms Reeves also announced free bus journeys for those aged 15 and under in England, as part of the broader package to ease transport costs for families.
8. New CMA Powers to Tackle Excessive Profits
Ms Reeves announced tough new powers for the Competition and Markets Authority (CMA) and other regulators. "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."
