Politics Home Article | Rachel Reeves Announces Cost Of Living Package For Households

Chancellor Rachel Reeves announced a package of measures to tackle the cost of living in the House of Commons on Thursday. (Alamy)

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Addressing MPs in the House of Commons, Reeves referenced the US-Israeli war with Iran, stating she believed it had “been a mistake”, and said that she was “clear-eyed” about her duty to “support families and businesses to be responsive to a changing world”. 

In her statement, the Chancellor announced an extension of the 5p fuel duty increase freeze, stating she recognised “the pressure the war has put on fuel prices” for households and businesses. 

According to the RAC on Tuesday, petrol prices hit their highest average price since the beginning of the Iran war at 158.52p a litre – with diesel prices also extremely elevated at around 186p a litre. 

Reeves also said she was aware that the weekly food shop had become one of the “biggest worries for families”, and that the government would take action in this area. 

Food inflation sat at 3 per cent in the 12 months to April, higher than overall inflation at 2.8 per cent – with concerns more price spikes are on the horizon as disruption to global supply chains due to the closure of the Strait of Hormuz, creating steep increases in the price of fuel and fertiliser. 

“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,” said Reeves. 

“And I am clear that I expect supermarkets to pass these savings on in full to their customers.”

The Chancellor also said she was bringing forward tougher powers for the Competition and Markets Authority, warning she would “not tolerate any company exploiting the current situation to make excess profits at consumers’ expense”. 

Elsewhere, as well as an extension of the £3 bus fare cap, Reeves also announced free bus fares for 5-15 year olds during the month of August, as well as the Great British Summer Savings Scheme “to help families and support our hospitality sector”. 

Reeves said she was aware that for families it was not just about “getting by”, but also “being able to enjoy time together without worrying about the next bill” – announcing a raft of changes ahead of the school summer holidays. 

“I can today announce a temporary cut in the rate of the VAT on summer attractions from 20 per cent to 5 per cent over the summer,” said Reeves.

“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 per cent VAT to 5 per cent, as well.”

The changes will start at the beginning of the Scottish school summer holidays at the end of June, and end on the 1st September. 

The Chancellor also said she stood “ready to act if market conditions worsen significantly later this year”, stating she had been “leading cross-government of potential future targeted and temporary support for businesses, any support will also need to be heavily targeted at firms most exposed to the crisis”. 

Responding the the Chancellor’s speech, shadow Chancellor Mel Stride said while he “welcomed” the announcement on fuel duty, “the Conservative Party has been campaigning against the fuel duty rise for months” – accusing the government of a “u-turn”. 

“That left motorists and businesses worried about even higher fuel prices in September,” said Stride. 

“It was always obvious that the fuel duty increase would need to be cancelled, obvious to everyone except the Chancellor.

“So, can I ask, why did the Chancellor fight us on fuel duty for so long? Why has she been so hell-bent on raising fuel duty during an enemy and an energy crisis?”

Stride also criticised the Chancellor for claiming the announcements were possible because “forecasts have improved”, and criticised the government for not announcing “measures to control government spending”.