Cost of living support latest: Reeves cuts VAT for families and suspends 100 food tariffs in new support package – UK Times

Downing Street denied that ministers are putting out a number of announcements this week as a response to the leadership jostling that unfolded last week, instead insisting the latest measures on the cost of living are evidence of “the government’s approach bearing fruit”.

“It is because the government is fully focussed on delivering for people… thats what we’ve seen this week”, the prime minister’s official spokesperson said.

Asked whether it was a response to Wes Streeting’s resignation, the spokesperson said: “I think it is the government’s approach bearing fruit.”

It is 15 years since the tax free mileage rate was last raised by a chancellor when George Osborne took it from 40p to 45p.

Rachel Reeves’ 10p increase backdated to April 2026 is a big boost for people who use their vehicles for work – a win for white van man in particular. It will help offset costs against their tax.

The chancellor had already extended the fuel duty cut until the end of the year and it comes amid concerns over the price of oil and gas rising sharply with the ongoing uncertainty with the war in the Middle East.

That was the biggest help in the measures but there was more to try to deal with household bills and the costs for younger people.

Ms Reeves’ plans for free bus travel over the summer holiday had already been trailed along with her announcement of removing tariffs from important of 100 food items which includes biscuits and baked beans among other things.

There was also a VAT cut to 5 per cent on tickets for summer attractions and children’s meals.

That should help families a little with household costs, especially over the summer holiday as well as boosting the UK’s domestic tourism industry.

But the mooted big ticket items were missing. The chancellor ducked a war with supermarkets with a suggestion of putting a price cap on essentials like bread, milk and eggs.

She also avoided a package to cap energy bills –  a measure which scuppered Liz Truss’s government – almost certainly because she could not afford it.

Rachel Reeves’ “Great British Summer Savings” scheme is estimated to cost around £300 million, the Treasury said.

Final costings for all the measures will be detailed at the next budget following scoring from the Office for Budget Responsibility, the department said.

It said the Government expects businesses to pass on VAT savings from the cut from 20 per cent to 5 per cent on summer activities to customers.

HMRC has published guidance for businesses on how to operate the scheme.

Rachel Reeves’ “Great British Summer Savings” scheme is estimated to cost around £300 million, the Treasury said.

Final costings for all the measures will be detailed at the next budget following scoring from the Office for Budget Responsibility, the department said.

It said the Government expects businesses to pass on VAT savings from the cut from 20 per cent to 5 per cent on summer activities to customers.

HMRC has published guidance for businesses on how to operate the scheme.

Rachel Reeves said she would pay for cost-of-living support by changing how oil and gas companies with overseas operations were taxed.

She told MPs: “Today I am bringing forward specific changes to the taxation of foreign branch profits, changing how companies are taxed in relation to their overseas activities.

“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 (Office for Budget Responsibility) forecast in the usual way.”

Rachel Reeves has announced a temporary cut to VAT on certain attractions over the summer holidays.

The VAT is set to be slashed from 20 per cent to 5 per cent on activities such as fairs, museums and children’s meals in restaurants and cafes.

She told the Commons: “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 per cent to 5 per cent 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.”

This includes tickets for cinemas, concerts, soft play and the theatre, and will apply from 25 June until the end of the holidays on 1 September.

Rachel Reeves has confirmed a U-turn in her planned increase to fuel duty, as a result of the war in Iran.

She told the Commons: “On fuel duty, I have already extended the 5p cut twice since the election, and I can confirm today that there will be no rise in fuel duty this year, recognising the pressure that the war has put on fuel prices.”

She also announced a 10p per mile increase in tax-free mileage backdated to April 2026, which will support those such as care workers and plumbers who are regularly on the road.

Among the measures to be announced, the chancellor has handed a £350m lifeline to the chemicals sector, including ceramics producers.

It is thought that this money will be targeted at companies who are classed as vital infrastructure to national resilience, amid concerns for the heavy industry sector.

Rachel Reeves has begun her speech to the Commons by saying that the Labour government have the “right economic plan”, ahead of introducing a swathe of measures to help with the cost of living crisis.

She told MPs: “Since the election, interest rates have been cut six times and real wages have risen andn yesterday the ONS confirmed inflation fell in April faster than expected.

“We have the right economic plan but the conflict in the Middle East poses a significant challenge to the world economy, including our own

“I have not shied away from my criticism of the war, I believe it was a mistake.”