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With permission, Madam Deputy Speaker, I will make a statement on the Government’s economic response to the war in Iran, and the action that we are taking to support families and businesses with rising costs. Madam Deputy Speaker, this Government has the right economic plan. 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 th...
With permission, Madam Deputy Speaker, I will make a statement on the Government’s economic response to the war in Iran, and the action that we are taking to support families and businesses with rising costs. Madam Deputy Speaker, this Government has the right economic plan. 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. We beat the Office for 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. I said I would cut borrowing: Borrowing last year was £20 billion lower than the previous year, and the latest forecasts show it falling in every year of this Parliament. The IMF has backed our economic plan, saying that the government’s fiscal framework strikes – and I quote – a “good balance between deficit reduction and growth-friendly spending.” I said I would cut the cost of living: Since the election interest rates have been cut six times. Real wages have continued to rise in every single month since I became Chancellor, And yesterday, the ONS confirmed that inflation fell in April faster than expected, making the UK the only G7 economy where inflation fell last month. Madam Deputy Speaker, 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 to have been a mistake. Nor have I ignored the costs that it will bring to bear on the British people. I have been clear-eyed about my duty: to do what I can to support families and businesses. To be responsive to a changing world. And responsible in the national interest. Next week, Ofgem will confirm the level of the energy price cap that will apply from July. I know that any increase will be felt by families . Because of the decision that made at the Budget last year to cut £150 off energy bills, we have lessened the impact of rising prices, and current external forecasts suggest that the cap from July will be at a similar level to the cap in April last year. 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. But while many firms have been insulated from recent prices rises through fixed price contracts, there are sectors that face particular structural issues related to energy costs. That is why we have already increased support for our most energy intensive companies through the British Industry Competitiveness Scheme and we’ve brought that forward. And it is why we must also build resilience in our critical infrastructure and industrial strategy sectors where supply chains are critical for growth and security. Following representations from my right honourable friends - the members for Redcar, Mid Cheshire, and Bathgate Linlithgow – and building on the good work of the Minister for Industry - I am today establishing a £350 million Critical Chemicals Resilience Fund to support strategically important producers. And having listened to my right honourable friends including the members for Stoke-on-Trent Central, North and South, and my honourable friend the member of Amber Valley and workers represented by the GMB union – I am today announcing a new £120 million fund to help our historic ceramics sector helping them to increase efficiency and drive-down energy costs, because we will always stand up for British industry and British jobs. The Government has also this week set out additional, targeted support for those businesses most exposed to rising fuel costs. For hauliers, the Government is granting a 12-month road tax holiday for HGVs, saving the typical heavy lorry up to £912. To support farmers and the rail freight industry, I have decided to cut duty on red diesel by over a third until the end of this year. And having heard from my honourable friends the members for Oldham West, Chadderton and Royton and the trade union Unison, I can today announce a 10p per mile increase in tax free mileage rates, backdated to April 2026; benefiting those who need to drive for work, from care workers to plumbers. Madam deputy speaker, when a country faces challenges because of higher oil and gas prices, we must ensure that those who benefit from increased prices and volatility pay their fair share. In my first Budget, I extended and increased the Energy Profits Levy. Last year, I announced a new, permanent windfall tax regime on oil and gas price shocks. Last month, I increased the Electricity Generator Levy, alongside further action to weaken the link between high gas prices and electricity prices. 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 forecast in the usual way. Madam Deputy Speaker, I know the pressure family finances are under. That is why I have already taken action to provide help I increased the National Living Wage and National Minimum Wage to its highest rate ever. Freezing prescription charges and rail fares. And taking £150 off energy bills which contributed towards the fall in inflation last month. But I want to go further. And today I am taking further action to ease the burden on family finances. First, fuel duty – I have already extended the 5p cut twice since the election and I can confirm today there will be no rise this year, recognising the pressure that the war has put on fuel prices. Second, 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 consumers. Third, 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. Fourth, for many families driving is not always an option. Busses are the most popular form of public transport in Britain, with over four billion journeys made last year. I have already extended the £3 bus fare cap to March 2027 and today I can confirm that bus travel across England will be free for children aged between 5 and 15 throughout August. Finally, Madam Deputy Speaker, 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 summer holidays on 25th June and run until the end of the school holidays in England, Wales and Northern Ireland on 1st September. Madam Deputy Speaker, this Government has the right economic plan. 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. And I commend this statement to the House.
Speech Brief