All the cost of living support Labour is promising as US-Iran war threatens new crisis
UK households are bracing for new cost-of-living pressures as conflict in the Middle East threatens basic needs such as fuel, energy and even food.
Speaking on Monday, Sir Keir Starmer warned that the Iran war would “affect the future of our country” but insisted the UK was “well placed” to weather the storm as the conflict hit the economy and raised costs for consumers.
The Prime Minister sought to reassure Britons there would be a “long-term plan” to emerge a “stronger and more secure nation”, amid widespread concerns about the impact of the crisis on household expenses.
He added that there was a “five-point plan” to help people recover from the immediate crisis; This includes investing in energy security to make the UK less susceptible to market fluctuations and easing tensions in the Middle East.
Many of the commitments announced during the speech were not new, a point the Prime Minister also made.
“That’s my point,” Sir Keir said, “everything I do in politics, certainly since the Ukraine War in 2022, is a response to this new and dangerous world.”
The Prime Minister highlighted several government commitments aimed at reducing the cost of living in 2026, including freezing prescription charges and fuel duty (until September). Some of the other plans the government will roll out this month include:
New government-backed support fund
From April councils will be able to manage Labour’s new ‘Crisis and Resilience Fund’, designed to support low-income households in times when meeting basic needs becomes a struggle.
This new program will continue to provide vital assistance to those facing financial difficulties, complementing standard aid and grants. It will also integrate discretionary housing payments, which are one-off grants for housing costs.
Operating similarly to the existing scheme, eligible households across the UK will be able to access support such as essential appliances, a contribution towards utility bills and direct cash payments of up to £300.
The government has committed £1bn a year to authorities for at least three years for this change, replacing the previous annual approval model.
While council leaders welcomed this long-term commitment, the Local Government Association said: Independent Last year, a large majority (98 percent) were not confident that funding would adequately meet local demand.
Energy bill discounts
Ofgem has announced an average reduction of £117 in the energy price cap from April; This is broadly in line with Labour’s pledge to cut energy bills by £150 from the start of the new financial year by scrapping its energy efficiency plan.
The April to June limit was set in February, meaning bills are effectively protected until July.
But respected energy consultancy Cornwall Insight predicts the price cap for July will rise by around £300 compared to July as conflict in the Middle East threatens to increase costs.
Heating oil aid fund
The government has added £53 million to its Crisis and Resilience Fund to support those struggling with the rising cost of heating oil.
The product, used by around 1.5 million households in the UK (including two-thirds of those in Northern Ireland), has seen one of the sharpest price rises since the start of the US-Iran war.
Due to the nature of the fund, only households that face financial difficulties due to price increases will be able to benefit from the support.
Benefits and wages are rising – but not for all
April 2026 sees an income increase of around 6.2 per cent above inflation in the standard allowance for all universal credit claimants.
For a single person over the age of 25, this means an increase of £6 per week, rising from £92 to £98. Couples where one or both partners are over 25 will see an increase of £9 per week, from £145 to £154.
Most other benefits, including PIP, DLA, care allowance, carer’s allowance and ESA, are only expected to increase by 3.8 per cent at the September inflation rate.
The state pension will also increase by 4.8 per cent in line with annual earnings growth from next April, taking the weekly amount to £241.05.
But at the same time, the monthly payment rate for the health-related element of universal credit for new applicants will also be reduced from £105 to £50. Rates for existing claimants will also be frozen until 2029.
At the same time, the national living wage for eligible workers aged 21 and over rose by 4.1 per cent to £12.71 per hour. The government estimates this would increase a full-time worker’s gross annual earnings by £900 at that rate, and around 2.4 million low-paid workers would benefit.
The national minimum wage rate for 18 to 20 year olds also rose by 8.5 per cent to £10.85 per hour, narrowing the gap to the national living wage.
End of two child benefit limit
The Chancellor announced an end to the two-child benefit limit in last year’s Budget, following intense pressure from backbenchers, campaign groups and political opponents.
The Office for Budget Responsibility’s (OBR) financial outlook calculated that the move would increase benefits for 560,000 families by an average of £5,310.
Set to come into force this month, the government estimates the change will reduce the number of children living in poverty by 450,000 by 2029/30.
