Politics latest: Reeves to cut food costs and offer free children’s bus rides in cost of living package

Britain’s interest rates might have fallen twice this year had it not been for the Iran war, the governor of the Bank of England has warned that potential supermarket price controls are “unsustainable” in the long term.

Bank governor Andrew Bailey told MPs on the Treasury Committee that inflation may have fallen to the 2% target level last month but the energy shock was keeping the cost of living high.

He said the conflict was “the most significant change in the landscape” for the economy.

Mr Bailey added: “Before all this happened there was a reasonable expectation that we would probably cut once or twice this year, the market was pricing in that.

“The market is not currently and effectively pricing in what is taken off the table.”

You can’t maintain low prices without going bankrupt, writes James Moore:

A new YouGov poll reveals 49% of Britons oppose easing sanctions on Russian oil, while 19% support it.

But when asked which is the bigger priority, more Britons say keeping fuel prices low (42%) than keeping sanctions strong (32%).

The design of two terrible new policies in one day shows that Keir Starmer’s government has finally lost the plot, John Rentoul writes:

Shoppers can save on the cost of biscuits and chocolate as part of a package of measures set out by Rachel Reeves to ease the impact of the Iran war.

The government is cutting import tariffs on more than 100 types of products in a move expected to save consumers more than £150 million a year.

The Chancellor has also launched a “Great British Summer Savings” scheme, which includes free bus travel for children in England during the August school holidays.

The free bus travel scheme will allow every child aged 5 to 15 in England to travel on participating local routes.

The Chancellor is committing more than £100 million to fund the free ticket scheme and support bus services facing rising costs.

Ms Reeves said: “My number one priority is to protect households from rising costs.

“I want every family to be able to have fun this summer, which is why we’re launching the UK Summer Savings Scheme and why we’re helping children with free bus travel throughout August.”

However, the government is not expected to announce emergency aid for increasing energy bills.

Andy Burnham is backing Shabana Mahmood’s hardline efforts to block immigration in a bid to win votes from Reform UK supporters, his allies say.

The mayor of Greater Manchester reportedly wants to “reframe” the home secretary’s changes but supports attempts to restrict legal and illegal immigration, according to sources in his team.

Next month’s by-elections in Makerfield are expected to be a close contest between Mr Burnham and Reform UK, which made council gains in the last local elections.

Reform has previously dubbed him “open-border Andy” but those close to his campaign told The Guardian he would not want to ease the government’s restrictions on immigration.

The Home Office’s reforms to immigration rules under Ms Mahmood include ending the right to permanent refugee status and new settlement rules for people arriving in the UK since 2021.

Wes Streeting is likely to give up his ambition to become Labor leader if Andy Burnham wins the Makerfield by-election, according to the report. The Times.

Senior allies of the former health secretary have said there is a growing feeling that “no one will beat Andy” if the Manchester mayor, who is widely believed to be plotting a leadership challenge against Sir Keir Starmer, finds his way back to parliament.

But another source close to Mr Streeting said the proposals were “ridiculous” and he would take part in any leadership race.

He had previously warned Sir Keir in his resignation speech in the House of Commons that his government had lost the fight against nationalism and risked “handing the keys to Number 10 to Nigel Farage and Reform UK” unless he changed course.

Mr Streeting said he had “no regrets” and “no rebellious hope” after leaving the government last week and calling on Sir Keir to resign.