Labour urged to ‘go further’ on cost of living – here’s what the experts want

Labor has been called on to be “bolder” on the cost of life support after Chancellor Rachel Reeves announced a package of measures to ease financial pressure on families over the summer holidays.

Plans include reducing VAT to 5 per cent on summer attractions such as theme parks and soft play centres, and free bus journeys for under-16s in England throughout August.

In addition, the chancellor confirmed that he was postponing fuel tax increases due to come into force in September and December.

Announcing the measures, he said: “Whether it’s a fun day out, a family meal or taking advantage of the UK’s thousands of fantastic attractions, Great British Summer Savings will support families with life’s little treats while boosting business across the UK.

“This builds on the support we have already put in place, including a fuel duty freeze, a £117 cut on energy bills, a freeze on prescriptions, fuel duty and rail charges.”

Charities and campaign groups welcomed the plans but warned they would not be able to grapple with the scale of rising prices in the UK.

Rising housing costs, food prices and the threat of a rise in energy bills amid the US-Iran war all overshadow the government’s proposals.

Dame Clare Moriarty, chief executive of Citizens Advice, said the newly announced measures “will make a real difference to families this summer”, but added that people were “not just worried about August, they are already struggling and fearful things will get worse come winter”.

“Today’s announcement does not address the urgent need for a plan to tackle record energy debt or the huge uncertainties people face about their finances,” he added.

Meanwhile, TUC general secretary Paul Nowak said: “Any practical steps to help families facing a cost-of-living crisis are a good thing” but added the government needed to be “bolder”.

“We have only just begun to experience the economic effects of the Iran war, and the longer the war drags on, the greater the threat to living standards will become.”

The Chancellor’s announcement comes as speculation grows that the Treasury is considering more radical measures to tackle the cost of living, alongside details of rent controls, food price caps and planned energy debt relief.

Food price limits

Supermarket bosses reacted angrily to rumors of cost caps on staple foods earlier this week, with M&S chief Stuart Machin branding them “unconscionable”. Reports showed the government had urged retailers to limit the cost of essentials such as eggs, bread and milk, but industry leaders and Treasury officials denied this.

Speaking in parliament on Thursday, the chancellor told MPs he was instead talking to supermarkets and “encouraging them to do what they can to keep prices low”.

Ms Reeves also announced she would suspend import duties on more than 100 foods, including chocolate and biscuits, adding: “I expect supermarkets to pass on all of these savings.”

The ongoing US-Iran war threatens to impact food prices in the UK due to a rise in the cost of producing synthetic fertilizers, experts have warned. This complex crop is essential to British agriculture as it is used in some form in the vast majority of grain, vegetable and oil farming.

However, this important vehicle is also considered an ‘energy product’ because natural gas is required to produce it. Much of this comes from the Middle East, with up to 30 percent of the world’s supply often passing through the Gulf.

rent controls

There was no mention of housing costs in Ms. Reeves’s speech, disappointing those who expected the much-rumored rent controls to emerge. Many think tanks and campaign groups have called on the councilor to include a rent freeze as part of his package, pointing out that rent increases above inflation will continue.

Last week, the New Economics Foundation (NEF) called for an ’emergency brake’ that would ensure rents do not rise by more than the lowest level of inflation, or 2 per cent, saving tenants thousands of pounds.

The think tank told Independent He said this would provide “time for new home construction to improve affordability and build a new longer-term system for fair rents”.

Following speculation that the Government was considering rent control measures, Housing Minister Matthew Pennycook said earlier this month: “We are not doing that. This is not a credible or serious policy proposal.”

Energy bill discount

On energy costs, the chancellor did not announce any new measures to deal with Ofgem’s energy price cap increase in July; Instead he pointed to the government’s action to cut energy costs by an average of £117 by scrapping two energy efficiency schemes.

This was thought to be a major factor in headline inflation falling from 3.3 per cent during the year to 2.8 per cent by April. But forecasters now predict the price cap could rise by around £200 from July, virtually eliminating government intervention.

NEF says there should be a ‘basic energy guarantee’, which would ensure that every household is guaranteed a very cheap amount of energy by the government to meet its basic daily needs. Such universal policy has been shut down in the past by Ms Reeves, who said in April that any future energy support would be means-tested based on household income.

The government is expected to announce more details of its planned energy debt relief plan soon, but hopes that it would start in early 2026 have not been met. The scheme is expected to clear £500m of energy debt for the poorest households, with total debts feared to reach £7bn by the end of the year.