Financial and Professional Services: Mansion House Speech

Rachel Reeves Excerpts

Wednesday 15th July 2026 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

Last night I delivered my annual speech at the financial and professional services dinner at Mansion House.

In my speech, I announced a package of further reforms to unlock investment across the country, increase access to finance for growing businesses, and position the UK at the forefront of financial innovation.

The Government welcomed the outcomes of the Financial Policy Committee’s bank capital review, including reforms to the leverage framework and capital buffers that support lending while maintaining resilience. It has also published consultations on ringfencing reforms, including a new growth allowance for ringfenced banks that could unlock up to £80 billion of financing for UK businesses, as announced in May. The Government have also welcomed new figures from the Association of British Insurers showing that UK life insurers have invested £16.8 billion in UK productive assets between 2024 and the end of the first half of 2025, putting the sector on track to meet its pledge to invest £100 billion in UK productive assets over 10 years.

The Government have expanded the growth guarantee scheme to facilitate around £3.35 billion of small and medium-sized enterprise lending per year by 2028-29. They also confirm that they will make up to £500 million of British Business Bank ENABLE Guarantee capacity available for lending to innovative and intellectual property-rich firms; and have announced a new UK Export Finance guarantee product, delivered in partnership with the British Business Bank, to support smaller businesses that are exporting or looking to begin exporting. It is also building on nearly £120 million already committed through the British Business Bank’s community ENABLE funding programme, with a new ambition to scale the programme to at least £500 million over the next five years.

The wholesale digital markets champion, Chris Woolard CBE, has published his first report on tokenisation, which will help to drive a cross-sectoral approach to digitalising UK markets. The Government have confirmed their intention to issue the first digital gilt instrument no later than the first quarter of 2027, and intend to prepare for potential further issuances, subject to the success of the first transaction. The Bank of England has approved the first firm to undertake live activity in the digital securities sandbox, and the dematerialisation market action taskforce has published its implementation plan for removing paper shares by the end of 2027. The Government have also set out progress on crypto asset and stablecoin regulation, including final rules from the Bank of England and Financial Conduct Authority, and have published updates to tax rules to facilitate the use of stablecoins and certain crypto asset loans and liquidity pools. The Government have published a consultation on modernising payment services regulation, and welcomed the financial services AI adoption plan, authored by the financial services AI champions—Harriet Rees and Dr Rohit Dhawan—which sets out practical recommendations to accelerate safe and responsible AI adoption across the sector. Finally, the Government have committed to consult on an open finance regulatory framework in 2027, focused on small and medium-sized enterprise lending.

We are building on the UK’s global strength through deeper international partnerships and improved market access. This includes increased regulatory co-operation with the European Union on financial services, focused on improving oversight and reducing burdens for firms in areas such as transaction reporting, and working together on emerging challenges such as the green and digital transitions. The joint UK and United States transatlantic taskforce for markets of the future has committed to publishing its report, which sets out recommendations to advance UK-US financial services collaboration, focusing on digital assets and capital markets. This sits alongside wider progress on financial services agreements and engagement with partners including Switzerland, India, the Republic of Korea, the Gulf Co-operation Council and China.

The Government have published “One Year On: Delivering the Financial Services Growth and Competitiveness Strategy”, which draws together progress in the last year across all six themes of the strategy, and demonstrates the impact those reforms are having.

Together, these reforms will unlock more investment, improve access to finance for growing businesses, support innovation and strengthen the UK’s position as a leading global financial centre.

The full list of the measures launched at Mansion House, along with supporting technical documents, can be found at

https://www.gov.uk/government/collections/mansion-house-2026

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Fiscal Risks and Sustainability Report 2026

Rachel Reeves Excerpts

Tuesday 7th July 2026 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

Since I became Chancellor, the UK economy has grown by 2.1%—the fastest growth among European G7 economies in that period, demonstrating that this Government’s economic plan is the right one. Growth is the only way to deliver sustainable rises in living standards, and, after falling by 2.3% in the previous Parliament, living standards—real household disposable income per capita—have grown by 1.1% so far this Parliament. We have increased our resilience to global shocks by building stronger public finances and bringing down borrowing—which is less than the G7 average this year—while bringing in an additional £120 billion in public investment through changes to our fiscal rules.

The Office for Budget Responsibility’s fiscal risks and sustainability report 2026, which was laid today, confirms the need to boost growth and maintain sustainable public finances. This demonstrates the importance of this Government’s decisions to reduce the deficit, unlock a step change in public investment, and strengthen the tax base by announcing electric vehicle excise duty, in order to support a stronger fiscal position.

The FRS is an important part of the Government’s fiscal risk management framework. The report fulfils the OBR’s duty under the Budget Responsibility and National Audit Act 2011 to assess and report on the sustainability of the public finances and the key risks facing them.

This year’s FRS provides a detailed assessment of the risks to long-term fiscal sustainability. Since the start of this Parliament, the Government have taken the necessary decisions to put the public finances on a sustainable path while continuing to support economic growth. The Government are bringing down borrowing. Borrowing in 2025-26 was over £23 billion lower than in 2024-25, and the OBR forecast it will continue falling in every year. This strategy is underpinned by robust fiscal rules, which were designed to unlock a step change in public investment while keeping debt on a sustainable path, alongside multi-year spending plans and wider reforms to the fiscal framework that strengthen credibility and transparency.

The Government have taken the decisions needed for long-term security and sustainability. For example, at Budget 2025, the Government strengthened the tax base by introducing eVED to respond to the long-term decline in fuel duty receipts. The Government have also published the defence investment plan, backed by £298 billion of investment over the next four years, to strengthen national security, support long-term resilience and invest in the capabilities needed for the future.

The FRS highlights the importance of productivity growth to fiscal sustainability. Tackling historical under-investment is critical to boosting productivity, and the Government are protecting the increase of more than £120 billion in departmental capital spending over the Parliament. Decisions taken across this Parliament will raise output in the medium and longer term, as the OBR estimates that the combined supply-side effects of policy announced across the Parliament will raise the level of GDP by over 0.6% after 10 years.

[HCWS195]

Defence Funding

Rachel Reeves Excerpts

Tuesday 30th June 2026 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

The first job of any Government is to keep people safe. Since I have been Chancellor, I have been clear that national security is central to our economic security, and we have invested record sums into defence. The Government have today confirmed an additional £15 billion for the defence investment plan between 2026-27 and 2029-30. That will mean this Government will be spending over £60 billion more on defence over the next four years than if spending were maintained in line with plans set out by the last Government in spring Budget 2024. This will move the UK towards warfighting readiness, modernise military capability to fight the wars of the future, and drive economic growth. The DIP document sets out investments in detail, totalling £298 billion over the next four years.

From ’27-28 onwards, the UK will spend 2.7% of GDP on core NATO defence spending, solidifying its position as the NATO alliance’s third-largest cash spender, behind only the US and Germany. The Government have committed to increasing defence spending to 3% of GDP in the next Parliament, with funding and plans to be set out at the next spending review, where defence must be the No. 1 priority. Alongside NATO allies, the UK has committed to reach 3.5% of GDP on defence spending by 2035. The UK remains committed to meeting its obligations to the defence investment pledge. All allies will review the trajectory and spend in 2029, when NATO next reviews its capability plans. This is more money for UK defence, spent more effectively to ensure our service personnel have the capabilities they need to deter and fight now, while driving out waste and inefficiency.

This will support £5 billion investment in drones and autonomous systems, the UK’s largest ever investment in drone warfare, and learning the lessons of Ukraine. It will fund strike and surveillance drones, a new hybrid Navy as well as uncrewed land vehicles. It will also support the next generation of RAF aircraft, with £8.6 billion investment under the Global Combat Air Programme with Italy and Japan, and £300 million for the development of collaborative combat aircraft. It will also support an £11 billion investment for munitions and weapons to increase UK stockpiles, at least six new energetics factories, and £3.2 billion in space capabilities. And it will deliver the UK’s renewal of the nuclear deterrent, with £64 billion of investment to build new submarines, develop a sovereign warhead and buy F-35A jets.

The defence investment plan will provide long-term certainty over Government procurement and innovation priorities, backing British business, and crowding in private investment and supporting high-value jobs and skills across the UK. By aligning defence spending with the Government’s industrial strategy, it ensures that every pound invested strengthens national security, while driving growth in key sectors, boosting regional economies and positioning the UK at the forefront of advanced manufacturing and technology.

At the same time, additional funding will support improved procurement and productivity, allocating £400 million towards the UK’s contribution to the multilateral defence mechanism, which will enable joint procurement with allies as well as supporting greater spending and our defence industrial base, and a £500 million transformation fund to enable transformation of the civilian workforce, reduce dependence on consultancies and deliver productivity improving investments in artificial intelligence. This is also supported by £115 million that the Department for Science, Innovation and Technology will spend to strengthen our defences against the risks of AI, and a new £50 billion defence export facility to support British defence businesses to compete and create jobs.

These choices are necessary to ensure our capabilities are fit for today, and to put defence on a sustainable footing. This includes moving towards more advanced, more effective technology. It also includes driving out waste and inefficiency, with a new commitment to deliver £250 million of fraud recovery by 2029-30. There will also be a fundamental reset in the Ministry of Defence’s financial management, with defence decision-makers accountable to the MOD permanent secretary on budget management, and annual DIP delivery updates to Parliament each year.

Funding

This package has been funded by reprioritising public spending and acting within our fiscal rules, and without taking resources away from day-to-day spending on frontline services. It is funded primarily by reallocating budget from across Government Departments, with £10.3 billion identified now. A further £4.7 billion over four years will be confirmed at Budget 2026, in a fair and balanced way.

We will ensure that we focus this on finding efficiencies, cancelling or delaying lower-priority programmes, and remaining ruthlessly focused on value for money for the taxpayer. Departments will also monetise assets, including underused land and buildings, so that we are securing the maximum value from the £1.9 trillion of assets the Government holds. Departments will bring forward details in due course.

As Departments with larger capital budgets, the Government have decided to ask the Department for Transport and the Department for Energy Security and Net Zero to make further contributions. DFT will provide up to £700 million of savings from roads funding. DESNZ will find an additional £2 billion of savings—including £400 million in financial transactions—while maintaining the fastest growing capital budget out of any Department across this spending review period. DESNZ will reshape its capital budget in a way that continues to protect the clean power mission, drive renewable and nuclear build-out and insulate us from future gas price spikes on the path to energy independence. More detailed plans will be shared by autumn.

A further £3.4 billion of spending power has been generated through removing burdens on defence. This unlocks new investment in the DIP. It includes £0.4 billion income from rationalising the MOD estate, and £0.6 billion from reprioritising MOD spending. His Majesty’s Treasury is also freeing up £2.4 billion by taking on responsibility for the cost of further support for ongoing international objectives, which include Ukraine security guarantees in the case of a ceasefire, and unlocking additional savings from improved procurement. That frees up cash from MOD’s budget, which it can invest elsewhere in the DIP. This will bring total additional funding to £15 billion—including £11.6 billion in additional cash. This is new investment, on top of existing budgets.

Departmental control totals will be adjusted to reflect these choices in the usual way at supplementary estimates.

We are committed to fiscal sustainability. We are acting within our iron-clad fiscal rules to protect households and businesses from higher inflation and higher interest rates, while readying UK defence against emerging global threats.

Covid Counter Fraud Commissioner Independent Review: Government Response

Rachel Reeves Excerpts

Tuesday 23rd June 2026 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

I am pleased to inform the House that the Government’s response to the final report of the Covid Counter Fraud Commissioner, CP 1596, has been laid in Parliament today.

On 9 December 2025 the Covid Counter Fraud Commissioner revealed in his final report, “Pursuing Recoveries and Preventing Reoccurrence”, CP 1462, the staggering amount of fraud and error across pandemic support schemes—£10.9 billion. This is money that should have funded our NHS and schools—money that belongs in our communities.

The commissioner’s report set out crucial recommendations for recovering this money, ensuring those who defrauded the state during a national crisis face justice and preventing the misuse of public funds during future crises. Over the last two years Government have been working up an ambitious plan to recover funds and prevent fraud in future national emergencies based on the commissioner’s findings. Today’s paper sets out that plan and responds in detail to each of the commissioner’s recommendations.

Righting these wrongs will not be easy. Significant time has elapsed and many of the entities involved have been dissolved, meaning some funds may still prove irrecoverable. But we are committed to putting this appalling scandal right—by recovering funds taken by fraudsters during the pandemic and putting them back into our public services, holding those responsible to account, and ensuring that taxpayer money is better protected in the future.

The report is published on gov.uk at:

https://www.gov.uk/government/publications/final-report-of-the-covid-counter-fraud-commissioner

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Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 23rd June 2026 Commons Chamber

[Josh Newbury (Cannock Chase) (Lab)]

14. What steps she has taken to help support households with the cost of living.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government recognise that energy costs, inflation and global pressures continue to squeeze household budgets. That is why we have taken careful, targeted action through the great British summer savings package which launches on Thursday, cutting VAT on summer activities so that adventure parks, soft play centres, cinemas and theatres will be cheaper, alongside the work we are doing to maintain the triple lock and to lift children out of poverty.

[John Lamont]

The Chancellor has overseen huge tax rises for those who work hard and do the right thing. Now they have been hit by soaring energy bills—a situation that is even more acute for many of my constituents who rely on heating oil. How does the Chancellor think that squares with the Government’s pledge to cut energy bills?

[Rachel Reeves]

The measures I took in my Budget last year took £150 off energy bills by getting rid of some levies altogether and moving others to general taxation. If we look at the most recent inflation numbers, inflation in the UK was 2.8% last month, which compares to 3.2% in the eurozone and 4% in the US. Food inflation was at its lowest rate for 17 months.

[Josh Newbury]

The Chancellor will know that I have raised the need to take action on the costs faced by farmers and families alike, both of which she has done. The great British summer savings scheme will be a brilliant help with the cost of giving kids a great school holiday, particularly the free bus travel for five to 15-year-olds throughout August. Does the Chancellor agree that continuing to look at how we can support affordable bus travel for constituents like mine in Cannock Chase will be very important even beyond the great summer break to come?

[Rachel Reeves]

As my hon. Friend knows, we are investing £3 billion in local bus services to both improve the service for passengers and freeze bus fares until at least March next year. This summer there will be unlimited free travel for children aged between five and 15 in his Cannock Chase constituency and across the country. I also give a special shout-out to my mayor, Tracy Brabin, for the beautiful Weaver Network of electric buses, manufactured in Northern Ireland and Yorkshire, and serving the people of West Yorkshire.

[Andrew Rosindell (Romford) (Reform)]

2. What steps she has taken to support people adversely affected by the loan charge.

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[Euan Stainbank (Falkirk) (Lab)]

3. What steps she has taken to help support people with the cost of living in Falkirk.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government remain dedicated to raising living standards for people in Falkirk and across the UK by driving economic growth and bearing down on inflation, which I know continues to squeeze household budgets. Measures announced in my Budget last year are already taking effect: raising the national living wage and the national minimum wage; maintaining the triple lock on pensions; and extending free school meals to more families. Our great British summer savings package builds on that, reducing VAT on a whole range of summer attractions, including, I believe, Airthrill in my hon. Friend’s constituency.

[Euan Stainbank]

The cut to VAT for family days out this summer starts along with the summer holidays later this week. This is a Labour Government acting to bring down the cost for families visiting Falkirk’s fantastic tourism, leisure and hospitality attractions. Many families are anxiously looking at the other side of the summer, with energy bills rising as a direct consequence of the illegal Iran war. Does the Chancellor agree that any forthcoming targeted energy bill support must similarly extend to working families?

[Rachel Reeves]

We timed the great British summer savings so that they start on the first day of the Scottish school holidays and continues to 1 September, when children in England, Wales and Northern Ireland return to school. We hope that the scheme has a big impact on families around the country, alongside the free bus travel in England in August.

We did not start the war in the middle east, we did not join it, and I have been clear about my views on it, but the war is clearly having consequences here at home. We will continue to monitor the situation and take every action necessary to support families.

[Alex Easton (North Down) (Ind)]

4. What assessment she has made of the adequacy of the temporary reduction in the rate of VAT in supporting the hospitality sector in Northern Ireland.

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[Peter Lamb (Crawley) (Lab)]

6. Whether she plans to update the Treasury Green Book supplementary guidance on wellbeing. [R]

[The Chancellor of the Exchequer (Rachel Reeves)]

The Treasury published the Green Book supplementary guidance on wellbeing, which helps officials to assess how their policies and projects affect the wellbeing of citizens, in 2021. In February, this Government published an update to the Green Book that reaffirms the importance of considering wellbeing. Most importantly, my new Green Book will support fairer and more balanced decisions on investment in every part of the country, including outside London and the south-east, across urban, rural and coastal communities, so that projects have a better chance of securing Government funding.

[Peter Lamb]

I thank the Chancellor for her response. With the constantly growing evidence base behind it, wellbeing economics offers Governments an increasingly sophisticated means of supplementing conventional economics in decision making. It reveals that big-ticket items very often offer little wellbeing benefit to our constituents, while much cheaper interventions can have a dramatic impact. Wellbeing levels have even been shown across Europe to be a better predictor of electoral outcomes than traditional economic measures. Would the Chancellor be willing to meet me and other members of the all-party parliamentary group on wellbeing economics to discuss how wellbeing economics can enhance the work of the Treasury?

[Rachel Reeves]

I will ensure that the relevant Minister meets my hon. Friend and others to discuss how we can make further enhancements to the Green Book. Something that has held Britain back for too long is that projects outside London and the south-east, including in rural and coastal communities, have missed out on funding because of the way in which the Treasury used to evaluate those projects. I have changed those rules so that we can make investments in all parts of the United Kingdom.

[John Milne (Horsham) (LD)]

In my constituency, Chess Dynamics, part of Cohort, is a world-leading developer of counter-drone and air defence technology, yet like much of the defence sector, it has been left waiting for clarity on future investment. Given the recent turmoil at the top of the Labour party, can the Minister assure us that the vital defence investment plan will not be pushed back even further and finally give defence manufacturers the go-ahead—

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[The Chancellor of the Exchequer (Rachel Reeves)]

I am pleased to update the House that I met the Secretary of State for Defence and the Chief of the Defence Staff yesterday to talk through the defence investment plan. The Ministry of Defence is producing a defence investment plan that will meet the scale of the challenges and meet the moment with increased readiness. I am confident that the new defence investment plan will be published before the NATO Ankara summit. It will involve more money spent more effectively and will meet the scale of the challenges facing our country.

[Rebecca Smith]

The former Defence Secretary has blown apart the defence investment plan, revealing that the Treasury was prepared to offer only a pitiful increase in defence spending—just 0.08% by 2030—despite growing threats across the world. At the same time, the Treasury continues to fork out billions for welfare and the net zero agenda. Innovative small and medium-sized enterprises in defence are effectively locked out of MOD contracts and denied the opportunity to scale their capabilities. As the Chief of the Defence Staff put it,

“the price of peace is increasing”.

Will the Chancellor commit this morning to filling the £28 billion gap in defence investment by 2030 to secure our position on the world stage, or will she stand in the way of the delivery of the DIP that we need?

[Rachel Reeves]

As I just said, the DIP will be published before the summit. It will involve more money spent more effectively, and it will meet the scale of the challenges we face. Frankly, I will take no lectures from the Conservatives, who left our armed forces, in the words of their former Defence Secretary, “hollowed out”. Our forces hit rock bottom for pay, morale and numbers. The Tories do not like to mention the £12 billion of cuts that they made to defence in their first five years in office. We are turning that around with the biggest uplift in defence spending since the end of the cold war. This Labour Government will continue to invest in defence, with contracts awarded to firms here in Britain to keep our country safe.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

My right hon. Friend is right to highlight those challenges. Throughout the 10-year equipment plan, there was always a £14 billion deficit that never seemed to go away. It is great that we are seeing more investment, but could the Chancellor update the House on what conversations she or her Ministers are having with Governments in Europe and with Canada about the Defence, Security and Resilience Bank and the multilateral defence mechanism for funding and procuring defence across NATO?

[Rachel Reeves]

I thank my hon. Friend for her question. As Members will know, this Government are working on plans with our NATO allies for a multilateral defence mechanism. We have already signed a treaty agreement with Finland and the Netherlands, and we are working closely with Scandinavian, Baltic and eastern European countries. The multilateral defence mechanism will enable us to procure jointly and stockpile equipment off the balance sheet, ensuring better value for money for taxpayers and enabling innovative forms of finance to fund our defence. We are also working closely with Canada on the multilateral defence mechanism and the Defence, Security and Resilience Bank, which lends to smaller businesses in the supply chain, so that we have one model to help us better fund defence in our country and across Europe.

[Mr Speaker]

I call the shadow Minister.

[James Wild (North West Norfolk) (Con)]

It is good that the Chancellor has had those meetings, but perhaps they have come too late, because when the former Defence Secretary resigned, he said that the Treasury was “unwilling” to provide the resources needed to defend the country against rising threats. The Chancellor has said that national security always comes first, so why this dereliction of duty? Why is she failing to tackle the ever-expanding welfare budget and blocking the defence investment plan from getting the funding needed to meet the threats that we face?

[Rachel Reeves]

The hon. Gentleman is literally sitting two places away from the right hon. Member for Central Devon (Sir Mel Stride)—the former welfare Secretary who presided over a record increase in welfare spending.

We have commissioned Alan Milburn to do a review—the first part of which was published recently—to address the problem that we inherited of young people not in employment, education or training and get young people back into work. I am proud to be the Chancellor who has overseen the biggest uplift in defence spending since the end of the cold war. We funded that through our difficult decision to reduce overseas development assistance, but that was the right choice. When we set out the defence investment plan ahead of the Ankara NATO summit, the whole House will see the further changes we are making in order to better support defence in an increasingly unstable world.

[Bradley Thomas (Bromsgrove) (Con)]

8. What assessment she has made with Cabinet colleagues of the potential impact of her Department’s policies on levels of youth unemployment.

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[Mrs Elsie Blundell (Heywood and Middleton North) (Lab)]

11. What fiscal steps she is taking to help develop transport infrastructure in the north-west.

[The Chancellor of the Exchequer (Rachel Reeves)]

This Government are committed to improving transport connectivity right across the north of England, and we know that part of how we can deliver that is by recognising that decisions about local transport are better made locally. That is why we are giving mayors and local leaders the powers and the funding to make decisions locally; through the transport for city regions fund alone, there will be £4.1 billion for Greater Manchester and the Liverpool city region between 2027 and 2032, and there will be further devolution through the integrated settlements.

[Mrs Blundell]

As the Chancellor will know, northern powerhouse has been spoken about since 2014, which is 12 years ago. If we are to get Northern Powerhouse Rail off the ground and delivered, we cannot let valuable land that could create tens of thousands of jobs and boost the northern economy be used as a cheap option. What recent conversations have there been with local leaders regarding the proposed underground station at Manchester Piccadilly?

[Rachel Reeves]

This Government, for the first time, have backed Northern Powerhouse Rail with actual money in the spending review. The programme will improve connections between key cities—Liverpool, Manchester, Bradford, Leeds, Sheffield and York. We have not yet taken a decision on the type of station that we will deliver at Manchester Piccadilly, but I recognise my hon. Friend’s preference for an underground station. I recently met Bev Craig, the leader of the city council, to discuss how the Government can support Manchester’s ambition for an underground station at Manchester Piccadilly.

[Cat Eccles (Stourbridge) (Lab)]

12. What steps she is taking with Cabinet colleagues to support industry.

[The Chancellor of the Exchequer (Rachel Reeves)]

We are cutting electricity costs for up to 10,000 businesses through the British industrial competitiveness scheme, and expanding the supercharger scheme. We are also strengthening key supply chains and protecting jobs through the steel strategy, the new £350 million critical chemicals resilience fund, and the £120 million in support for our ceramics sector.

[Cat Eccles]

I welcome the decisions taken by the Chancellor and Government colleagues to revise the electric vehicle targets for 2030, following representations from the industry, unions and MPs. Targets are really great, but they need to match capabilities and market realities. What assessment has she made of how the change will safeguard jobs in the automotive supply chain in my constituency of Stourbridge and across the UK?

[Rachel Reeves]

I thank my hon. Friend, and other MPs who speak for constituencies with automotive businesses, for their representations. As she said, we are bringing forward the review of the zero emission vehicle mandate, so it will now take place this year—a year earlier than planned. In that, we will look at a slower phase-in of those targets to bring us closer, for example, to where the EU is. Automotive is the crown jewel of British manufacturing. We must not let targets damage our sector; that would lead to money being paid out to foreign companies, such as those in China, that produce more electric vehicles. That is why we have made the changes, and why we are having the review.

[Greg Smith (Mid Buckinghamshire) (Con)]

Mid Buckinghamshire is home to a number of businesses that are part of the supply chain for the aerospace and defence industries. Those businesses rely on steel that is categorically not made here in the United Kingdom. If the Department for Business and Trade fails to rectify the cliff edge that is coming on steel tariffs, what will the Treasury do to backfill that and ensure that many businesses, such as those in my constituency, do not become completely unviable?

[Rachel Reeves]

The hon. Gentleman makes an important point about making sure that we get the balance right. We are supporting steel made in Britain, which the previous Government neglected; we are backing it through the nationalisation of the steelworks in Scunthorpe and more support for Port Talbot and Sheffield, but I also recognise the challenge that some British companies will face. This is why, for example, as is shown by the work that we are doing with the EU on the upcoming EU-UK summit, we want a steel alliance, to reduce tariffs on steel.

[Mr Speaker]

I call the shadow Minister.

[James Wild (North West Norfolk) (Con)]

Next week, those swingeing 50% tariffs on steel imports will hit manufacturing businesses across the country, putting thousands of jobs at risk. While they are intended to protect domestic production, industry is warning that many grades simply are not made in the UK in the quantity needed. It is a simple question for the Chancellor: will she guarantee that tariffs will not apply where businesses cannot get steel in the UK?

[Rachel Reeves]

Our steel strategy protects the UK steel industry, so that more orders can come to British Steel and other steel manufacturers in the UK. We will not allow our steel sector to be undercut by cheap foreign imports.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

13. If she will make an assessment of the potential merits of increasing levels of economic co-operation with the EU.

[The Chancellor of the Exchequer (Rachel Reeves)]

At a time of great global uncertainty, it is more important than ever that we deepen ties with our closest allies and biggest trading partners, whose values we share, and whose interests are bound to ours. It is 10 years today since the Brexit referendum, but the economic impact from the deal negotiated by the previous Government is stark. Indeed, recent studies indicate that its impact could be as great as an 8% reduction in GDP. I have worked closely with my counterparts across the EU as part of this Government’s commitment to resetting the UK-EU relationship, most recently at meetings of the G7 in Paris, and meetings with the European Bank for Reconstruction and Development in Riga. They have been clear that they would welcome closer ties, which will be in all our interests. At the upcoming UK-EU summit, we hope to be able to conclude deals on food and agrifood, on linking to the EU emissions trading schemes, and on an ambitious youth mobility scheme.

[Rachel Gilmour]

Today does indeed mark 10 years since Britain voted to leave the European Union. One of the consequences of Brexit has been to bury my constituents in red tape. My farmers cannot export without doing reams of paperwork, and small businesses are seemingly locked out of European markets. The EU remains the world’s largest trading bloc, and it sits on our doorstep, so will the Chancellor set out a path to an ambitious UK-EU reset—something that my party has called for—including a new customs union that would slash costs for British businesses, open markets for our farmers, and bring down prices for the British consumer? Or will we have to wait for her successor to show that ambition?

[Rachel Reeves]

I have been working hard in this Labour Government to reset the relationship so damaged by the choices of the Conservatives. That is why we have committed to this second UK-EU summit, after the agreement between President Ursula von der Leyen and our Prime Minister last year to finalise the deal on food to help our farmers, on youth mobility to help our young people, and on emissions trading to help keep the cost of energy down.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Given what my right hon. Friend has rightly said about the disastrous deal negotiated by the Conservatives once we left the EU, when the next UK-EU summit does eventually happen, will it not be time— after we have successfully concluded discussions on the priorities of the UK-EU reset—to discuss the opportunity, costs and benefits for more key parts of our economy of rejoining the single market?

[Rachel Reeves]

I understand why my hon. Friend makes those arguments; we are clearly poorer outside the European Union than we otherwise would have been. We made a manifesto commitment that we would not rejoin the single market or customs union, or return to the free movement of labour. Those red lines stand, but within them there is an awful lot that we can do to improve relations. We are doing just that.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

15. What steps she has taken to help support people with the cost of living in Wythenshawe and Sale East constituency.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government are committed to easing cost of living pressures for people in Wythenshawe and Sale East, and across the UK. Budget measures are already helping households; we are freezing prescription charges for the second year in a row, freezing rail fares for the first time in 30 years, and taking £150 off energy bills, as well as protecting pensioners through the triple lock and lifting half a million children out of poverty.

[Mike Kane]

My constituents Darren and Nicole shared with me their story of hardship in raising five children on one income. Like me, they are grateful to this Chancellor for ending the two-child benefit cap. Will she consider an independent process for advising the Government on how much universal credit needs to be, if people are to afford everyday items?

[Rachel Reeves]

I thank my hon. Friend for bringing the story of Darren and Nicole to this House. I hope that they and their children will benefit from the change I made to the two-child limit for universal credit, as well as from the rolling out of free breakfast clubs to all primary schools, and the introduction of free school meals for all children whose parents are on universal credit, which will start in September and be available at primary, secondary, nursery and further education levels. As the Trussell Trust has said, the decisions I made in my Budget mean that the cruel two-child limit, which drove countless families into hardship and forced them to turn to food banks to survive, will end.

[Munira Wilson (Twickenham) (LD)]

16. What assessment she has made of the potential impact of Heathrow airport’s expansion on economic growth in regions outside London.

--- Later in debate ---

[John Grady (Glasgow East) (Lab)]

17. What progress she has made on strengthening the economy since July 2024.

[The Chancellor of the Exchequer (Rachel Reeves)]

Since I became Chancellor, our economy has grown by 2.3%—the fastest growth among European G7 economies in that period. Over that time, we have progressed our strategy for stronger and more secure growth through fiscal stability by bringing in an additional £120 billion in public investment, by crowding in private investment through the National Wealth Fund and the British Business Bank, because I changed our fiscal rules; and by removing structural barriers to growth, including through big reforms to our planning and pensions systems and through progress on reducing regulatory burdens, particularly on smaller businesses.

[John Grady]

The long-term strength of the economy depends on long-term investment in the UK. UK growth companies still struggle for capital, while UK savers’ money flows to trackers, which are concentrated on a small number of US stocks. That is bad news for our future. My right hon. Friend the Chancellor has made brilliant progress on reforming pensions, but can she reassure me that the Treasury is looking at further reforms, to increase the amount of UK savers’ money that is invested in our future?

[Rachel Reeves]

I thank my hon. Friend for his question and his work on the Treasury Committee. On pensions reform, through the Mansion House accord and Sterling 20, we have got pension funds to commit to investing more in British businesses, both through British venture schemes and in British infrastructure. Those changes were secured by the Pension Schemes Act 2026 taken through Parliament by the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Swansea West (Torsten Bell). That, for the first time ever, requires investment in UK businesses and in infrastructure. We are also making reforms to how our ISA system works so that for people under the age of 65, after investing £12,000 in cash, any additional money has to be invested in stocks and shares, helping start-up and scale-up businesses grow and stay in Britain.

[John Glen (Salisbury) (Con)]

The Chancellor has obviously had to make some tough decisions since 2024, but the right hon. Member for Ilford North (Wes Streeting) wants her to go further by aligning the capital gains tax rate to the higher rates of income tax. Did she examine the behavioural effects of such a policy before she made a much more modest increase in her first Budget?

[Rachel Reeves]

In my two Budgets, I have raised an additional £30 billion through taxes for more wealthy people, whether that is through the changes to the non-dom rules, VAT and business rates on private schools, taxes on private jets, the high-value council tax surcharge or, indeed, the increases in capital gains tax. Combined, that is an extra £30 billion secured for our public services, to stabilise our public finances and get debt down as a share of our economy by asking those with the broadest shoulders to pay more.

[Mr Speaker]

I call the shadow Minister.

[Richard Fuller (North Bedfordshire) (Con)]

I am sorry, but the Chancellor’s recollection of her record is fantasy economics from a fantasy economist. Is it not the case that her true record is poor decision making: with U-turn after U-turn on winter fuel payments, business rates and family farm taxes; tax after tax on jobs, investment and savings; a country more indebted with higher interest rates; and a Chancellor unable to cut welfare and unwilling to fund our defence?

[Rachel Reeves]

I am incredibly proud of my record as Chancellor of the Exchequer: the fastest growing country in the G7 within the EU, wages rising faster than inflation every single month since I became Chancellor, record investment coming into the United Kingdom, rolling out free breakfast clubs and free school meals, 500,000 children lifted out of poverty, creating the National Wealth Fund and leveraging in private sector investment. Those things are only possible because of the decisions I have made as Chancellor. As a result, for the first time since 2019, Government borrowing was less than 5% of GDP—a far change from the mess I inherited from the Conservatives.

[David Williams (Stoke-on-Trent North) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Chancellor of the Exchequer (Rachel Reeves)]

This Government have the right economic plan—the fastest growth in the G7 at the start of this year, the second fastest rate of growth in the G7 since the election, and inflation lower than forecast, with food inflation at its lowest level for 17 months despite the disruption in the middle east. Wages have risen faster than prices in every single month since I became Chancellor. I am tackling the cost of living challenges with rail fares, prescription charges and fuel duty frozen, and with money off energy bills. Our economic plan is the right one, and I will continue to deliver for the British people.

[David Williams]

Sometimes we do not say thank you enough, so I would like to offer my heartfelt thanks to the Chancellor for listening. She listened to me, my fellow MPs, our pottery workers, our GMB union and especially Sharon Yates by offering a £120 million support and growth package for our ceramics sector. Can the Chancellor now outline how she will ensure that smaller manufacturers benefit from this fantastic new scheme?

[Rachel Reeves]

I thank my hon. Friend for that question and for the representation that he and other MPs representing ceramics constituencies have made. It was a real honour for me to meet the impressive force of nature that is Sharon Yates when I visited Dunoon, a ceramics business in Staffordshire, a couple of months ago. I pay tribute to her and the campaigning trade union, GMB, Ceramics UK and all campaigning Labour MPs on their efforts. As a result, they have been heard, and our £120 million package of support for ceramics announced earlier this year will give a positive future for the sector.

[Several hon. Members rose—]

[Sir Mel Stride (Central Devon) (Con)]

Given all that is going on, this could be the last time. The legacy of this Chancellor has been the highest taxes on record, a benefits bill spiralling out of control, and unemployment 300,000 higher than it was at the last general election. The right hon. Lady trumpets 2.8% inflation, but that is still well above target, and only last year it was the highest in the G7, to the detriment of millions up and down our country. Under her plans, how much more does she intend to borrow in this Parliament than under the plan she inherited?

[Rachel Reeves]

Let’s talk about my record: six cuts in interest rates; wages rising faster than inflation; trade deals secured; investment delivered; support for our energy-intensive industries; half a million children lifted out of poverty; record investment in our national health service; more money for local transport infrastructure right around the country; the biggest uplift in defence spending since the end of the cold war; and an economy that has constantly beaten the forecasts—an economy that is growing, and an economy where inflation has come down. Compared with the disastrous 14 years when the Conservatives were in office, I would take our record any day.

[Mr Speaker]

May I repeat what I just said? Chancellor, there are lots of Government Members who need to get in. I have to get through this list. You have to help me to help them ask their questions.

[Sir Mel Stride]

The right hon. Lady cannot bring herself to answer the simple question I asked. I will tell her: she is borrowing one quarter of a trillion pounds more than the plans that she inherited—that is her legacy. We hear that the right hon. Member for Makerfield (Andy Burnham) is considering borrowing even more. Does she agree that that would be utterly reckless and that the bond markets will not wear it?

[Rachel Reeves]

When the Conservatives were in office, in the last Parliament they borrowed more than the G7 average every single year. This year we are borrowing less than the G7 average and have brought down Government borrowing to 4.2% of GDP in the most recent data. We have brought forward our fiscal rules so that they kick in two years earlier, and we are meeting those fiscal rules, to ensure that we have sustainable public finances—a far cry from those that I inherited.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

T2. Staffordshire’s MPs hunt as a pack, and we are all grateful for the package of support for the ceramics industry. It is important for jobs and livelihoods in Newcastle-under-Lyme, where we make excellent British bricks. May I urge the Chancellor to do whatever possible to increase the use of British-made bricks in construction projects right across our United Kingdom?

[Rachel Reeves]

I thank my hon. Friend for the representation that he makes on behalf of the ceramics industry in Newcastle-under-Lyme. The £120 million funding will be launched in the autumn. We are working with the sector now, and it will be available for firms of all sizes, because it is important that small ceramics manufacturers can benefit, as well as larger ones.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Today is exactly 10 years since the country voted to leave the EU, and thanks to the Conservatives, the post-Brexit red tape has created 2 billion pieces of extra paperwork for British businesses—enough to stretch around the world 20 times. The hit to growth is the equivalent of the Treasury losing out on £90 billion every single year. Surely by now the Labour Government and the Labour party must recognise that if they want to go for growth and raise revenue, they should drop their red lines on Europe.

[Rachel Reeves]

With all respect, the Liberal Democrats backed that referendum 10 years ago, and they were part of the Government who legislated for it. Unlike the Liberal Democrats, the Labour party actually sticks to its manifesto commitments.

[Euan Stainbank (Falkirk) (Lab)]

T4. The loss of Grangemouth’s refinery was a loss to Scotland’s economy. The Chancellor rightly consulted on including refined products in the carbon border adjustment mechanism to level the playing field for domestic refining—a level playing field the Tories did not pursue before the closure of Grangemouth was announced in 2023. Will the Chancellor meet me and other colleagues to discuss the merits of accelerating the inclusion of refined products in the CBAM?

--- Later in debate ---

[Liam Conlon (Beckenham and Penge) (Lab)]

T6. In all our constituencies, small hospitality businesses, such as Shotsmiths in Beckenham and the Alma pub in Crystal Palace, provide important third spaces, bringing life to our high streets and providing good jobs. The Chancellor has visited my constituency to outline additional support for local pubs. Will she set out what further steps she is taking to ensure that these small businesses can grow and thrive?

[Rachel Reeves]

I have not only visited my hon. Friend’s constituency, but I went to school there and I am well aware of many of the pubs in Beckenham and Penge. This summer, from this Thursday, the great British summer savings programme will benefit businesses in Beckenham and Penge and around the country. VAT rates on children’s food in restaurants, pubs, cafés and bars will be cut, and children’s entertainment venues in Beckenham and Penge and around the country will also see cuts in VAT.

[Sarah Olney (Richmond Park) (LD)]

T5. Today marks 10 years since the Brexit referendum. Since that date, we have had 10 Home Secretaries, nine Foreign Secretaries, eight Chancellors, seven Defence Secretaries and 6 Prime Ministers. Does the Chancellor agree that such instability has acted as a break on growth in this country and can she set out what she plans to do to reverse that trend?

[Rachel Reeves]

In the first quarter of this year we were the fastest growing economy in the G7. Since I became Chancellor, we have had growth of 2.3%, which is the second fastest rate of growth in the G7. We are growing our economy by bringing investment and stability back to the UK, and businesses are following our lead by investing in our country.

[Mark Sewards (Leeds South West and Morley) (Lab)]

T7. Last week, the Chancellor announced the biggest insourcing of Government caterers, cleaners and security officers that we have seen in a very long time, when the current contract ends. Does she agree that that move will finally recognise workers who have been undervalued and under-appreciated for far too long?

[Rachel Reeves]

When we were in opposition, I promised the biggest wave of insourcing in a generation, and we are now working in government to deliver exactly that. The Government Property Agency contract that expires in 2028 will come back in house, so people working at around 40 locations across government in London and around the country will find that instead of being employed by an outsourcing company, they will be employed directly by the Government. They will have the same terms and conditions as other civil servants, making a huge difference to them and their families.

[Robin Swann (South Antrim) (UUP)]

In an earlier answer, the Minister ruled out a VAT reduction for hospitality businesses across the United Kingdom. Will he at least meet me, Hospitality Ulster and the Northern Ireland Food to Go Association to discuss the concept of a Northern Ireland-specific pilot?

--- Later in debate ---

[David Burton-Sampson (Southend West and Leigh) (Lab)]

T10. The Tory Government squandered billions of pounds of public money on covid fraud, waste and corruption. Will the Chancellor tell the House what measures she is taking to address this issue on behalf of taxpayers?

[Rachel Reeves]

Today the Government have responded to the covid counter-fraud commissioner’s recommendations in a report that I commissioned, which confirms that the Conservative Government left the door open to more than £10 billion of pandemic fraud. That is money that could have gone into our NHS and our schools, and we have acted in the last two years to claw it back. Today we set out how we will go even further, launching a powerful new public authorities fraud investigation and enforcement service, with new powers to ensure that we get that money back directly from fraudsters’ bank accounts. Nearly 2,000 directors have been disqualified and 86 criminals have been prosecuted in actions that will bring more money back to the public purse. I want those who have defrauded the taxpayer to know: there is nowhere to hide; we are coming after you; you will pay that money back.

Middle East: Economic Response

Rachel Reeves Excerpts

Thursday 21st May 2026 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

Thank you very much, Madam Deputy Speaker. With permission, 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.

The Government have 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

“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 faster than expected in April, making the UK the only G7 economy where inflation fell last month.

We have the right economic plan, but the conflict in the middle east poses a significant challenge to the world’s 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 I made in last year’s Budget to cut £150 from 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 the design of potential future targeted and temporary support.

For businesses, any support will also need to be carefully targeted at the firms most exposed to the crisis, but although many firms have been insulated from recent price 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 industries through the British industry competitiveness scheme, which we have brought forward. It is also why we have built resilience in our critical infrastructure and industrial strategy sectors, where supply chains are critical for growth and security.

Following representations from my right hon. Friend the Member for Redcar (Anna Turley) and my hon. Friends the Members for Mid Cheshire (Andrew Cooper) and for Bathgate and Linlithgow (Kirsteen Sullivan), and building on the good work of the Minister for Industry, my hon. Friend the Member for Stockton North (Chris McDonald), I am today establishing a £350 million critical chemicals resilience fund to support strategically important producers. Having listened to hon. Friends, including my hon. Friends the Members for Stoke-on-Trent Central (Gareth Snell), for Stoke-on-Trent North (David Williams), for Stoke-on-Trent South (Dr Gardner) and for Amber Valley (Linsey Farnsworth), as well as workers represented by the GMB union, I am today announcing a new £120 million fund to help our historic ceramics sector, helping it to increase efficiency and drive down energy costs. We will always stand up for British industry and British jobs.

This week, the Government have also set out additional, targeted support for those businesses most exposed to rising fuel costs. We are granting hauliers a 12-month road tax holiday for heavy goods vehicles, 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 hon. Friend the Member for Oldham West, Chadderton and Royton (Jim McMahon) and the trade union Unison, I can today announce a 10p per mile increase in tax-free mileage rates, backdated to April 2026. This will benefit those who need to drive for work, from care workers to plumbers.

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 prices. 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 that 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.

I know the pressure that family finances are under, which is why I have already taken action to provide help. I have increased the national living wage and the national minimum wage to their highest rates ever, frozen prescription charges for two years in a row, and frozen rail fares for the first time in 30 years. I have also taken £150 off energy bills, which contributed to last month’s fall in inflation. However, I want to go further, and today I am taking further action to ease the burden on family finances.

First, on fuel duty, I have already extended the 5p cut twice since the election. 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.

Secondly, I know that the cost of the weekly shop is often one of the biggest worries for families, so last month I met supermarkets to urge them to do all they can to keep prices low. Today I am taking action by suspending tariffs on over 100 different foods sold in supermarkets. I am clear that I expect supermarkets to pass those savings on in full to their customers.

Thirdly, I will not tolerate any company exploiting the current situation to make excess profits at consumers’ expense. As such, 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.

Fourthly, for many families, driving is not always an option. Buses are the most popular form of public transport in Britain, with over 4 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 five and 15 throughout August.

Finally, 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 to support our hospitality sector. 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 also cut the cost of children’s meals in restaurants and cafés from 20% VAT to 5%. These changes will apply across the UK from the start of the Scottish school holidays on 25 June and will run until the end of the school holidays in England, Wales and Northern Ireland on 1 September.

This Government have the right economic plan. We promised to grow the economy, and we have. We promised to cut inflation, and we have. We promised to cut the cost of living, and we are—promises made by a Labour Government, promises delivered by a Labour Government. I commend this statement to the House.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Chancellor.

[Sir Mel Stride (Central Devon) (Con)]

I thank the Chancellor for advance sight of her statement—although the press, of course, got even more advanced sight of it.

The decision taken to cancel the increase in fuel duty is welcome—it has been a long time coming. The Conservative party has been campaigning against the fuel duty rise for months, but the Chancellor has defended that policy repeatedly, leaving motorists and businesses worried about even higher fuel prices in September. It was always obvious that the fuel duty increase would need to be cancelled—obvious to everyone except the Chancellor. Why did she fight us on fuel duty for so long? Why has she been so hellbent on raising fuel duty during an energy crisis?

Well, the inevitable U-turn has finally come, but it is astonishing to hear the Chancellor claiming that the Government can afford to help households because the forecasts have improved. Is she seriously suggesting that the economic outlook is now better than at the time of the last fiscal forecasts when we have had the Iran conflict, to which our economy is highly exposed thanks to this Government’s ruinous choices? The Chancellor has just pointed to the IMF forecast being upgraded this week. Let us be very clear about what is going on here: the IMF adjusted its growth forecast for this year up slightly to 1%, but until April it was forecasting 1.3%. Where exactly is the supposed growth dividend? Will the Chancellor directly address that point?

This is exactly the same game that the Government played last year when they U-turned on cuts to the winter fuel payment. They claimed then that they were U-turning because the economy was improving when, of course, they were doing it due to political pressure. Nobody bought it then and nobody is buying it now. Once again, we have a weak Government caving in to the inevitable after spending months defending a truly terrible decision.

The Chancellor claims that the measures announced today will be funded by a number of different tax measures, but most of the ones she mentions are already in place and baked into the OBR’s forecasts. Given that the Chancellor has not announced any measures to control Government spending, will she confirm that, in fact, the measures that she is announcing today will be funded, at least in part, by yet more Government borrowing? Will she also confirm whether fuel duty rates will still rise to the same level as previously planned after December, or will today’s announcement mean a permanent reduction in fuel duty?

Although we in the Opposition welcome some of the measures that the Chancellor has taken today, such as the increase in mileage allowances, it is all very minor compared with the inflation this Government have fuelled since coming into office and the tax rises that the Chancellor has imposed. Today’s announcements will bring little comfort to the hundreds of thousands of people who have lost their jobs, the countless businesses that have folded and the high streets that are now hollowed out. The reality is that we are in a terrible position to deal with the consequences of the latest energy crisis, thanks to the actions that this Government have taken.

The Chancellor claimed that growth is up; it is actually down. She claimed that borrowing is down; it is 75% up compared with the plans that she inherited. She claimed that she is fighting inflation; we have the highest inflation in the G7. She claimed that she is cutting energy bills; energy bills have gone up under this Labour Government. And of course, she did not mention unemployment.

On energy, this Government have made a conscious decision not to exploit our own natural resources in the North sea, weakening our economy and our energy security while importing oil from Putin’s Russia at the cost of Ukrainian lives. Families and businesses are facing rising costs and rising taxes. People are losing their jobs. The country is hurting. If the Chancellor were serious about the challenges we face, she would commit to getting spending down, tackling the benefits bill and getting taxes down to strengthen our economy. Yet thanks to the Chancellor’s mistakes and the weakness of this dying Government, today’s statement is all we get. Does the Chancellor really think that that is enough?

[Rachel Reeves]

Let me take the issues that the shadow Chancellor has raised. On fuel duty, when I became Chancellor of the Exchequer, the freeze in fuel duty was due to expire, under the plan set out in the Conservatives’ final Budget, within a matter of months. I have frozen fuel duty twice already and I have frozen it again today; indeed, I have frozen it with more than three months to go before the increase was due to happen, giving people plenty of time.

I have always said, since the middle east conflict began, that I would keep an eye on what was happening to oil and gas prices and set out plans ahead of the change due to come into effect in September. That is exactly what I have done. I have also gone further in three specific areas, with additional support for hauliers, additional support for red diesel—particularly helping the rail freight industry and farmers—and the higher mileage rates. The shadow chancellor says he welcomes the changes on mileage rates. It is the first time they have been increased since 2011, so if he welcomes them so much, why did the Conservatives not increase them when they had 14 years in government?

On the Iran conflict, let us remember that this is a war that the UK did not start and this Government chose not to join, whereas the Conservatives and Reform were cheering on the conflict every step of the way. The impact on the UK and global economies would be much more severe if we had heeded the pleas of Reform and the Conservatives to join that conflict.

The shadow Chancellor talks about inflation and growth. Yesterday, the numbers showed that inflation had fallen; we are the only country in the G7 where inflation fell last month. The IMF has revised up our growth forecast and we had the fastest growth of the G7 in the first quarter of this year. The shadow Chancellor asks whether that will be paid for with new borrowing. No, it will not. If he had been listening, he would have heard the changes we are making around the foreign branch exemption. That will raise hundreds of millions of pounds a year, which is why we are able to afford the package that we have announced today.

The shadow Chancellor mentioned high streets. Because of the Pride in Place money that I announced at the Budget, the banking hubs and the changes that we made to business rates, which have seen those rates for retail and hospitality come down significantly compared with the plans we inherited from the Conservative Government, we can reinvigorate our high streets.

The shadow Chancellor mentioned borrowing. Borrowing has fallen below 5% for the first time since 2019 because of the actions that I have taken as Chancellor. Borrowing is expected to fall in every year of this Parliament—very different from what happened under the Conservatives. Employment and activity remain in the top half of the OECD and the G7. The biggest benefits boom came under the last Conservative Government, when the shadow Chancellor was the Work and Pensions Secretary.

Oil and gas will play an important role in our economy for many years to come, but we also need to invest in renewable energy, which is why we announced yesterday restrictions in the number of judicial reviews, which are holding up investment in clean energy. It is a shame that the Conservatives voted against our Planning and Infrastructure Act 2025 and it is a shame that the Liberal Democrats abstained on it. We are determined to get Britain building, including building the energy infrastructure we need to get bills down.

Just a couple of weeks ago, I announced changes around tie-backs to make it easier for oil and gas companies to exploit their reserves of oil and gas in the North sea. Jackdaw and Rosebank would have gone ahead if it had not been for the last Government messing up the way they legislated. We will shortly announce the decisions, which the Secretary of State for Energy and Net Zero will make. I am very clear that oil and gas will play an important role in the UK for many years to come, adding to our energy security alongside investment in nuclear, small modular reactors, floating offshore wind and onshore wind and solar, opposed by the Conservative party.

[Madam Deputy Speaker (Judith Cummins)]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It never fails to amaze me that the shadow Chancellor tries to lecture this Government on inflation when many of us were here in September 2022 when the Conservative party crashed the economy. I welcome my right hon. Friend’s interventions. I am particularly interested in the cut in VAT in the leisure sector, and I hope that she will commission a full study from the Exchequer Secretary to the Treasury about the impact, because it could be a great way to fuel, promote and keep our stretched leisure and hospitality sector going. Will she commit to that?

[Rachel Reeves]

I agree with my hon. Friend that we will take no lessons from the Conservatives on inflation, when it reached more than 11% when they were last in office. On VAT in the leisure sector, we are making the changes from 25 June right until 1 September to help boost the hospitality sector but also, crucially, to help families during the summer. Our expectation is that this will cost taxpayers money, but it is funded through the changes that we are making around the foreign branch exemption, so companies cannot book losses overseas to avoid paying their fair share of corporation tax here in Britain.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I feel as though we are slightly through the looking glass. For six months, we Liberal Democrats have been calling for an emergency temporary VAT cut for hospitality, leisure and attractions, and our pledge was fully funded. For weeks, we have been calling for an emergency transport package, fully funded using the additional revenue from higher VAT rates and the EPL. All that time, we were told repeatedly that it was impossible to do those things and there was no additional money. Somehow, with the prospect of a by-election in Makerfield and the Prime Minister’s political life being on the line, the money has been found.

Let me ask the Chancellor two questions. First, I genuinely welcome the Government’s focus on the cost of food, which is of huge concern to the constituents of Members of all political parties. However, is there any risk that short-term gain might result in long-term pain? In looking at the tariffs, has the Chancellor had any conversations with the food manufacturing industry about whether it can remain competitive? Does removing the tariffs inadvertently risk undermining our food manufacturing sector? If there is a risk, will she look at our plans for a good food Bill and for promoting nature-friendly farming? I ask that question in the spirit of constructive opposition.

Secondly, the Chancellor and her Ministers will know that we are due to have a very hot summer. That means huge demand for outdoor attractions, because children will want to be outside in the hot weather. Indoor attractions, such as soft play centres, will not benefit so much, because there will not be much demand for them in the summer months, but there will be in the winter months. Will the Chancellor look carefully at the differences within the sector? Children are priced out of play when they need to go indoors in the winter months, but not so much in the summer months.

[Rachel Reeves]

I thank the hon. Lady for those questions. I am not sure whether she welcomes the changes around the foreign branch exemption, which is what will pay for the policies announced today by ensuring that companies pay their fair share of tax in the UK. Unless we can say where the money will come from, all that results is higher inflation and interest rates in the future. That is why I have always been clear that everything I will announce will be fully costed and fully funded.

On food, the hon. Lady cannot both say that she welcomes help with the cost of living, and then be a bit uncertain about tariff reductions. We have focused the tariff reductions on food products and agrifoods that we do not produce in significant quantities in the UK. We work very closely with the Department for Business and Trade in identifying those sectors.

On indoor and outdoor summer activities, I have had enough family holidays in the UK to know that there are plenty of days when it rains. I am sure that the leader of the Liberal Democrats, the right hon. Member for Kingston and Surbiton (Ed Davey), will be visiting a soft play centre soon.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I declare an interest as chair of the all-party group on ceramics. I thank the Chancellor for today’s announcement, and the Secretary of State for Business and Trade and the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Stockton North (Chris McDonald) for their support. This is a big step towards support for a sector that offers so much to this country. I thank Sharon Yates and Finbar Bowie from the GMB, as well as Rob Flello and Hannah Ault from Ceramics UK, for their leadership in this matter.

May I extract from the Chancellor a commitment that this is the next stage of a new partnership between the UK Government and UK ceramics? Today’s announcement will absolutely help us survive, but with more working together, we can thrive as a sector and do our bit to boost exports, boost growth and create well-paid, unionised jobs in this country.

[Rachel Reeves]

I pay genuine tribute to my hon. Friend for his work on behalf of businesses and working people in his constituency, to the other Stoke MPs, and to my hon. Friends the Members for Newcastle-under-Lyme (Adam Jogee) and for Amber Valley (Linsey Farnsworth). They have made the case powerfully and convincingly. I absolutely commit to working with Ceramics UK, the GMB, the MPs and the wider sector to ensure that the ceramics industry thrives in the UK.

[Stuart Anderson (South Shropshire) (Con)]

On tariffs, I want to explore what the Chancellor said about “significant quantities”, because a significant quantity for a supermarket can be of a completely different scale from a significant quantity for a small South Shropshire farmer. Will the Chancellor guarantee that no South Shropshire farmers will be undercut by the measures on tariffs, and that none of the supermarkets will pass on the cost cuts to British farmers?

[Rachel Reeves]

It is important that we help our constituents with the cost of living. The tariff reductions that I have announced today will save the British shopper £700 million. That is a significant reduction in the cost of the weekly shop for families across our country. We have chosen the tariff lines carefully. The full details will be published, and we will consult over the next week or two to ensure that we get them exactly right, but we have worked hard to make sure that the reductions do not affect British farmers. That is why we are also helping British farmers with the changes we have made on red diesel.

[John Grady (Glasgow East) (Lab)]

I welcome my right hon. Friend’s statement, which is great news for the cafés and restaurants in my constituency, of which there are many, and for the very many showmen and women who run Scotland’s and Britain’s great fairs. I note that the Conservative party objects to all this, but it is the Conservative party that left us with debt to GDP of almost 100%. There is nothing progressive in running debt levels like that, and the Chancellor is right to focus on paying that debt off.

Many of my Glasgow East constituents rely on cars and vans to get to work and do their work. They face extortionate charging for parking in town from the SNP council, which is utterly anti-car, and regular bills for repairing their cars and vans from all the potholes. Will my right hon. Friend set out how she is helping hard-pressed car and van drivers in Glasgow?

[Rachel Reeves]

My hon. Friend is absolutely right that there is nothing progressive about piling up the debt that future generations will have to pay; that is why our fiscal rules are getting the debt and deficit down while enabling us to invest in our country’s infrastructure and public services. On helping people with the cost of driving, we have frozen fuel duty until the end of this year, but recognising that some people rely on their cars and vans more than others, we have also taken off the HGV tax for this year, saving HGV drivers up to just over £900 a year, and cut the duty on red diesel by more than a third. We have also increased the tax-free mileage rates to help the employed and the self-employed with the cost of fuel.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The announcement on red diesel will be welcomed by my farming constituents, who will await the details on the tariffs the Chancellor has cited with a great deal of interest and a certain amount of trepidation. Does she acknowledge that a third of the world’s fertilisers pass through the strait of Hormuz, and that the increase in the price of fertiliser is bound to have an impact on British agriculture and therefore on prices in the shops? What will she do to relieve some of that—in some cases existential—pressure on farms in the United Kingdom?

[Rachel Reeves]

I thank the right hon. Gentleman for that question. I urge him and businesses and farmers in his constituency to look at the list of products and feed into the consultation over the next week or so. We are keen to bring the tariff reductions into effect to reduce prices in shops for all our constituents, but we want to do so in a way that is respectful of British farming. That is why we have chosen the tariff lines that we have. As he recognises, we are doing more to support farmers with the reduction in duty on red diesel.

The best way, though, that we can help all our constituents, the farming sector and others is to bring the conflict to an end and reopen the strait of Hormuz. That is why the Prime Minister and Foreign Secretary are working intensively with international partners to do just that, while at the same time we are working to diversify our supply of oil and gas so that fertiliser, to which the right hon. Gentleman rightly refers, is still available for our farmers.

[Linsey Farnsworth (Amber Valley) (Lab)]

I thank the Chancellor honestly for her statement. As she has mentioned, and as many Members of this House will be aware, I have been campaigning hard for the ceramics sector with a view to saving Denby Pottery. I thank the Ministers in the Treasury and the Department for Business and Trade for their ongoing engagement through the many meetings we have had on this. I am delighted to hear about the £120 million support package. It is a clear indication that the Government are supporting and backing UK ceramics, and it will make Denby Pottery a more attractive prospect for any potential investors. Given the circumstances currently facing Denby Pottery, can the Chancellor commit to ensuring that the funding is available as soon as possible, in the hope that Denby can be saved?

[Rachel Reeves]

I thank my hon. Friend for the work she does on behalf of all her constituents, particularly those impacted by what is happening at Denby. It was my privilege to come to Amber Valley with her last year to meet businesses across her constituency. We are backing UK ceramics. We want to find a future for Denby, and we will continue to work with my hon. Friend to achieve just that.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I remind the House of my entry in the Register of Members’ Financial Interests. Last year, suckler beef farmers in my constituency were getting paid £7.30 per kilo for their finished product on the hook. Yesterday that was down to £5.75, and it is still falling. The price paid to dairy farmers for their milk is through the floor. Arable farmers are struggling after two catastrophically bad harvests. The red diesel duty cut is welcome, but it will not help farmers who are struggling with rocketing fertiliser prices or, indeed, those who are required to heat glasshouses. Opening the door ever wider to food imports risks undermining domestic food production. If food security genuinely is national security, surely our food producers and manufacturers should have access to the same support as other critical sectors. Will the Chancellor look again at adding food and drink to the Government’s industrial strategy, so that they can access the same support as other sectors?

[Rachel Reeves]

I know that, as Chair of the Environment, Food and Rural Affairs Committee, the right hon. Gentleman will play a key role in scrutinising what the Government are doing. The reduction of more than a third in the rate of duty on red diesel will have an immediate and important impact on the costs for farmers. I also appreciate the fact that his party, like the Government, did not support the conflict in the middle east and recognised that it was a mistake that would have an impact on businesses here at home. That is why we are doing everything within our power to reopen the strait of Hormuz, to ease these pressures on consumers and businesses, including farmers, but also in the meantime to diversify supply and open up new refining facilities in the UK, to help businesses, including farmers, during these challenging times.

[Dr Allison Gardner (Stoke-on-Trent South) (Lab)]

The Potteries welcome this statement. I have been working with local companies, the TUC, GMB and research organisations to develop proposals to support the ceramics industry to innovate, improve energy efficiency and decarbonise. I have previously called on the Government to release an industrial energy innovation fund for energy-intensive industries, with Government grants to explore process efficiency and new technologies, as well as vouchers to access shared pilot facilities. Could the Chancellor clarify whether part of the £120 million of funding announced today could be used by ceramics companies to access and invest in innovations such as AI-enabled process optimisation and energy technologies, to help reduce energy bills?

[Rachel Reeves]

I thank my hon. Friend and all the MPs involved in helping to put together this scheme of support for ceramics. Like her, I welcome the work of the TUC and GMB in this. Innovation and ensuring that the industry is sustainable and competitive for the future is absolutely essential. This is not just a sticking-plaster policy; it is about setting up the industry for the future, including investment in innovation and R&D and also the diversification of energy supplies.

[Kirsty Blackman (Aberdeen North) (SNP)]

The UK is losing 1,000 oil and gas jobs a month. The Chancellor is aware of that, and we have made it very clear to her that we are keen to move to the oil and gas price mechanism as soon as possible—we urge her to do that. On the foreign branch profits announcement today, have the Government modelled the job losses that may occur as a result of this change in the oil and gas taxation regime? Can she tell the House how many jobs might be lost as a result?

[Rachel Reeves]

As I have said in previous answers, I recognise the role of oil and gas in the UK and its importance to the UK for many years to come, which is why we have changed the rules around tiebacks and put in place a permanent mechanism for taxing windfall profits. But the hon. Lady has to answer the question: are she and her party in favour of the foreign branch profits exemption or not? If not, they cannot back the support we are giving today to help people with the cost of living and the support we are giving for ceramics. This exemption means that we are moving in line with how other countries treat foreign profits. At the moment, we have the absurd situation where losses overseas can mean that businesses avoid paying their fair share of corporation tax in the UK. This moves us in line with what other countries do. It is closing a tax loophole, and the hon. Lady and the Conservatives should welcome that.

[David Williams (Stoke-on-Trent North) (Lab)]

What a day to be a Stokie! As the Chancellor knows, my mum proudly worked in the pot banks of Tunstall and Burslem, and 10 weeks ago I asked the Prime Minister in this place what support the Government could offer our ceramic sector. The good news is that my mum is watching again right now at home, and she is clearly happy, because I have had a three-word text from her: “Nice one, duck.” How will we make sure the £120 million support package benefits ceramics companies of every size—from our Moorcrofts to our Moorlands, from our Steelites to our Churchills—so that we protect jobs, skills and the future of our economy?

[Rachel Reeves]

I thank my hon. Friend for that question, and I say to Mrs Williams and all those who work in the ceramics sector: I am proud to be the Chancellor who is backing British industry and British jobs.

[Ben Obese-Jecty (Huntingdon) (Con)]

Back in March, the Chancellor announced the £50 million crisis and resilience fund to help families with the price of heating oil, which is a big issue in rural constituencies such as mine. Does she have any plans to extend or repeat that scheme come the autumn, given that we are likely to have a similar crisis with the strait of Hormuz still shut? To what extent will the Russian oil that will come via a third country under commodity code 2710 form part of the fuel mix?

[Rachel Reeves]

Yesterday, we introduced the toughest set of sanctions on Russia that this country has ever had, but like the previous Government, we are phasing those in so that they do not have a disproportionate impact on industry here in the UK. That is what the previous Government did, and that is what we are doing as well.

The hon. Gentleman mentions support for people with the cost of heating oil. We were pleased to be able to introduce targeted support in areas that are particularly dependent on heating oil. We are doing a piece of work at the moment to see how much money has been used by local authorities—some have been more proactive than others in ensuring that local residents get support—and once we have completed that, we will look at whether and what further support is needed.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

I welcome the statement and the action that those of us in ceramic communities have been calling for, and I thank the Chancellor for announcing it. This is a good day for all of us in north Staffordshire. As it happens, staff from a ceramics business based in Newcastle-under-Lyme are sitting in the Gallery watching this statement; I welcome them. Can the Chancellor assure us of two things: first, that the eligibility for the support in this scheme will be as wide as possible, and secondly, that it will be as easy as possible to apply for?

[Rachel Reeves]

I am pleased to know that staff from a business in the ceramics sector in Newcastle-under-Lyme are here today, and I say to them directly: this Government have got your back and want to work with you and the trade unions that represent people in the sector to ensure that the ceramics industry plays an important part in British life—particularly in the pottery communities —for many years to come. Of course, we will set out the details of the scheme, but like my hon. Friends who represent these communities in Stoke, Newcastle and Amber Valley, this Government are very keen to crack on with the scheme and make sure that businesses can get the support they deserve.

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

Will the Chancellor expand on her discussions with the supermarkets and their role in keeping prices down? When the supermarkets make special offers or reduce prices, there is always a concern that rather than absorbing the costs themselves, they pass them on directly to farmers and their suppliers, who are not in a position to absorb them because of their fixed production costs.

[Rachel Reeves]

The right hon. Gentleman makes a really important point. Today I have set out a number of measures that will directly help the supermarkets to reduce their costs, and it is really important that those cost reductions are passed on directly to consumers. Reducing the cost of running an HGV will have a direct impact on our supermarkets, and reducing tariffs will have a direct impact on costs for our supermarkets. The trade deal that we are looking to do with the EU to reduce the costs of importing exporting food from the EU will also have a direct impact on costs for supermarkets. I say to the supermarkets: those cost reductions must be passed on directly to consumers, who are struggling with the cost of living, given the conflict in the middle east.

[Adam Thompson (Erewash) (Lab)]

I thank the Chancellor for her statement, and particularly her VAT cut on theme park tickets. I invite her and all hon. Members to join me on my annual trip to Alton Towers this summer. Erewash has many great summer events for families to enjoy, such as Long Eaton carnival, the classic car show and the Glow festival in Ilkeston, but entertaining kids during the summer months can be daunting and expensive for parents. Can the Chancellor please elaborate on how the measures that she is announcing today will support Erewash families and boost great community events?

[Rachel Reeves]

My only worry with this package is that it will mean children badgering their parents even more for days out over the summer—I slightly worry about what I have unleashed in my own household. I am pleased to announce today that trips to Alton Towers and other activities, whether it be soft play, funfairs, zoos or museums—if many kids want to go to them; not mine probably, sadly—will be cheaper this summer because of the action that this Government are taking.

[Robert Jenrick (Newark) (Reform)]

The Chancellor’s approach to the cost of living crisis is to find small ways to subsidise people’s costs, but is not the best solution to build a strong, abundant economy by doing the hard yards of supply side reform? In that economy, there would be better jobs and higher wages, people would be richer and the state would have less bearing on their lives, yet under the Chancellor, the benefits bill is ballooning, unemployment is rising, particularly among the young, and taxes are at their highest ever level. In the spirit of giving people some relief today, will the Chancellor confirm—assuming that she intends to stay in office for the rest of this Parliament—that she will not be increasing taxes on working people at all for the rest of this Parliament?

[Rachel Reeves]

I will take absolutely no lessons from the man who was part of a party that took our economy to its knees—inflation at 11%, working people worse off at the end of the last Parliament than they were at the beginning, and the worst Parliament ever for living standards—or from a party that has opposed all our reforms to make it easier to get things built in Britain, to increase the wages of working people with the national living wage and the national minimum wage, and to increase the rights of working people, including through statutory sick pay from day one and by ending abusive zero-hours contracts. If we want a lesson on economics, I certainly will not be taking it from the Reform party.

[Josh Newbury (Cannock Chase) (Lab)]

The Chancellor’s announcement of a £120 million support package for ceramics will of course be welcomed in Stoke-on-Trent, but also in Rugeley in my constituency, which is home to many workers at the Armitage Shanks factory in the constituency of my hon. Friend the Member for Lichfield (Dave Robertson), who is a staunch advocate for them. Does the Chancellor agree that it is only this Labour Government who are putting in the investment that firms such as Armitage Shanks need? Does she also agree that iconic British brands like this should play a central role in new homes, to boost them even further?

[Rachel Reeves]

I thank my hon. Friend for that question. I am pleased that people in Rugeley and people working for Armitage Shanks will also benefit from this investment. The £120 million to support our ceramics sector is a clear indication of this Government’s intention to back British jobs and British industry.

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

Although I welcome some of the measures announced today, the reality is that instability in the middle east is having a direct impact on the UK economy and on the price paid by British households. Can the Chancellor therefore outline what steps her Department is taking to work across Government to ensure a stable region, including by boosting our defence spending? Will she finally commit to spending 3% of GDP in this Parliament and to working collaboratively towards reopening the strait of Hormuz?

[Rachel Reeves]

I do think it is a little rich for Conservative Members to talk about the instability from the middle east conflict—a conflict that they wanted Britain to join in from day one, but which our Prime Minister made the decision to keep Britain out of, because that war was a mistake and it is having an impact on British businesses and British families. I am proud to be the Chancellor who has overseen the biggest uplift in defence spending since the end of the cold war. We are spending £270 billion during this Parliament, taking spending to 2.6% by April next year. The Conservatives said they would get to 2.5% by the end of this Parliament. They had no paid-for plans to do so; we are achieving it three years early.

[Naz Shah (Bradford West) (Lab)]

May I congratulate the Chancellor on the very welcome announcement that she has made? For people in Bradford West, the Great British summer savings scheme will go down an absolute treat. Does she agree that it will also benefit the hospitality industry, which has been struggling for years in my constituency and across the country?

[Rachel Reeves]

We all listened to my hon. Friend’s response to the King’s Speech last week, when we heard about the great restaurants in Bradford. I am pleased to say that VAT on children’s meals in those restaurants will fall from 20% to 5%, so all hon. Members who are looking forward to a curry in Bradford can enjoy one at Mumtaz, Aagrah and all the other great restaurants in her city.

[Dr Ellie Chowns (North Herefordshire) (Green)]

I would like to start with the positive. I know that care workers in my constituency of North Herefordshire will really welcome the increase in mileage rates, and I welcome the measures that the Chancellor has announced that seem to be starting to tackle profit shifting, which is a key problem related to tax avoidance.

Does the Chancellor not recognise, however, that struggling families need help year round, not just short-term sticking plasters in the summer holidays? The Green party is calling for free bus travel for everybody under 22, year round. We are calling for free school meals for all children, to help all families year round. The cost of living crisis requires year-round action. This could be funded easily by taxing wealth fairly. Will she take that year-round bold action to tackle the cost of living crisis properly?

[Rachel Reeves]

I thank the hon. Lady for that question and for her welcome of the changes to mileage rates and the measures on profit shifting. Obviously not all parties in the House welcome them, so I appreciate the fact that hers does, but we are helping working people. The Renters’ Rights Act 2025 is the biggest upgrade in the rights of renters in a generation; the Employment Rights Act 2025 is the biggest upgrade in the rights of working people for a generation. We have taken the national living wage and the national minimum wage to their highest ever levels. For working families, the 30 hours of childcare, free breakfast clubs, the extension of free school meals and getting rid of the two-child limit are all putting money in the pockets of working people. The measures that I have set out in my statement today on bus fares, fuel duties, VAT and hospitality, and more, will give further help, both in Herefordshire and around the country.

[Dave Robertson (Lichfield) (Lab)]

The announcement today of the £120 million fund to support the UK ceramics industry will be so welcome in my part of Staffordshire. Armitage Shanks is often not spoken of in the same breath as ceramics—partly because of the excellent advocacy of the Stokies and my hon. Friends the Members for Newcastle-under-Lyme (Adam Jogee) and for Amber Valley (Linsey Farnsworth)—but ceramics goes much further than flatware. The sanitary ware that comes out of Armitage Shanks is world class, but it is much, much more than that. It is the identity of that village, and it is an iconic British brand. The Chancellor’s support for Armitage Shanks and the rest of the ceramics industry will go down so well, not just with those workers and the GMB workers who are part of that factory, but with my community, so may I thank the Chancellor for her intervention?

[Rachel Reeves]

My hon. Friend is right that ceramics have a life in many parts of our economy, not just in great heritage businesses like Denby, which produces plates and other ceramics, but in sectors like defence and aerospace, where ceramics are crucial. That is why I am pleased to back them further with the £120 million package announced today.

[Joe Robertson (Isle of Wight East) (Con)]

The conflict in the middle east is not the Chancellor’s fault, but she has chosen this time to make it more expensive for my constituents to take a car from Fishbourne on the Isle of Wight to Portsmouth. Will she do the right thing and scrap the emissions trading scheme levy that she intends to introduce in July this year? It should not only be Scottish islands that are exempt.

[Rachel Reeves]

The measures that I have announced today will help people on the Isle of Wight. We have frozen fuel duty for the third time—in comparison, the plans that we inherited from the previous Government would have seen fuel duty go up—we are helping farmers with the cost of red diesel, we are helping the rail freight sector and we are supporting HGV drivers. Many people go to the Isle of Wight on their summer holidays and enjoy wonderful days out, and the cost of that will also be reduced, helping that sector in the Isle of Wight this summer.

[Jim McMahon (Oldham West, Chadderton and Royton) (Lab/Co-op)]

I thank the Chancellor for her important statement, not least because the previous Government failed to act on HMRC mileage rates for the 14 years that they were in power, watching as motoring costs went up year after year but doing absolutely nothing for the self-employed and frontline workers, like home care workers. It shows the power of a union like Unison, and it shows that we have a Chancellor who is willing to take the action needed to support working people. Ahead of the Fuller review, will the backdating of these measures support both the self-employed and employed workers alike?

[Rachel Reeves]

I pay tribute to my hon. Friend, who raised this issue in Treasury questions just a few weeks ago. I committed then to looking at this ahead of the next Budget, but given the ongoing conflict in the middle east, I thought it was right to bring those changes forward and increase the mileage rate for the first time since 2011. I assure him, home care workers, plumbers and all those who use their car for work that we will increase the mileage rate by 10p, backdated to April 2026, for employed and self-employed workers alike.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr iawn, Dirprwy Lefarydd. People are very aware that President Trump’s war with Iran is worsening the cost of living, but there are long-term measures within the gift of the Government that could improve heating costs for households. In north Wales and Merseyside, we pay the equivalent of £255 a year on standing charges, compared with £160 in London. When will the Chancellor address the structural inequality in heating costs?

[Rachel Reeves]

In the Budget last year, I reduced energy bills by £150, and just a few weeks ago, I put in additional money to help people with the cost of heating oil. The issue around standing charges and those allocations is for the Department for Energy Security and Net Zero, but I will pass on the right hon. Lady’s concerns to the relevant Ministers.

[Leigh Ingham (Stafford) (Lab)]

I thank the Chancellor for her statement, which is welcome for those of us who are serious about buying British, building British and backing British. Will she say a little more about how she believes the measures will help the British brickmaking sector, a subject that I know Madam Deputy Speaker will also be interested to hear about?

[Rachel Reeves]

I thank my hon. Friend for her question and for always standing up for the people of Stafford, whether by supporting bringing a market back to the town or supporting the brickmaking sector. This Government are investing £120 billion more in capital spending during this Parliament, compared with the plans that I inherited from the previous Government. I am determined that that money is spent here in Britain—whether on defence, energy, transport or building schools and hospitals—creating good jobs, paying decent wages, supporting British industry and supporting British workers.

[Sarah Bool (South Northamptonshire) (Con)]

Food inflation is forecast by the Food and Drink Federation to reach at least 9% by the end of this year. Energy costs are driving up food inflation, as are a lot of the other anti-business policies put forward by this Government, including not incorporating food manufacturing in the industrial strategy. When will the Chancellor realise that announcing things like capping supermarket food prices is just like flower arranging while the roots of the flower are dying?

--- Later in debate ---

[Rachel Reeves]

The hon. Lady says that we should extend the industrial strategy, but the previous Government did not even have an industrial strategy. I would say that a £700 million tariff reduction is not exactly fiddling at the margins; supermarkets should pass on those cost savings directly to consumers to help all our constituents with the cost of living.

[Clive Efford (Eltham and Chislehurst) (Lab)]

I congratulate the Chancellor on her summer package of savings for families—it will give relief to those families who have booked domestic holidays, and a welcome boost to our domestic leisure and entertainment industries—but will she say a little bit more about how we intend to pass on the savings made by her tariff cuts through supermarkets? Too often, they have taken a cut and a slice off the reduced cost to them, so how do we ensure that all the savings get passed on to our constituents?

[Rachel Reeves]

I remember that, when I was young, I used to enjoy visits to Chislehurst Caves and Eltham Palace, and I hope they will be able to benefit from the changes I have announced today. It is important that we ensure that supermarkets pass on these cost reductions to their customers. We are also making changes to HGV duty, which will reduce costs for supermarkets. It is important that Supermarkets recognise the pressure that their customers are under at the moment. We have provided additional powers to the Competition and Markets Authority to ensure that no business, whatever its size or nature, takes advantage of the conflict in the middle east to hike prices for their customers.

[Jeremy Corbyn (Islington North) (Ind)]

Youth unemployment is now at 5%. On current form, it will rise to 5.8% by next year, which will mean a very large number of young people without work. What actions can the Chancellor take to ensure that young people get access to jobs and careers, and do not have the deeply depressing experience of being unemployed when they leave school, college or university? A disproportionate number of young people rent in the private rental sector, so will she also do something about bringing in much needed rent regulation in the private rental sector?

[Rachel Reeves]

We have already increased the number of apprenticeships, and changes to the growth and skills levy mean that young people do not always have to have maths and English at grades A to C to get on to an apprenticeship programme. We have also introduced shorter apprenticeships to help young people to get the skills they need. On private rent, the right hon. Gentleman might have seen the changes that we made through the Renters’ Rights Act 2026, which gives renters the greatest rights they have had in a generation, including the right to challenge a rent increase and to have only one rent increase a year. If someone challenges their rent increase and takes their case to a tribunal, they will not have the rent increase during the course of the tribunal, helping to limit rent rises for hard-working families.

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I thank the Chancellor for this wonderful set of measures. I will go one further than my hon. Friend the Member for Erewash (Adam Thompson), who is no longer in his place, and invite her across the bridge to some of the greatest attractions in the UK, ranging from the London Eye to the Southbank Centre, the London Aquarium and even the Paddington Bear Experience, which will all benefit from this wonderful VAT cut. We have been raising this issue for many months, so it is good to see action.

This morning, I visited John Ruskin primary school in Camberwell in my constituency. We might think that the impact of what is happening is not affecting young children, but it is. The children there were so articulate, raising questions on oil and gas prices and prices in the supermarket, so I thank the Chancellor for addressing the issues. How will the CMA monitor supermarkets? It is a non-ministerial organisation, but will it be providing regular updates to the Treasury, so that we can ensure that price cuts are being passed on to hard-working families?

[Rachel Reeves]

I can confirm to my hon. Friend that the London Eye will be included. Apparently it is called an “observation attraction”—the Exchequer Secretary to the Treasury and I made sure that such attractions are part of the package of measures. I totally agree with what she says about young children of primary school age having a deep understanding of the cost of living pressures faced by their families and carers at the moment. That is why it is so important that today’s measures particularly address the cost of the summer holidays for parents. I know that parents, whether in Vauxhall or in my own constituency of Leeds West and Pudsey, are not always as excited about the summer holidays as their children are because they are worried about the costs. I hope that the measures that I have announced today on the cost of children’s meals in restaurants and cafés, and to reduce the cost of days out, will go some way towards helping families to have a better summer.

[Neil Duncan-Jordan (Poole) (Lab)]

I welcome my right hon. Friend’s announcement, but I ask her to look further at introducing a package of emergency measures to keep down energy bills in a number of ways, including through an essential energy guarantee for all households, a nationwide social tariff and extending the windfall tax on the energy sector’s excessive profits.

[Rachel Reeves]

When I became Chancellor, I extended the energy profits levy on gas and oil to 78%. We will be able to bring in money as a result of that. We have also increased the electricity generator levy by 10 percentage points to help to decouple gas and electricity prices. Because of the measures I took in my Budget last year, I was able to take £150 off people’s energy bills. I recognise the impact of the cost of living on families, pensioners and businesses, which is why I have introduced a further range of measures today, particularly targeting and helping families, energy-intensive industries, and those who drive a lot for work.

[Marsha De Cordova (Battersea) (Lab)]

I thank the Chancellor for her statement and welcome the measures she has announced, which will have a huge impact and support many of my constituents and businesses in Battersea. She is very welcome to visit Battersea; we have wonderful hospitality there.

As we live in an increasingly unpredictable global landscape, it is vital that we work with some of our closest allies. That is why I welcome the European partnership Bill announced in the King’s Speech last week. Will the Chancellor continue to explore ways to strengthen our economic relationship with the EU as a means of promoting stability and security, particularly in the light of the current financial pressures as a result of the Iran war?

[Rachel Reeves]

The measures I have set out in my statement will absolutely help the hospitality and entertainment sectors in Battersea, whether zoos, cinemas or restaurants. My hon. Friend is right to point to the economic benefits—reducing inflation, and boosting jobs and growth—of a closer relationship with our nearest neighbours and trading partners in the EU. That is why we are currently negotiating an ambitious agreement to reduce the costs of bringing in agricultural, food and farming products from the EU, and increasing markets for British farmers in the EU. That is alongside a youth mobility scheme, Erasmus, and energy trading and electricity trading across the European Union.

[Mr Calvin Bailey (Leyton and Wanstead) (Lab)]

I welcome the measures that the Chancellor has set out, particularly those that will help small businesses such as Noted Eel & Pie House in Leyton, Homies On Donkeys in the ’Stone, Bare Brew and City Place in Wanstead, and Fresh as a Daisy in South Woodford. I look forward to seeing their children’s menus, so that families can benefit from the measures she has set out. What more is she doing to support hard-pressed families in Leyton and Wanstead, particularly those who rent in the current cost of living crisis?

[Rachel Reeves]

I very much hope that families and businesses in Leyton and Wanstead can benefit from the changes that I have set out today. I know that the cost of renting is very high, especially in London, and the Renters’ Rights Act should give greater certainty and stability to renters and limit rent increases. In addition, families in Leyton and Wanstead will benefit from the offer of 30 hours of free childcare, the abolition of the two-child limit on universal credit and the roll-out of free breakfast clubs to primary schools. From September, straight after the summer holidays, all children whose parents or carers are on universal credit will benefit from free school meals.

[Lillian Jones (Kilmarnock and Loudoun) (Lab)]

I am proud that this Government are backing British industry, from ceramics to British steel, in today’s announcement. Will my right hon. Friend look at possible measures to support the UK wood and timber sector? It is facing challenges such as price volatility, rising costs, supply chain pressures and missed targets for productive tree planting.

[Rachel Reeves]

The measures announced today will help ceramics and the chemicals sector, but other schemes, such as the supercharger scheme and the British industrial competitiveness scheme, will benefit other sectors across the economy. I am sure that the relevant Minister would be happy to meet my hon. Friend specifically to discuss wood and timber issues.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

I declare an interest, as someone who worked for Unison immediately before coming to this place; its contribution to my campaign is included in my entry in the Register of Members’ Financial Interests. I worked as a trade union official for more than 20 years, representing public sector workers. One issue that came up in pay negotiations year after year was mileage rates, particularly for frontline social care workers. As the cost of living and fuel prices rose, frozen mileage rates effectively imposed a stealth cut on workers who were already delivering vital public services. On behalf of those workers and the thousands of frontline workers across Scotland, may I warmly welcome the Chancellor’s decision and announcement today? Will she confirm that she has spoken with her counterparts in the new Scottish Government to ensure that the levers of power over which they have control are similarly focused on cutting the cost of living for my constituents?

[Rachel Reeves]

The increase in mileage rates for employed and self-employed workers will have a material effect on those who need to use their car for work every day; it is, of course, the first increase since 2011. Alongside the Employment Rights Act, this is giving greater rights, greater certainty and greater incomes to ordinary working people. I pay tribute to the trade union Unison for its lobbying and work on this issue over many, many years.

[Peter Swallow (Bracknell) (Lab)]

Families in Bracknell Forest often tell me that the schools holidays can be bittersweet; the opportunity to make treasured memories and spend time with their children must be balanced against having to juggle childcare and work, as well as the cost of living pressures that come from keeping their children entertained. The measures VAT cuts for summer attractions that the Chancellor has announced today will therefore make a real difference. May I ask her to encourage people across the country to make use of the fantastic leisure facilities in Bracknell Forest, including the Look Out Discovery Centre, South Hill Park and Play World soft play, as they take advantage of this new scheme?

[Rachel Reeves]

I hope that families in Bracknell, whether they are enjoying a day out in Bracknell Forest or going on a summer holiday to one of the great seaside towns across our United Kingdom, will benefit from these changes. They will make lunch or dinner out as a family, and entertainment, a little bit cheaper. If parents or carers are on universal credit, when their kids go back to school in September—whether they are in nursery, primary, secondary or further education—they will benefit from free school meals.

[Sean Woodcock (Banbury) (Lab)]

I thank my right hon. Friend for her statement, especially the measures to support farmers and hauliers. Banbury has a thriving logistics sector, with brilliant businesses like TWE Haulage; I visited that company last month, and I know it will really welcome the measures that she has announced. Will she and her colleagues continue to keep under review the particular pressures on the logistics sector and be open to any further measures that may be needed?

[Rachel Reeves]

The best way to reduce cost pressures on families and businesses is to get the strait of Hormuz reopened and those vessels carrying oil and gas flowing again, but of course in the meantime I will keep under review the support necessary to support businesses and families in Banbury and across the country.

[Catherine West (Hornsey and Friern Barnet) (Lab)]

I welcome the tone of yesterday’s announcement at the petrol pump and today’s announcement in the House. The Government are fighting for working people every day. Is ice skating included in the measures? Alexandra Palace has the most fantastic ice skating rink. I hope that ice skating is included, so that children visiting London, as well as London children, can enjoy slightly cheaper ice skating this summer, with a lovely meal to boot.

[Rachel Reeves]

I will have to check about ice skating. I like to pride myself on being on top of my brief, but I do not know whether ice skating is included. I did, however, know about the London Eye.

[Mr Jonathan Brash (Hartlepool) (Lab)]

Following a successful sale to the LB Group, chemicals firm Tioxide is planning to reopen its Greatham plant in Hartlepool. The £350 million critical chemicals resilience fund is a real boost, at exactly the right time, for that Hartlepool employer. Can the Chancellor say a little more about how the fund will promote jobs and growth in Hartlepool?

[Rachel Reeves]

Businesses in Hartlepool and across Teesside will be among the biggest beneficiaries of these changes around chemicals. The Minister for industry, my hon. Friend the Member for Stockton North (Chris McDonald), is now in his place, and I pay tribute to him again for his help in setting out this package of measures. The Department for Business and Trade will shortly set out the details of the chemicals scheme, but I can assure my hon. Friend the Member for Hartlepool (Mr Brash) that it includes help with capital and day-to-day costs, with the aim of making the sector more sustainable and less energy intensive in the future. That will make it increasingly competitive. We recognise the chemical sector’s important role in the UK, and we are determined to ensure a bright future for it.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I, too, thank the Chancellor for her statement, and in particular the announcement of the £350 million chemicals resilience fund. As a consequence of the Iran war, energy price rises of 16% and food price rises of up to 7% are predicted by the Bank of England. I very much welcome the Chancellor’s addressing the cost of living crisis, and the steps to help families this summer, including with bus fares for children; that will be welcomed in Middlesbrough and Thornaby East. We will no doubt monitor and evaluate the dividends of that travel offer. Will the Chancellor consider whether the long-term free travel initiatives elsewhere in Europe have translated positively into economic engagement and growth, and whether they could be replicated here? Given the cries from the retail sector this week, can she advise on what a voluntary pricing arrangement on core items in a basket of supermarket goods, as introduced in France in 2023, might do for living standards?

[Rachel Reeves]

Businesses in the chemicals sector in Middlesbrough will benefit from these changes. In today’s package, a lot of the focus was on food costs, be it the cost of kids’ meals in restaurants and cafés or the reduction in tariffs, and on support for transport, whether people are travelling by car or by bus. We recognise that increases in essential costs are the ones that families fear most. We will of course monitor the impact of these measures. We expect the range of measures that I have set out today to have a cost to the Exchequer, and that is why I have also set out the foreign branch exemption changes, to ensure that all businesses pay their fair share of tax.

On supermarkets, which my hon. Friend mentioned, the Co-op announced last November, on the back of my Budget, that it was cutting the cost of 1,000 products because of the beneficial impact of the changes to business rates. Last week, the Co-op froze the price of more than 40 essential products, and it has committed to working to keep them down. I welcome those measures by the Co-op. I hope that other supermarkets heed the calls of their customers to keep prices down; and I hope that they take advantage of what I have set out today to reduce their costs, and pass those savings directly on to consumers.

[Several hon. Members rose—]

[Alex Baker (Aldershot) (Lab)]

I welcome this announcement and the Chancellor’s statement. It means that, thanks to this Labour Government, it will be cheaper for families across my community to go to theme parks, farms and soft plays this summer. I will see them there, because my children have a long list of places they want to visit. On days out, our families get to choose between eating out or taking a good old picnic. Can the Chancellor bring to life the decision that she has made today? How will it ensure that families have full tummies, as well as lots of fun and excitement, this summer?

[Rachel Reeves]

We are helping to keep prices down in the supermarkets, and to reduce the cost of lunch at a café or restaurant when families have a day out. Having met my hon. Friend’s kids out on the campaign trail in Aldershot, I think that a couple of days out not delivering leaflets would be very much in order.

[Phil Brickell (Bolton West) (Lab)]

I congratulate the Chancellor on this ambitious and comprehensive package of measures, supporting families across Bolton West. As a long-standing proponent of a fairer taxation system, I thank her for the measures she has put forward to close the tax loopholes that have been used by oil and gas firms to structure their affairs and avoid paying hundreds of millions of pounds into the Exchequer. That money will finance this package of proposals to support families. She mentioned the Competition and Markets Authority. Can she say a little more about what engagement she envisages having over the coming months to make sure that we do not see profiteering, going forwards?

[Rachel Reeves]

Closing tax loopholes has been a feature of the first two Budgets I have delivered as Chancellor—for example, the loophole whereby private schools did not pay VAT or business rates. I increased the energy profits levy and the tax on private jets, and there has been a range of other measures to ensure that those with the broadest shoulders pay their fair share of tax. The Competition and Markets Authority is already, at my behest, carrying out a review of heating oil to make sure that customers using heating oil are treated fairly. We are introducing the fuel finder to ensure that customers can always get the best deal when filling up their car with petrol.

[Emma Lewell (South Shields) (Lab)]

I thank my right hon. Friend for the package of support she has announced today. She knows at first hand that hospitality is what my little town does best. My hospitality industry, fairground and constituents will be very happy today. Can she clarify, as I am not sure, whether the 15% VAT cut applies to all restaurants, café, pubs, bars and hotels serving children’s meals? Will she please keep under review the possibility of extending this welcome VAT cut to the hospitality industry as a whole?

[Rachel Reeves]

I have happy memories of having fish and chips with my hon. Friend in her constituency several years ago. I can confirm that the VAT for children’s meals, be they in a pub, hotel, restaurant or café, will be cut from 20% to 5% between 25 June and 1 September. We will monitor the impact of that on tax revenues, and the number of people going out for dinner. We envisage that this measure will have a cost to the taxpayer, which is why we are funding it by ending the tax loophole whereby some companies were using losses overseas to offset their corporation tax here in Britain.

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

Families across my constituency will be relieved to hear the measures set out by my right hon. Friend, whether that is the freezing of fuel duty, free bus travel for young people this summer or the suspension of tariffs on essential food items. All those actions will be greatly welcomed by families worried about the impact of the Iran war on household finances. Can the Chancellor set out how much she envisages these measures combined will save families in the north-east? Will she keep measures, including on energy bills, under review, ahead of the winter?

[Rachel Reeves]

People in more rural areas, such as some of my hon. Friend’s constituents, will particularly benefit from the freeze in fuel duty and the free bus fares for kids. We think that the changes in fuel duty have already saved people around £100 a year, and we expect the same sort of benefit thereafter. Drivers of heavy goods vehicles will benefit by up to £912 through those changes. The bus fare changes are unlimited free bus travel for five to 15-year-olds, and we can add in the savings on days out and meals out. All these things are unlimited; people can go on a bus as many times as they like, and they can take their kids out for a meal and benefit from that reduction in VAT as much as they like. We want people to have an enjoyable summer, worrying less about the costs and thinking more about making happy memories.

[Chris Webb (Blackpool South) (Lab)]

The plans outlined today by the Chancellor will be a massive boost for families in my constituency, but also for the hospitality and tourism sector. I am sure she will agree that Blackpool has some of the best attractions in the world, including the best theme park in the United Kingdom, Blackpool Pleasure Beach, which is today launching its record-breaking £8.7 million new ride, Aviktas. Since the Chancellor made her statement, my phone has not stopped ringing; businesses, theme parks and organisations from across the town are welcoming this news. On their behalf, as well as for my own part, may I invite the Chancellor to Blackpool this summer to see at first hand the positive difference that her policies will make in our town, and the potential that we have?

[Rachel Reeves]

I am really excited about what is happening in Blackpool in the lead up to the 100th anniversary of the Blackpool illuminations in three years’ time. I very much look forward to my next trip to Blackpool. I do not eat only fish and chips, but I remember a very happy meal of fish and chips in my hon. Friend’s constituency during his by-election campaign.

[Sureena Brackenridge (Wolverhampton North East) (Lab)]

Parents, grandparents and carers will know that keeping children busy during the summer can feel like an expensive endurance event. Will the Chancellor assess the economic and social value of the great British summer package of savings, particularly its impact on opening up access to museums, cinemas, libraries, sports facilities, theatres, theme parks and attractions? It will build children’s cultural capital and life experiences, while also supporting local economies in Wolverhampton and Willenhall, and across the country.

[Rachel Reeves]

Spoken like a proper former teacher! Expanding their cultural capital is what my children want to do every weekend. Whether it is expanding cultural capital, or having fun at a theme park in Blackpool or at Alton Towers, I want children and families to be able to enjoy this summer. As a former teacher, my hon. Friend will know that although the summer holidays are a welcome relief for teachers and children, it can often be a time of worry for parents. I hope that today’s changes will make the summer holidays a bit easier for all families.

[Claire Hazelgrove (Filton and Bradley Stoke) (Lab)]

People across the Filton and Bradley Stoke constituency work hard, and being able to enjoy time together as a family this summer is important for everyone. I know that the Chancellor’s announcements on summer savings for families—including on popular attractions—and on free bus travel for children will be warmly welcomed at home. Could she please set out how the decisions that she has taken to stabilise the economy have made it possible for the Government to fund this?

[Rachel Reeves]

It is important that all the policies that we have set out are fully costed and fully funded, and the change that we have made to the foreign branch exemption will fund today’s package of measures. The reduction in inflation due to the measures I set out in my Budget last year, and the strong growth that we have seen—the fastest in the G7 in the first quarter of this year—make the package affordable and sustainable. That is why we are able to set out this support today.

[Lola McEvoy (Darlington) (Lab)]

I wholeheartedly welcome the Chancellor’s intervention at a time when the cost of living is increasingly putting pressure on working families in Darlington. This is a proper Labour intervention from a proper Labour Chancellor, and representation matters in this House. As I look around the Chamber, I can see Stoke and the ceramics industry supported. I can see Redcar, Middlesbrough and Stockton represented, and their industries supported. Not only has this Labour Chancellor intervened to make sure that families in my constituency can have a much better summer, but their jobs will be secure for much longer, so I thank her.

[Rachel Reeves]

This package was not just designed by me; it was designed by hon. and right hon. Members of this House who have made representations to me about the cost of living, but also about the specific business needs and business challenges in their constituencies. Although I am proud to be the Chancellor who has delivered today’s package, I pay tribute to all Members who have contributed to it.

[Jessica Toale (Bournemouth West) (Lab)]

I congratulate the Chancellor on her skilful management of our economy in what are extremely difficult international circumstances. Growth is up, inflation is down and borrowing is down. I particularly welcome the great British summer savings scheme, which will make a huge difference to families and business in my constituency, but families will continue to worry about their day-to-day bills. Can she reassure my constituents that the fuel duty freeze, and the reduction in tariffs on foodstuffs, will be felt directly in their pockets?

[Rachel Reeves]

Absolutely. The freeze in fuel duty will continue until the end of this year and we will keep it under review, depending on what happens in the middle east. It is very important that the tariff reductions and the HGV duty changes are passed on to customers. I am slightly worried that my statement has unleashed a competition between hon. Members about whose constituency has the best summer attractions, whether it is soft play, theme parks, zoos or ice skating. I am being lobbied by my right hon. Friend the Member for Redcar (Anna Turley) about lemon tops in her constituency. I look forward to this continuing ahead of the introduction of VAT reductions on 25 June.

[Cat Eccles (Stourbridge) (Lab)]

I welcome the announcement from my right hon. Friend, particularly the suspension of import tariffs on more than 100 food and drink staples. I know that my constituents across Stourbridge, Brierley Hill and Netherton have been struggling with the cost of a weekly shop. Although we all enjoy a treat, including me, it was disappointing to see the headlines leading with biscuits and chocolate, given that we have a public health crisis with obesity and diabetes. Could the Chancellor assure the House that the Government remain committed to the healthy food standard, which encourages supermarkets to promote healthy choices, and will she work with the Secretary of State for Health and Social Care to ensure that efforts to tackle poor diet and obesity remain a priority, alongside the cost of living?

[Rachel Reeves]

A whole range of products are included in the tariff reductions, including imports of tropical fruits, bananas, olive oil and much more, but I expect that hon. and right hon. Members would be forgiven for wanting to have a chocolate biscuit after a day of work in this place.

[Tracy Gilbert (Edinburgh North and Leith) (Lab)]

I welcome the measures that my right hon. Friend has announced today, which will help ease the cost of living pressures on families in my constituency, and on its very many businesses and attractions—and in time for the Scottish school summer holidays. She is always welcome for award-winning fish and chips in my constituency.

Earlier this year, the Government set out welcome plans to break the link between the wholesale price of gas and the cost of electricity. Can my right hon. Friend provide an update on those plans and tell us how that will help reduce bills over the long term?

[Rachel Reeves]

I am sure that my hon. Friend’s constituents in Edinburgh North and Leith will benefit from being able to enjoy attractions in the Scottish school holidays. People from the other nations and regions of the UK, or from further afield, will also be able to enjoy the attractions of Edinburgh this summer.

On the specific issue of delinking gas and electricity prices, this is both a short-term and long-term measure. In the short term, we have increased the electricity generator levy by 10 percentage points to bring in more money this year. We are renegotiating contracts to move electricity prices on to contracts for difference in order to have greater certainty about electricity prices, so that the gas price does not set the electricity price so frequently, giving greater stability of energy prices to businesses and families.

[Perran Moon (Camborne and Redruth) (Lab)]

Inflation is down, wages are up, interest rates are down, and growth is up. These are the reasons why the Chancellor can make today’s announcements. Those on the Opposition Benches will not say it, but I will: thank you, Chancellor.

As the Chancellor said in her statement, the British industrial competitiveness scheme offers important support for economic growth, but at the moment it excludes the vital critical minerals sector, which, as she knows, is directly relevant to my Camborne, Redruth and Hayle constituency. Will she meet me to discuss energy support measures for the critical minerals sector?

[Rachel Reeves]

As my hon. Friend knows, I am absolutely committed to the critical minerals sector. We have already introduced the Kernow growth fund for Cornwall, and we have instructed the National Wealth Fund to invest more in critical minerals, including the huge opportunities in tin and lithium in Cornwall. We need more diversified supply chains for critical minerals and rare earths, and Cornwall gives us a great opportunity to achieve exactly that. I look forward to continuing to work with my hon. Friend and the other Cornwall MPs to ensure that we bring good jobs, paying decent wages, to the region.

[Alison Hume (Scarborough and Whitby) (Lab)]

The news that bus travel will be free for children this summer is extremely welcome. Does my right hon. Friend agree that this is a golden opportunity for East Yorkshire Buses and Transdev to boost summer capacity, ensuring that children from deprived communities in Scarborough are not squeezed off the buses by tourists travelling to the coast for a great British summer?

--- Later in debate ---

[Rachel Reeves]

I would encourage bus companies to use this as an opportunity to increase the services they offer this summer as they cater for more young people on their buses. I am sure that many hon. and right hon. Members will have enjoyed days out at the aquarium in Scarborough and dinner at the Magpie in Whitby, which serves very good fish and chips.

[Andrew Cooper (Mid Cheshire) (Lab)]

Madam Deputy Speaker, you will of course be aware that the best summer attraction is the Northwich piña colada festival, which is enjoyed by boys and girls of all ages.

I thank the Chancellor for her statement. The relief she is providing to the chemicals industry will be welcomed by sector businesses in Mid Cheshire. Their expertise and innovation contribute significantly to both local employment and national resilience. I have previously spoken about the rising input costs and regulatory challenges that these businesses face, and I look forward to hearing more about how she will consult with the industry on eligibility for the funds. Does she agree that the forthcoming summit with the EU presents an opportunity to bear down on regulation further by seeking alignment and mutual recognition on the UK and EU REACH—registration, evaluation, authorisation and restriction of chemicals—regulations?

[Rachel Reeves]

I am slightly worried that someone will make a point of order about the age at which people are allowed to enjoy the Northwich piña colada festival.

Yes, we will be consulting on chemicals and ceramics to ensure that we give businesses the right support, but we do not want a long consultation to get in the way of actually getting the support to those businesses. My hon. Friend made an important point about our trading relationship with our nearest neighbours and trading partners. We are proud to be a Government who have done trade deals with the Republic of Korea, the United States, India and, yesterday, the Gulf countries. However, the biggest prize is a trade deal and improved trading relations with our nearest neighbours and trading partners in the EU, and I hope that we will make progress on that in the next few months.

[Madam Deputy Speaker (Caroline Nokes)]

I thank the Chancellor for her statement, but I am obliged to point out that, in fact, Peppa Pig World, on the edge of my constituency, is the finest attraction in the country.

Notification of Contingent Liability

Rachel Reeves Excerpts

Monday 18th May 2026 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022. The sales of corporate bonds ceased on 6 June 2023, with a small number of outstanding corporate bonds reaching maturity on 5 April 2024. Therefore, the APF is now comprised solely of gilts.

The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.

Since 11 November 2025, when the maximum authorised size of the APF was last reduced, the total stock of assets held by the APF for monetary policy purposes has fallen further, from £555 billion to £524.9 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £524.9 billion, comprising entirely of gilts.

The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.

There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.

The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. Provision for any payment due under the liability will continue to be sought through the normal supply procedure.

A full departmental minute has been laid in the House of Commons, providing more detail on this contingent liability.

[HCWS26]

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 28th April 2026 Commons Chamber

[Michael Wheeler (Worsley and Eccles) (Lab)]

2. What steps she has taken to help support people with the cost of living in Worsley and Eccles constituency.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government are committed to improving living standards for people across the UK. Thanks to decisions I made in the Budget, the energy price cap reduced by £117 a year, on average, in April. We have extended the cut in fuel duty twice, and introduced an anti-profiteering framework to protect working people from unfair price rises during the Iran conflict.

[Michael Wheeler]

I strongly welcome the steps that the Government have taken to bring down my constituents’ energy bills from the start of this month. However, the effects of the war in Iran are now beginning to feed through into higher food prices. Pressures on oil and fertiliser costs are likely to intensify, and I am concerned about increases in the price of my constituents’ weekly shop at a time when their budgets are already strained. Will the Chancellor outline what steps the Government have taken to protect my constituents in Worsley and Eccles from rising food prices?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of his constituents. The response of this Government during this conflict is, first, to try to de-escalate it. This is not a war that we started, and it is not a war that we joined. Unlike the Conservatives and Reform, we are working to de-escalate, not ramp up, the conflict, and that is the best way to keep prices down. As long as the conflict persists, we will do everything in our power to be both responsive and responsible in the national interest, which is why we are keeping energy bills down and why we have provided £53 million of support for people who need heating oil.

[Jacob Collier (Burton and Uttoxeter) (Lab)]

3. What steps she is taking to support businesses to trade globally.

--- Later in debate ---

[Jess Brown-Fuller (Chichester) (LD)]

17. What assessment she has made of the potential impact of the conflict in the middle east on energy costs.

[The Chancellor of the Exchequer (Rachel Reeves)]

We are monitoring the situation and preparing for every eventuality. The International Monetary Fund expects the UK to be the fastest growing European G7 economy cumulatively over this year and next. A rapid de-escalation of the conflict remains the best way to protect consumers from rising bills. We continue to act on the cost of living, with £117 on average off energy bills from 1 April, £53 million to help with the cost of heating oil, and freezing both rail fares and prescription charges.

[Zöe Franklin]

I thank the Chancellor for her answer. The tensions in the middle east are pushing up energy and food prices, adding further pressure to households who are already struggling due to the cost of living. The Chief Secretary to the Prime Minister warned this weekend that families face “eight-plus months” of difficulty ahead. With the school holidays approaching in both the May half-term and the summer, many low-income families in my constituency of Guildford are asking how they will get through the summer. When I visited Holy Trinity school in my constituency last week, the children raised concerns too, which shows how deep the anxiety about this conflict is. What concrete support will the Government provide to protect the most vulnerable households from further cost pressures in the months ahead, especially if this conflict continues into the summer holidays?

[Rachel Reeves]

I welcome the hon. Lady’s question. Like her, I regularly see pupils and local teachers in my constituency. As she knows, from this month we have got rid of the two-child limit in universal credit, which is lifting 450,000 children out of poverty. We are also expanding free childcare for children aged between nine months and five years, helping parents in work with the costs of balancing family life with work life. In addition, we have taken £117 off energy bills, we are freezing rail fares and prescription charges, and we are helping people—particularly those in rural areas—with the cost of heating oil.

[Sadik Al-Hassan]

I am grateful to my right hon. Friend the Chancellor for her efforts in what are far from ideal circumstances. Attacks on energy infrastructure and the effective closure of the strait of Hormuz are having real consequences here at home. Baker Hughes employs more than 300 people in Nailsea in my constituency of North Somerset and is an essential energy technology provider. It is at the sharp end of this crisis. Can the Chancellor confirm what support the Government are providing to exposed companies like Baker Hughes, to secure energy supplies and rebuild damaged supply chains today, and invest in the infrastructure we will need to protect British consumers tomorrow?

[Rachel Reeves]

I thank my hon. Friend for his question. Baker Hughes, an important employer in his constituency, is a good example of how this conflict is affecting businesses and families here at home. As he knows, we have stepped in to defend our Gulf allies who have been attacked, unprovoked, by Iran. We are working with our allies in the Gulf, whom I speak to on a very regular basis, to ensure that we are not only defending them now but helping them to rebuild their infrastructure. Here in Britain, both the supercharger and the British industrial competitiveness scheme are helping businesses with the cost of their energy.

[Jess Brown-Fuller]

In my constituency, the owner of a haulage business—a vital industry that keeps our economy moving—has reported a 40% increase in the cost of diesel. It is at risk of going bust, while companies like BP are reporting record profits. Given that the impact of the conflict will be felt up to eight months after its conclusion, will the Chancellor please commit to cutting fuel duty, to keep my businesses and my residents on the road?

[Rachel Reeves]

Fuel duty was never lower at any point under the previous Conservative Government or, indeed, the Conservative-Liberal Democrat Government. We are keeping under review what happens from September, but it is important to note that in the first three months of this year, revenues from fuel duty were no higher than they were just a year ago.

With regard to the profits of energy companies, that is exactly why we extended the energy profits levy: to ensure that windfall profits could be taxed appropriately. BP and other oil and gas companies play a really important part in our energy mix, and our important British companies are representing our country in the US this week, but it is important that windfall profits are properly taxed, whether that is through the electricity generator levy or the energy profits levy.

[Laura Kyrke-Smith (Aylesbury) (Lab)]

I am grateful to the Chancellor for the work she is doing to protect us from the economic impacts of this war. One of my local farmers has been in touch about the impact on red diesel prices, which are up by around 70%, and fertiliser prices, and shared his nervousness about the affordability of going ahead and planting next year’s crops. Can the Chancellor outline what more she can do to protect our farmers, our food security and our food prices in light of these global challenges?

[Rachel Reeves]

When we froze fuel duty and extended that freeze, that also impacted red diesel. As we keep under review what happens to fuel duty, we will do the same for red diesel. I think there are two crucial issues. The first is protecting supply, which is why de-escalating this conflict—not ramping it up, as the Tories and Reform would do—is so important, so that we can reopen the strait of Hormuz. The second is prices and costs. That is why we have introduced the British industrial competitiveness scheme to help businesses with energy costs and the supercharger. BICS comes in from this year, and the supercharger is extended from this year, to help businesses impacted by this conflict.

[Sir Jeremy Hunt (Godalming and Ash) (Con)]

Given that national debt is around 95% of GDP and debt interest costs are nearly 4% of GDP, does the Chancellor agree that it would be irresponsible to fund any cost of living support by increasing borrowing? That would further drive up borrowing costs, choke off growth and saddle future generations with totally unfair debt.

[Rachel Reeves]

I congratulate the right hon. Gentleman on running his fourth London marathon this week for a cancer charity. I know that cause is dear to his heart. He makes an important point. I understand why people are calling for immediate support, but the previous Government’s untargeted support—I understand why the former Chancellor did what he did—cost more than £100 billion in total, I think, and it meant that interest rates, inflation and taxes have ended up being higher than they needed to be. We managed to reduce Government borrowing by £20 billion last year. The budget deficit is below 5% for the first time since 2019. Sticking to fiscal responsibility is not just good for the public purse; it is also good for ordinary families and businesses. I am determined that we do not go back to the high inflation, high interest rates and high taxes that would be the inevitable result if we had an untargeted response to this conflict.

[Mr Paul Foster (South Ribble) (Lab)]

Cost of living, cost of living, cost of living—those are the three words that my constituents in South Ribble and the small area of Chorley that I represent contact me about every single week. They do not contact me about the Westminster bubble and process. Will the Chancellor please assure me that she will stay laser-focused on delivering on the cost of living for the constituents of South Ribble and will not allow the noise and disruption from the Opposition to put her off?

[Rachel Reeves]

I thank my hon. Friend for standing up for the people of South Ribble and the issues that matter to them. Since the general election, there have been six cuts in interest rates, which is the best way to help people with the cost of living, especially if they have a mortgage. Before this conflict began, unemployment was falling, the economy was growing, the deficit was coming down and interest rates had gone down six times. I will continue to focus on the cost of living, because that is the thing that matters most to all our constituents.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Australia, Italy, India and more have all slashed fuel duty in response to Trump’s idiotic war in Iran. We Liberal Democrats are calling for fuel duty to be cut by 12p per litre here. Last week, the Chancellor claimed that anyone calling for a cut in fuel duty was “economically illiterate”, because it would push up inflation. According to the Office for Budget Responsibility, the current 5p fuel duty cut has led to a 0.2% reduction in the rate of inflation. Does the Chancellor think that the OBR and all these other countries that are helping their citizens are economically illiterate, or does she accept that her Government might be in the wrong and that it is time to act?

[Rachel Reeves]

Last time she stood up in the Chamber, the hon. Lady said that she wanted a 10p cut in fuel duty; now it is a 12p cut. What she has failed to explain is how on earth she is going to pay for any of those policies. As a former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), has just explained, untargeted support will result in higher inflation, higher interest rates and higher taxes, which would hurt people in St Albans and around the country rather than helping them with the cost of living.

I support what the Liberal Democrats say about opposing the war in Iran—that is our policy—but they appear to be the only people on the planet who think that a war in the middle east is somehow good for the Treasury coffers. I would not be surprised if in their next manifesto they said they would commit themselves to closing the strait of Hormuz for good. It is not good economic policy, and I am afraid that that says a lot about the Liberal Democrats’ policies.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

6. What fiscal steps she is taking to support motorists with fuel costs.

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[Leigh Ingham (Stafford) (Lab)]

9. What steps she is taking with Cabinet colleagues to ensure Government procurement supports British businesses.

[The Chancellor of the Exchequer (Rachel Reeves)]

We are reforming Government procurement rules so that we can buy more that is made in this country, and we have already changed the rules on steel, shipbuilding, energy infrastructure and artificial intelligence. But I do not just want big companies to be able to get contracts; I want to help smaller businesses and charities to access Government procurement. The Government are the biggest buyer of goods and services in the economy, and I want more of that money to be spent here in Britain.

[Leigh Ingham]

I thank the Chancellor for her answer. In Stafford, world-class manufacturers such as GE Vernova are producing the technology that powers our national grid, yet for far too long these British employers have not had money given to them through British Government contracts. I therefore warmly welcome the Government’s commitment to reform public sector procurement to grow British industry, British skills and British jobs. Can the Chancellor tell us how this new approach will ensure that Government spending reaches manufacturers and businesses in constituencies like Stafford and towns across our country, so that when the taxpayer spends, Britain builds?

[Rachel Reeves]

I am slightly disappointed that my hon. Friend did not mention that today is Staffordshire Day; Staffordshire oatcakes are available for Members from both sides of the House in the Tea Room. On the wider issue, we do need to buy, make and sell more in Britain, with more contracts going to firms in Staffordshire—not just for their brilliant oatcakes, but for their ceramics.

[Mr Speaker]

I call the Father of the House.

[Hon. Members]

Hear, hear!

[Rachel Reeves]

Conservative Members cheer, but they did not use any of those freedoms. It is this Government who are doing everything we can to buy, make and sell more in Britain. One of the best ways in which we can grow our economy is to work more closely with our friends, trading partners and neighbours in the European Union—whether through rejoining Erasmus, through playing our full part in Horizon or through a deal for our food and farming sector so that we can export the great stuff that we make here in Britain into the EU as well as to so many other areas. That is why we are determined to rebuild that relationship with the European Union.

[Peter Fortune (Bromley and Biggin Hill) (Con)]

10. What assessment she has made of the potential impact of recent changes to business property relief on levels of investment by family-owned businesses.

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[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

11. What steps her Department is taking through the child poverty taskforce to help reduce levels of relative poverty.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government are taking action to tackle child poverty, by removing the two-child limit and by expanding free school meals and breakfast clubs, including the seven breakfast clubs already rolled out in the Dewsbury and Batley constituency. As a result, 550,000 children will be lifted out of poverty in this Parliament: the biggest reduction in child poverty in any Parliament ever.

[Iqbal Mohamed]

In my constituency, 44.4% of children are living in poverty, according to the latest Government figures. Yet Oxfam reports that just 56 billionaires in the UK now hold more wealth than 27 million people combined in our country, and their wealth rose on average by more than £230 million each last year. Does the Chancellor accept that child poverty is not inevitable but the result of political choices about who this Government want to protect? Can she explain how the child poverty taskforce can succeed without the Treasury being willing to pursue far more fair and equitable wealth distribution, through closing tax loopholes, taxing wealth and not just income, and preventing—

[Mr Speaker]

Order. I think the Chancellor has got the drift.

[Rachel Reeves]

Child poverty is absolutely not inevitable, which why we are lifting 550,000 children out of poverty. It is always Labour Governments who lift children out of poverty and Tory Governments who put children back into poverty. The numbers the hon. Gentleman refers to are appalling: 44% of children should not be growing up in poverty in Dewsbury and Batley. We have made the changes we have made to lift those children out of poverty and to give all of them a decent start in life.

[Andrew Pakes (Peterborough) (Lab/Co-op)]

One of the worst legacies of the previous Government is that 43% of children growing up in Peterborough are living in poverty. Nearly 10,000 children will be affected by the lifting of the child cap in Peterborough alone. Will the Chancellor assure me that, while we have made huge progress, we will keep a razor-like focus on child poverty as we deal with the cost of living crisis and the fallout from the war in Iran?

[Rachel Reeves]

The fact that some 10,000 children in one constituency have been lifted out of poverty, by just one of the policy changes we have made to reduce child poverty, shows the difference that this Labour Government are making. Combined with the breakfast clubs, the free school meals, the extension of childcare, the Renters’ Rights Act 2025 and the building of new homes, the Government are set to deliver the biggest ever reduction in child poverty in one Parliament.

[Warinder Juss (Wolverhampton West) (Lab)]

12. What steps she has taken to help support people with the cost of living in Wolverhampton West constituency.

[The Chancellor of the Exchequer (Rachel Reeves)]

First of all, I offer my deepest condolences following the tragic death of two young children in my hon. Friend’s constituency. This will be an incredibly distressing time for the whole community and the thoughts of the whole House are with them.

We recognise that everyday living costs remain too high, which is why we are supporting households with their energy bills, and why we have frozen prescription charges for a second year in a row and rail fares for the first time in 30 years. It is also why we have lifted the national living wage and the national minimum wage, so people on low pay can see their money go further.

[Warinder Juss]

I thank the Chancellor for her condolences. I was at the site of the tragedy on Sunday laying flowers. It is very upsetting for everyone in my constituency.

One of my favourite places for lunch is the Pomegranate Café, together with the Central Community Shop, in my constituency. It is a community-based social enterprise partnership founded by the Good Shepherd charity, the Wolves Foundation and the Labour-controlled city of Wolverhampton council. It provides affordable food, and all the profits from the café are donated to the Good Shepherd’s free-to-access services—supporting its work to end homelessness, assist recovery, provide access to services around training and employability, and provide meaningful pathways out of poverty in Wolverhampton. Will the Chancellor please join me in congratulating everyone involved with the Pomegranate Café—

[Mr Speaker]

Order. Once again, I think the Chancellor has got the question.

[Rachel Reeves]

I thank my hon. Friend for raising the excellent work city of Wolverhampton council is doing to help people with the cost of living, in particular the most vulnerable people in our society. The measures we are taking to reduce child poverty, and to increase the basic state pension and the new state pension, combined with what we are doing with Pride in Place, including in Whitmore Reans and Dunstall Hill in his constituency, will improve outcomes for people in Wolverhampton West and around the country.

[Catherine Fookes (Monmouthshire) (Lab)]

13. What steps she is taking to support economic growth in Wales.

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[Cat Smith (Lancaster and Wyre) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Chancellor of the Exchequer (Rachel Reeves)]

We are on the right path with the right economic plan. Unemployment is down, the economy is growing, interest rates have been cut six times, and last year Government borrowing was lower than it was the year before and is set to fall by more than in any other G7 economy.

At the same time, the Government are acting responsibly on the world stage. This is a war that we did not start, we did not enter, and we are working with our international allies to de-escalate. Our focus is on protecting family finances, supporting businesses and taking care with the public purse to improve Britain’s economic resilience. That is the right plan for our country.

[Cat Smith]

I thank the Chancellor for her work to lift the two-child benefit cap, which was cruelly brought in by the Conservative Government. Does she agree that that is not only morally the right thing to do, but economically good news for the 1,690 families in Lancaster and Wyre who will have more money in their pockets to spend in our local economy in Lancashire—unlike the super-rich, who would have just taken it to offshore tax havens?

[Rachel Reeves]

Just a couple of weeks ago, I hosted an event in Downing Street where I met people who are benefiting from the change in the two-child limit and people who had campaigned for that change. Mums told me that they were going to use the money to pay for their kids to go to after-school clubs with their friends, swimming lessons that they could not afford before, or a new school coat rather than a second-hand one. That is the difference that this money is making to families up and down the country. I am proud to be the Chancellor who has scrapped the two-child limit.

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

[Sir Mel Stride (Central Devon) (Con)]

In response to the question from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) on borrowing, the right hon. Lady suggested that she was following a strict deficit reduction plan. I think she made reference to a reduction in the deficit of £20 billion year on year—but, of course, it is easy to reduce something if you pump it up recklessly in the first place. Could she tell the House how much more borrowing this Government will undertake across this Parliament compared with the plans that she inherited from the last Government?

[Rachel Reeves]

To start with, let us remember that the plans we inherited from the last Government would have seen fuel duty go up straightaway; the plans that we inherited from the last Government would not have seen £29 billion of investment a year in our NHS; and the plans that we inherited from the last Government would have seen business rates for our high street businesses—our retail, hospitality and leisure businesses—go up straightaway. We did make the decision to change that inheritance because we thought it was the right thing to do, and we still do. The International Monetary Fund confirmed that we have the fastest rate of fiscal consolidation of any country in the G7, and our borrowing as a share of GDP fell to 4.3% in the last financial year and is due to fall in every single year of this Parliament. This is the first time that our deficit has been lower than 5% since 2019.

[Sir Mel Stride]

The right hon. Lady does not seem to know how much additional borrowing this Government are undertaking compared with the plans of the last Government, so I will tell her: it is one quarter of a trillion pounds of additional borrowing across this Parliament. The truth is that this Chancellor is addicted to borrowing, which means, compared with what otherwise would be the case—she said exactly this, in terms, in the answer to my right hon. Friend the Member for Godalming and Ash—higher borrowing costs, higher inflation, higher interest rates and more sluggish growth, doesn’t it?

[Rachel Reeves]

What the right hon. Gentleman is basically admitting is that he would have gone ahead with the increases in fuel duty and business rates, and that he would take that money out of our national health service. We made those changes on the mandate that we got at the election, and at the same time we are reducing the budget deficit so that, for the first time in six years, it is now below 5% of GDP. As a result, the Bank of England has cut interest rates six times, helping all our constituents with their mortgages. This is very different from the hikes in mortgages that we saw under the previous Tory Government.

[Yuan Yang (Earley and Woodley) (Lab)]

T2. This weekend, while door-knocking in Woodley, I spoke to a young father of three who, despite working multiple skilled jobs, feared being made homeless because of high and rising costs of rent. Will the Chancellor examine the case for a fixed-term rent freeze in the private rented sector to protect renters like my constituent from rising costs following the invasion of Iran, and to bring inflation down in the wider economy?

[Rachel Reeves]

As my hon. Friend knows from sitting on the Treasury Committee, this Government have already taken action to reduce the cost of living and to bear down on inflation with the changes around energy prices, fuel duty, prescription charges and rail fares. I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector. That is why we have already introduced the Renters’ Rights Act 2025. People who have mortgages have seen cuts in their mortgage rates since we came into office, and we will also do everything we can to help people in the private rented sector too, because we must ensure that this conflict in the middle east does not result in our constituents being poorer.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

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[Antonia Bance (Tipton and Wednesbury) (Lab)]

T4. We now know what was going on in the economy before the attack on Iran. Growth was up. Unemployment was down. Borrowing was lower than forecast. The Chancellor took the right decisions and it was working. Does my right hon. Friend agree that families and businesses should know that, when times are tough, it is Trumpflation that is to blame?

[Rachel Reeves]

I thank my hon. Friend for that question. While other parties—specifically Reform and the Conservatives—wanted us to enter this war, we stayed out of it, and are working to de-escalate the conflict and reopen the strait of Hormuz. The economy was growing, interest rates were coming down and inflation was falling. As a result, every month since I have become Chancellor, wages have risen by more than inflation, easing the cost of living pressures that the previous Government oversaw.

[Olly Glover (Didcot and Wantage) (LD)]

T3. At a recent meeting with members of Wantage chamber of commerce, local businesses were united in their concerns about business rates and unconvinced by recent Government tweaks that Ministers have just alluded to. Page 31 of Labour’s manifesto states:“The current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets. In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer”—

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[Chris Bloore (Redditch) (Lab)]

T7. Given that Reform in Worcestershire promised to cut taxes but has instead increased county council tax for Redditch residents by nearly 9%, does the Chancellor agree that at the Redditch borough council elections on 7 May the only way to protect vital local services and keep taxes low is to vote for Redditch Labour candidates?

[Rachel Reeves]

My hon. Friend is absolutely right that although Reform-led Worcestershire council said that it would cut taxes, it has instead put them up. That is why I urge people in Redditch and across the country to vote Labour on 7 May.

[Sarah Olney (Richmond Park) (LD)]

T5. More than 1.3 million people use lifetime ISAs to save for their first home. The property cap of £450,000 has been frozen since 2017, despite rising house prices, but those buying their first home over that threshold face a 25% penalty. First-time buyers across London are disproportionately affected. Data from February this year showed that the average price paid by a first-time buyer in London was £463,000. Can the Chancellor tell us how she is ensuring that first-time buyers in London are not unfairly disadvantaged by using this saving scheme?

[Tom Rutland (East Worthing and Shoreham) (Lab)]

T8. The Chancellor will have seen the news this morning that BP’s profits have more than doubled, undoubtedly driven by the conflict in the middle east. Does she agree that this shows the value of having a windfall tax at this point in time?

[Rachel Reeves]

The oil and gas sector will play an important part in our energy mix for many years to come, and we need to support it, as we are doing through tiebacks, for example. But it is important that the energy profits levy remains in place for now, because during this conflict we will be able to capture the profits made in the UK through the windfall tax. The Conservatives and Reform oppose this tax, which would just mean even higher profits for oil and gas companies. As my hon. Friend knows, we are also delinking gas and electricity prices by increasing the electricity generator levy, so that no energy company can make excess profits because of the conflict.

[Chris Coghlan (Dorking and Horley) (LD)]

T6. It has been widely reported in the press that the Chancellor is rightly considering issuing defence bonds. I know that the Chancellor agrees with me on the value of defence research and development. Does she or the Minister agree that defence bonds could be a powerful way to increase R&D and raise economic growth?

--- Later in debate ---

[Rachel Reeves]

I thank my hon. Friend for all his campaigning in this area. I also pay tribute to the trade union USDAW, its former general secretary Paddy Lillis, and its current general secretary Joanne Thomas, for all their work in this area. Strengthening statutory sick pay is part of our commitment to implement our plan to make work pay, ensuring that the safety net of sick pay is available to those who need it from day one.

[Shockat Adam (Leicester South) (Ind)]

Leicester South has a home ownership rate of just over 40%—nearly 23 points below the national average—in a city where the average house costs 8.5 times average local earnings. My young constituents work very hard and save responsibly to get on to the housing ladder, yet the tax system offers them absolutely nothing, while incorporated landlords deduct full mortgage interest through a company structure. Canada and Nordic countries are offering targeted tax relief for first-time buyers. Has the Chancellor considered introducing a similar relief here to ensure that young people are supported by the tax system, not left behind?

Middle East: Economic Update

Rachel Reeves Excerpts

Tuesday 21st April 2026 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

With permission, I will update the House on the spring meetings of the International Monetary Fund and the continued action that the Government are taking to strengthen our economic and energy security in response to the conflict in the middle east.

We did not start this war and we did not join this war, but since the war in the middle east broke out, I have been clear-eyed about my duty: to be responsive to a changing world and responsible in the national interest. The best economic policy today is our diplomatic policy—negotiation, de-escalation and the permanent reopening of the strait of Hormuz.

Last week in Washington, I held talks with world Finance Ministers, including the US Treasury Secretary, Scott Bessent. I struck a joint agreement with 10 other major economies, calling for a swift and lasting negotiated resolution to the conflict and agreeing to avoid unnecessary trade restrictions to support energy and food security. We agreed to maintain maximum economic pressure to ensure that Russia cannot profit from this war. I was proud to announce the UK’s third tranche of the Extraordinary Revenue Acceleration funding for Ukraine’s defences, as well as continuing to work with the US Administration to increase economic pressure on Iran.

The Prime Minister has also led global action, convening a summit of nations with the President of France to work together to support freedom of navigation through the strait of Hormuz. The UK will continue to play its part, including engagement with the insurance industry to support shipping when conditions allow.

We are continuing to plan for every eventuality, but we must deal with the economic costs that are already being felt. I reject the demands for a knee-jerk response to this crisis that would put household finances at risk through higher inflation and higher interest rates. Every choice that I make will be about keeping costs down for families and businesses. That is why I have extended the 5p cut for fuel duty twice since the election, saving the average motorist £90 a year compared with the plans that I inherited. It is why I have frozen prescription charges for two years in a row and frozen rail fares for the first time in 30 years; it is why I am taking £150 off energy bills with additional help for those struggling with the cost of heating oil; and it is why I have expanded the British industrial competitiveness scheme to over 10,000 manufacturers, addressing long-term competitiveness and cutting electricity costs from this year.

During the last energy shock, the previous Government’s package of unfunded and untargeted support saw more than a third of direct energy bill support go to the wealthiest households. That meant higher inflation, higher interest rates and higher taxes. I will not repeat those mistakes. Last week, the IMF said that my plan is “the appropriate response” to the conflict. I led a joint statement, with 10 other major economies, agreeing to co-ordinate our domestic responses, to ensure that they are responsive and responsible. This Government have the right plan for our economy. At the spring forecast, we saw how the action that we have taken since the election has prepared Britain to better weather this conflict. Inflation was at 3% and set to fall to target—a lower base than at the outset of the Russia-Ukraine conflict, when inflation was high and rising. Borrowing was set to fall more over this Parliament than in any other G7 economy. We are set to reduce the deficit by £20 billion, from 5.2% to 4.3% of GDP this year. I increased our financial buffers, with headroom against the stability rule of £23.7 billion, so that we can weather shocks and keep borrowing costs down.

Last week, the IMF welcomed the UK’s “notable improvement” in our public finances. I am clear that the best way we can build a stronger, more resilient economy is through economic growth. I welcome recent figures showing that the economy grew by 0.5% in the three months to February and upgraded growth for the three months to January to 0.3%. I also welcome this morning’s labour market figures for February, which show unemployment coming down and real wages continuing to rise, as they have in every month since I became Chancellor—adding to the evidence that the Government have the right economic plan to steer our economy through the uncertainty ahead.

However, as I have said, the war in Iran will come at a cost. Last week, the IMF published its updated forecasts for the global economy in response to the war. It reduced its expectations for GDP growth in the United Kingdom and increased its expectations for inflation. That builds on the IMF’s judgment that the UK is more exposed to energy price shocks than our counterparts—a problem that the previous Government failed to address in 14 years—and on its observation that, since the last energy crisis, the UK has had higher inflation than other countries. The aftermath of Liz Truss’s disastrous mini-Budget, and the previous Government’s untargeted and unfunded support package, contributed to a more persistent rise in inflation and interest rates than in other countries around the world.

The IMF’s forecasts are a stark reminder of why we must stick to our economic plan and go further and faster on delivering economic security. Since the election, we have invested in clean, home-grown energy, in renewables and in nuclear power. In 2025, we imported 17% less gas than in 2021, and gas generation now sets the wholesale price of electricity around a third less frequently than it did in the early 2020s, meaning that our energy system is now more secure and less exposed to volatile global energy prices.

Today we are going further, with a package of changes to reduce our reliance on imported oil and gas, boost the use of renewables, and smooth the impact of energy price shocks. First, oil and gas production from the North sea is an important and valuable resource, and its workforce is a vital asset for our country. That is why we are harnessing our domestic supply by managing existing fields for their entire lifetimes, including by allowing tiebacks for those fields to ensure that they remain viable. Today, in advance of legislation, we are publishing further details on tiebacks, which I first announced in the Budget. External analysis has predicted that they could result in tens of millions more barrels of oil and gas being available for UK supply. Today’s announcement gives industry greater clarity to support investment in those projects and maximise supply from our existing sites to support our energy security.

Secondly, we are sweeping away the barriers to new renewables investment by accelerating vital grid infrastructure, reforming land access rules and extending permitted development rights, as well as making more public land available for renewable infrastructure, which could unlock up to 10 GW of capacity, and helping households and businesses to switch to clean, cheaper renewable electricity through plug-in solar panels and better electric vehicle charging.

Thirdly, we are reforming our energy system. Currently, households and businesses pay more for their electricity when the gas price is high. The electricity generator levy already recoups some of the excess returns made by generators due to high gas prices. Today, I am announcing that I will extend the electricity generator levy beyond its scheduled conclusion in 2028, and, ahead of that, I will increase the rate of the levy from 45% to 55%. That will ensure that a larger proportion of any exceptional revenues from high gas prices are passed back to Government, providing a vital revenue stream so that money is available for Government to support businesses and families with the impacts of the conflict in the middle east. Crucially, it will encourage older low-carbon electricity generators, which supply about a third of our power, to move from market pricing to fixed-price contracts for difference.

New proposals, set out by the Secretary of State for Energy Security and Net Zero today, will further weaken the link between high gas prices and the price paid for our electricity, and limit the spikes in energy prices from driving up inflation and costs for households and businesses.

The Government have the right economic plan—a plan that was right before this conflict in the middle east started and is now essential to weather the impact of that conflict. The plan, backed by the IMF, will keep costs down for everyone and provide support for those who need it most. In a world that is more uncertain, it is a plan to build a Britain that is stronger and more secure. I commend this statement to the House.

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

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[Rachel Reeves]

That response exposes a shadow Chancellor who is out of credible ideas. I was sad to read in the weekend’s newspapers that once again, he is being lined up for the sack by the Leader of the Opposition, but to be honest, after his performance today, I can understand her choice.

The shadow Chancellor talks about the IMF. Yes, the IMF did downgrade the forecast. Why? It is because of a war, which his party unquestioningly backed, and because of our high exposure to global energy markets, which his party allowed. We are taking the right choices. We did not back this war, nor did we follow the calls of the Leader of the Opposition and the leader of Reform to join in. We are investing in and reforming our energy market, so that we can take back control of our energy security.

The shadow Chancellor talks about the economy. Well, let’s talk about the economy. Before this war broke out, our economy grew by 0.5% in the three months to February and 0.3% in the three months to January. Inflation was expected by the Bank of England and the Office for Budget Responsibility to return to target, and interest rates had been cut by their fastest rate in 17 years, compared with hitting 5.25% under the Conservatives, which saw mortgage costs going through the roof. [Interruption.] The hon. Member for Wyre Forest (Mark Garnier) says it is the Bank of England’s job to address inflation, but we had the same Bank of England when the Conservatives were in government. It has cut interest rates while we have been in government because we got control of the public finances, and the Conservatives lost control of the public finances.

The shadow Chancellor says that the response to a fossil fuel crisis is to rely more on fossil fuels and to reduce investment in clean, home-grown energy. He is ignoring the fundamental lesson of both Russia’s invasion of Ukraine and the conflict in the middle east. The shadow Chancellor opposed new solar energy, opposed onshore wind power and did not invest in either Sizewell C or small modular reactors, as this Labour Government are doing. Just today, the CEO of RenewableUK has said that

“reducing the link between the volatile global gas prices and the cost of electricity is the best way to protect households, businesses and industries against the unpredictable and volatile costs of fossil fuels in the long term, to strengthen the UK’s energy security.”

The shadow Chancellor says that tiebacks make no difference, yet Offshore Energies UK says that

“developing fields as tiebacks reduces costs, lowers emissions, and extends the life of existing critical infrastructure”,

which is exactly why we are doing it.

The shadow Chancellor says that delinking would lead to higher prices. It is the exact opposite. The whole aim here is to move to fixed prices. By increasing the electricity generator levy—we do not know whether the Conservative party supports or opposes it—we incentivise those energy companies to come off the levy and come on to contracts for difference. We are beginning the negotiations with industry, so that we can reduce that volatility in prices. As the CEO of E.ON has said today,

“For too long, the value in our energy system has flowed to those at the top of the chain. Today’s move starts to turn that around”,

because we can take out of the system the volatility and the spikes, which are so damaging for both family finances and business finances. But the shadow Chancellor had nothing to say on that.

Fuel duty was never lower in 14 years under the Conservatives than it is today. Of course, we are keeping all scenarios under review, but it is quite clear that the best way to bring down fuel prices is to de-escalate this conflict, not ramp it up like the Conservatives want to do.

The shadow Chancellor has nothing to say on international co-operation, nothing to say on global negotiations to keep the strait of Hormuz open, nothing to say on reform of our energy market and nothing to say on investment in our infrastructure. Why? It is because he has no plan. Why? Because he does not have any ideas. Why? Because his party has no economic credibility. Labour has the right plan for our country. The Conservatives would take us right back to the bad days of high inflation, high interest rates and the mess they made of our economy.

[Bill Esterson (Sefton Central) (Lab)]

The conflict in Iran is also a matter of energy security and the cost of energy. It is a reminder for the second time in four years of the dangers of being dependent on international fossil fuel markets and of the need to reduce our dependence. The Energy Security and Net Zero Committee has heard a lot of evidence about the importance of decoupling the price of electricity from the price of gas, so may I encourage the Chancellor to bring forward measures that will reduce the amount of time that gas can continue to set the price of electricity? It is a pity that the Conservative party did not take that approach following the invasion of Ukraine in 2022 when it had the chance.

[Rachel Reeves]

I thank the Chair of the Energy Security and Net Zero Committee for that question, and for his important work on this issue. There are two ways to reduce the number of days in which the gas price sets the electricity price. First is to invest more in home-grown renewables and in nuclear, so that more of the mix is made up of electricity. The second way is to delink gas and electricity prices, first by increasing the electricity generators levy to bring in money but also—this is crucial—by incentivising those companies that are currently getting the market price to go instead on to a contract for difference, which gives greater certainty for families, pensioners and businesses with their bills. That is exactly what we are doing.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I thank the Chancellor for advance sight of her statement.

The Chancellor should have come here today to explain how she was going to use the £20 million extra that the Treasury is pulling in every single day through higher VAT, a higher energy profits levy and other taxes, to tackle the immediate cost of fuel crisis that is facing families and businesses today. The Chancellor is fundamentally wrong when she says that a knee-jerk response would have put household finances at risk through higher inflation and higher interest rates. We need just to look at what other countries are doing. The Government could have used that £20 million to drive down prices—the price of petrol at the pump, the price of train and bus fares, and the price of home-charging electric vehicles. Slashing those prices could have helped the Chancellor to control inflation and higher interest rates. That is what other countries are doing, and what we Liberal Democrats are calling for.

The Liberal Democrats were the only political party to have in our manifesto a commitment to break the link between gas and electricity prices, so we are glad that 18 months on, the Government have finally listened.

In addition to the measures outlined today, may I ask the Chancellor about two specific things? First, has she spoken to any banks about rolling out low-interest loans for householders who want to do the right thing and adopt energy-saving measures, but are struggling with the up-front costs? Secondly, I met the Competition and Markets Authority on Monday. The CMA and Ofgem both agree that there is a case to answer about the broken energy market and why hospitality and small businesses are being blocked. Will the Chancellor join me in writing to Ofgem and asking it finally to investigate, without any further delay, a broken energy market that is blocking hospitality and small businesses from accessing the best deals?

[Rachel Reeves]

I welcome the fact that the hon. Lady and her party opposed the war and did not want the UK to become involved, unlike the Conservatives and Reform. However, I find what she has just set out fundamentally economically illiterate. The idea that a great fiscal policy is to close the strait of Hormuz! Why did we not think of that when we came to office? If we close the strait of Hormuz, all our problems will be over because we can get in all this money—that is what the hon. Lady is suggesting; that we will get some great windfall from a tax. The truth is that the IMF and every other forecaster are clear that tax revenues will be lower, not higher, because of the conflict in the middle east. The money that the hon. Lady wants us to spend simply does not exist. I am afraid she is falling into the failed economic policies of the Conservatives, who delivered untargeted, unfunded support that resulted in higher interest rates, higher inflation and higher taxes. She is suggesting an untargeted approach, but that is what got us into the mess we are in today.

I welcome the fact that the hon. Lady supports us on decoupling, which is the right thing to do with our gas and electricity prices. I regret that she and her party did not support the Planning and Infrastructure Act 2025, which enables us to build the homes and energy infrastructure that we need. On working with banks, the Department for Energy Security and Net Zero is working with every high street lender and energy company to help people who are struggling with their bills.

[David Burton-Sampson (Southend West and Leigh) (Lab)]

As my right hon. Friend mentioned, in 2022 Liz Truss launched a household energy support package that provided blanket support to every household, including the most well off. It was estimated to cost between £57 billion and £60 billion, just over the first six months; that was predominantly funded by borrowing. Does my right hon. Friend agree that the right and fiscally responsible thing to do during this crisis is to provide targeted support to those who need it most?

[Rachel Reeves]

More than one third of that support for energy bills went to the top third of households. That makes no sense at all, especially when those households then end up being burdened with higher interest rates on their mortgages, higher inflation in the shops, and higher taxes for years to come. The right approach is a targeted one, to keep costs and interest rates down for everybody. Of course, the best economic policy would be a de-escalation of this conflict, not ramping it up, as the Conservatives and Reform want to do.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

The Chancellor will be aware of how important aviation is to the UK economy, particularly Heathrow, which is responsible for a huge amount of air freight and economic activity in my constituency. Given the reports regarding the supply chain for kerosene used in aviation, what measures is the Chancellor taking to ensure kerosene supply? What consideration has she given to tax relief to ensure that our aviation sector is sustainable and continues to contribute to the UK economy?

[Rachel Reeves]

As the hon. Gentleman knows, the Government are a big supporter of our airports and the aviation sector. That is why we are backing a third runway at Heathrow, a second runway at Gatwick, as well as expansion at Stansted and Luton airports. We are in regular contact with the aviation sector. It is currently not reporting any challenges with security of supply, but as the hon. Gentleman and the House would expect, we are planning for all different scenarios. The best way to ensure security of supply is to reopen the strait of Hormuz by working to de-escalate this conflict.

[Jim Dickson (Dartford) (Lab)]

I welcome the fact that in this time of economic shocks, the Government are playing their proper role in protecting UK households from the worst harms, and I thank the Chancellor for the work that she is doing with other Finance Ministers and Governments to bring about a de-escalation of the war—unlike others, who advocate for escalation. Does she agree that, in addition to taking the measures that she has talked about today, and that the Secretary of State for Energy Security and Net Zero has announced, she must continue, alongside the rest of the Government, to press other Governments for de-escalation of the war? That is the best way to protect UK households.

[Rachel Reeves]

That is why the whole House welcomed the Prime Minister and the French President convening a meeting of 50 countries on Friday, to work on how we could reopen of the strait of Hormuz and, crucially, on the protection of vessels travelling through it, when it is safe for them to do so; and it is why I have been working with the insurance industry to ensure that the right cover will be available to vessels, when it is possible to travel through the strait again. When I was in Washington last week, I met our allies from the Gulf countries, who made clear the importance of reopening the strait of Hormuz and preserving toll-free travel through it.

[Greg Smith (Mid Buckinghamshire) (Con)]

Prices are going up, and if the Chancellor’s 5p increase in fuel duty between September and next March goes ahead, we will be the European country with the eighth highest fuel duty. Surely this is not the time for that increase. If she wants certainty, the best thing she could do, at that Dispatch Box, is cancel the fuel duty hike.

[Rachel Reeves]

I understand the concerns that people have about filling up their car with petrol and diesel right now. We have introduced the cheaper fuel finder tool, so that people can compare prices and get the best deal when they fill up their car, and we have had all the petrol retailers into No. 11 Downing Street to ensure that we do not have any price gouging. There are still four and a half months until September. We are preparing for every eventuality. I have extended the fuel duty freeze and the 5p cut twice already, which means that the average motorist is saving £90 more than they would have done under the plans that I inherited from the Conservative party.

[Ms Julie Minns (Carlisle) (Lab)]

The conflict in the middle east has again highlighted just how vulnerable our off-grid rural households are to fossil fuel-driven energy shocks. Does the Chancellor agree with me that the warm homes plan is a major opportunity to upgrade rural housing and cut bills? Will she confirm what further steps the Government are taking to encourage the take-up of low carbon technology?

[Rachel Reeves]

I thank my hon. Friend for raising the challenges felt in many rural communities. Those challenges are why I put in place additional money to help people with the cost of heating oil. We recognised that the £150 off energy bills introduced in April does not apply to heating oil, and we wanted to ensure that people had support with that. We are also extending and increasing the generosity of the warm homes plan, in particular by including boiler upgrades. That will help people in all communities, including rural communities, where the cost of heating homes is often higher.

[Stephen Flynn (Aberdeen South) (SNP)]

We are very fortunate in Scotland to already produce more renewable electricity than we consume, and of course we produce more oil and gas than we consume as well. Unfortunately, we do not experience any benefit in our bills. The Chancellor had the cheek to say that she regards the oil and gas workforce as a vital asset to the country, but they certainly do not feel like that, because a thousand of them are losing their job every single month. If she believes in jobs, investment, energy security and reducing climate emissions, will she outline why she has not yet moved to the oil and gas price mechanism? Why is the Chancellor allowing the Energy Secretary to overrule her and prioritise imports of liquefied natural gas, rather than supporting domestic energy sources?

[Rachel Reeves]

People in Scotland, and right across the UK, benefited from the money off their energy bills. We are one of the few countries in the world where energy bills for households went down in April, rather than up. That was because of the changes that I made in the Budget. Of course, that benefits households in Scotland as well. Today, the Energy Secretary and I have announced changes around tiebacks. The previous Government could have made such changes, but they did not. Offshore Energies UK has said:

“developing fields as tiebacks reduces costs, lowers emissions, and extends the life of existing critical infrastructure.”

This policy will help to create and support more jobs in Scotland in this vital sector. If the Scottish National party is so concerned about jobs, why does it not back nuclear in Scotland, just as this Labour Government back nuclear in England and Wales?

[Luke Murphy (Basingstoke) (Lab)]

I welcome the Chancellor’s statement and the announcements made by her and the Energy Secretary. We have seen two fossil fuel shocks in just the past five years, which have done untold damage to our economy. Half the recessions since the 1970s have been caused by similar fossil fuel shocks. It is clear that the move to clean, home-grown energy is good for the economy, good for security and good for household bills. What conversations have she and the Energy Secretary had with organisations that might be taking up voluntary agreements? When might those agreements be made, and when will we see the benefit of breaking the link between gas and electricity prices?

[Rachel Reeves]

Investment in nuclear and renewables can ensure security of supply, and security of price. Investment in fossil fuels cannot secure security of price, because that price is determined by international markets. A third of power is electricity that is not covered by a contract for difference. We are trying to get that on to contracts for difference, so that we can stabilise prices and avoid the spikes that we see because of the volatility in fossil fuel prices that my hon. Friend mentioned. The Energy Secretary and I have already met representatives from the energy sector to discuss this policy and the negotiation of contracts for difference. After the negotiations, and given the incentive to avoid the higher electricity generators levy, we are confident that many businesses will be happy and willing to move, through a negotiated price, on to contracts for difference.

[Mr Andrew Snowden (Fylde) (Con)]

The strangely cheerful outing by Treasury Front-Bench Members today makes them the equivalent of the band playing on the deck of the Titanic, as the Government sink around them after hitting the iceberg that is Peter Mandelson. If the Chancellor thinks that anybody out there genuinely feels that she has made the economy more resilient to economic shocks, then I am sorry to say that she is living in cloud cuckoo land. I have met the families who have less money in their pay packets because of her tax raids. I have met the businesses that are making people redundant, cutting investments or facing closure because of her tax rises. If she wants to help people in the economy, she should cut taxes.

[Rachel Reeves]

Today we have announced an increase in the electricity generators levy to help the hon. Gentleman’s constituents, and all our constituents, to get lower prices for electricity. Instead of talking the country down, he might want to mention the fact that the economy grew by 0.5% in February, unemployment went down today, we have the fastest deficit reduction pace of any country in the G7, and in every single month that I have been Chancellor, wages have risen by more than prices. That is very different from what happened when his party was in charge.

[Nick Smith (Blaenau Gwent and Rhymney) (Lab)]

I thank the Chancellor for her statement. I agree that the best economic policy today is diplomatic policy. Given the situation in Iran, will she tell us more about her plans for putting economic pressure on the leadership there to de-escalate this dreadful situation?

[Rachel Reeves]

My hon. Friend is absolutely right that the best economic policy is diplomatic policy; it is reopening the strait of Hormuz, and de-escalating this conflict. That is why the Prime Minister hosted, with France, the coalition meeting last Friday, and why, when I met the US Treasury Secretary last week, we committed to doing more to increase the sanctions and the economic pressure on Iran. My team of Treasury officials met US Treasury officials last week to work out what more can be done, following the excellent work that our two Treasuries have already done together to increase economic pressure on Iran.

[Tim Farron (Westmorland and Lonsdale) (LD)]

As a result of this war, agricultural inflation is running at 7.6%—more than twice general inflation levels. Red diesel has doubled in price and fertiliser supply is under serious threat. Predictably, food prices are likely to rise, causing hardship for millions of people, partly because of Britain’s lack of food security. Is it not time for the Government to U-turn on the Conservative policy that they inherited, which means that England is now the only country in Europe that does not use its farm payments to actively support its farmers to produce food?

[Rachel Reeves]

I thank the hon. Gentleman for his representation of the agricultural sector. As he knows, on the two occasions when we have extended the 5p cut in fuel duty, a commensurate benefit has been applied to red diesel, but I recognise the challenges faced, in the current conflict, by the agricultural sector and other sectors that are big users of diesel. That is why we are working hard with industry to ensure that the sectors get the support that they need. Crucially, we are also trying to de-escalate the conflict and reopen the strait of Hormuz to improve the availability of diesel and fertiliser.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

I congratulate the Chancellor on her statement. The setting of electricity prices to international gas prices has long been blamed for the erratic nature of our electricity bills—indeed, that was previously accepted by the Conservative party. While the Conservatives complained about it and did nothing, this Government are seeking to take action to disconnect those two issues. Will the Chancellor advise when she thinks that families will start to see a benefit from the decoupling of electricity prices from international gas prices?

[Rachel Reeves]

My hon. Friend knows what she is talking about, not least because she is the MP for Great Grimsby and Cleethorpes, but also as a result of her previous career before taking her seat at the last election. There are two ways in which people will benefit. The first is in the short term, through the higher electricity generator levy. We have increased the rate from 45% to 55%, which will bring in money this year that can help us as a Government to relieve some of the pressure on families and businesses. We will also use the higher levy to negotiate the contracts for difference at a good price for bill payers and taxpayers so that we get rid of that volatility. I am confident that in the months ahead, while we have the higher electricity generator levy in place, we will be able to negotiate the new contracts and reduce the volatility. Crucially, the reduction in volatility will benefit both households and businesses.

[Sir Julian Lewis (New Forest East) (Con)]

May I welcome the couple of positive references that the Chancellor made a little while ago to civil nuclear power? Given that we have in this country Rolls-Royce, a world-leading specialist in the design and construction of small modular mobile nuclear reactors, what plans do the Government have to support this particular sector so that we are less dependent on the whims of Iranian dictators in future?

[Rachel Reeves]

I was really pleased last week to sign with Rolls-Royce the contract for the first fleet of small modular reactors in the UK. They will be located on Anglesey, but they will create jobs for people from Derby to Warrington and from Manchester to Sheffield, and of course in north Wales and on Anglesey itself. We are also working with Rolls-Royce as it looks to secure contracts overseas, as it already has with Czechia, creating more good jobs here in Britain for this exciting new technology, which will also have the benefit of secure, home-grown energy.

[Ben Goldsborough (South Norfolk) (Lab)]

Because of the action of this Government, rural communities in Norfolk received the highest payment of support for heating oil, with more than £3 million in the whole of England. However, a huge concern is that more than 60% of the applications that have been made have not been completed by the local Conservative-run council. What will the Chancellor’s action be to ensure that Norfolk county council gets these payments into the pockets of my constituents?

[Rachel Reeves]

I am sorry to hear that the Conservative-run council in South Norfolk has not completed 60% of the applications for help with heating oil. The Government made more than £50 million available and targeted it at such places and at my hon. Friend’s constituents, who need it most. I am very happy to follow up with the council to ensure that people get the support they need.

[Carla Denyer (Bristol Central) (Green)]

I am relieved that the Government are now committed to breaking—[Interruption.]

[Carla Denyer]

I am relieved that the Government are now committed to breaking the price link between expensive gas and cheap renewables, but given that the proposed solution is voluntary for electricity generators, how will the Chancellor ensure that the proposals that she and the Secretary of State for Energy Security and Net Zero are putting forward will actually deliver substantially lower bills? If I send them to her office, will she consider the proposals from the think-tank Commonwealth for a mandated, not-optional, fixed-price model to ensure that billpayers are not left at the mercy of the volatile international fossil fuel market?

[Rachel Reeves]

As I set out in my statement and as the hon. Lady said, we are delinking gas and electricity prices. That is the right policy, and we will achieve it through the increase in the electricity generator levy. By increasing it from 45% to 55%, we are providing a very strong incentive for companies that still get market prices to move on to contracts for difference to avoid the electricity generator levy. If they do not go on to a contract for difference, they will continue to pay the electricity generator levy, which I have extended today, and we can use that money to help people with their prices.

The hon. Lady’s commitment to lower prices and more secure supply would be a bit more credible if the Green party did not oppose new nuclear and the Planning and Infrastructure Act 2025, which will make it easier to build the infrastructure investment in renewables and clean energy that we desperately need to lower bills and get ourselves off fossil fuels.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I thank the Chancellor for her statement and for the work that she and the Energy Secretary have done in this regard. The focus on renewables and the decoupling of gas and electricity is most welcome, but may I point something out? One of the problems that we inherited from the Conservatives, who have the gall to complain about the high cost to businesses and households, is that we are heading towards curtailment fees in 2030 of around £6 billion per annum. Would the Chancellor be kind enough to meet me and my hon. Friend the Member for Camborne and Redruth (Perran Moon) to discuss some of the technological options available to us to mitigate those soaring costs?

[Rachel Reeves]

I thank my hon. Friend for the interest that he has in this really important area. We are doing a number of things on this front. The Planning and Infrastructure Act, which passed through Parliament at the end of last year despite the opposition of the Conservatives and the Greens and the indifference of the Liberal Democrats, will enable us to build the infrastructure to get energy from offshore wind to people’s homes and businesses, as well as investment in battery technology so that we can store energy. My hon. Friend will also have heard the announcement last week that we will enable differential pricing at different times—for example, to be able to get free electricity in some cases at weekends, when the demand for energy is lower. Those are some of the things we are doing to better balance demand and supply on the grid, and I would be very happy to meet him to discuss the matter further.

[Richard Tice (Boston and Skegness) (Reform)]

Is the Chancellor aware that the price of gas in the US is 10% lower than at the start of the war, while here in the UK it is 30% higher? That proves that if we produce what we consume, there is actually a domestic price of gas. Will she have a word in the shell-like ear of the Secretary of State for Energy Security and Net Zero and tell him to get on and approve the licences at Jackdaw and beyond, including onshore? That would mean more gas, more production and lower prices.

[Rachel Reeves]

I think that the hon. Gentleman has just said that he is in favour of fracking. If so, I look forward to campaigning against him on that.

[Amanda Martin (Portsmouth North) (Lab)]

I thank the Chancellor for her statement and for the work she is doing at this globally difficult time. As a proud coastal, naval and defence city, Portsmouth understands that economic, national and climate security are inseparable, from household bills to flood resilience and defence jobs. Will she reassure families and businesses in my constituency that today’s actions, such as decoupling, will protect them from rising costs, support the jobs that are so vital to our city and ensure that we have a city for future generations?

[Rachel Reeves]

I thank my hon. Friend for standing up for her constituents in Portsmouth. The purpose of decoupling gas and electricity prices is to reduce the volatility. We all know from our constituencies how much lower-income families and pensioners, in particular, struggle with volatility in gas and electricity prices, because electricity is an essential and people need it for everyday use. Decoupling will smooth out some of the volatility in the price of energy, giving greater certainty to families, pensioners and businesses, which all have to contend with the volatility of the fossil fuel market. That is why we want to move to more contracts for difference, and that is what today’s policy will achieve.

[Mr Lee Dillon (Newbury) (LD)]

In her statement, the Chancellor outlined a plan for tomorrow, but no help for today. The residents of Newbury—the small businesses and farmers—want to know how high the Chancellor will allow the prices of petrol, red diesel and fertiliser to go before she decides to take positive action and reduce the impact of the cost of living crisis on those people. How high do those prices have to go, Chancellor?

[Rachel Reeves]

In Newbury, and indeed in all of our constituencies, people got £150 off their energy bills in April this year. There are very few countries in the world where energy bills fell in April; in most countries they are going up. That was possible only because of the measures I took in last year’s Budget. I have extended the 5p cut in fuel duty two times already since becoming Chancellor. Obviously, we are following very carefully what is happening in the middle east and looking at the impact on the UK economy, families and businesses, and we will be ready to respond. However, the best way to get bills and prices at the pump down is to de-escalate this conflict and reopen the strait of Hormuz. That is the policy of the hon. Gentleman’s party, and it is the policy of this Government, because that is the best way to help people with the costs of energy.

[Tahir Ali (Birmingham Hall Green and Moseley) (Lab)]

The Prime Minister was right not to take part in the war led by Donald Trump and Netanyahu, and the Chancellor is right not to engage in a knee-jerk reaction to this economic difficulty. However, will she keep under active consideration those who are most vulnerable—those who are on benefits and the hard-working families who will struggle to put food on the table, choosing between that and paying energy bills—and if need be, will action be taken immediately?

[Rachel Reeves]

When the previous Government intervened in the case of an energy price shock, more than a third of the benefit went to the top third of income earners. That makes no sense at all when Government resources are stretched and when it resulted only in higher interest rates, higher inflation and higher taxes for the exact same people. That is why we are looking at what targeted action could be taken. It is also why, at the beginning of this month, the new state pension increased by up to £575 and we got rid of the two-child limit on universal credit, which will lift almost half a million children out of poverty over the course of this Parliament.

[Carla Lockhart (Upper Bann) (DUP)]

No farmers means no food, no hauliers means empty shelves, and no construction means a country that is not moving forward. In Northern Ireland, those three industries are now taking to the streets to protest, which is clear evidence that this Government’s inaction is pushing them to the brink. Will the Chancellor today do the right thing and commit to cutting fuel duty, scrapping punitive carbon taxes, and properly supporting the industries and sectors that are fundamental to this country’s security and stability?

[Rachel Reeves]

In Northern Ireland and across the country, people got £150 off their energy bills in April, and of course Northern Ireland was the biggest beneficiary of the support for heating oil—that support went disproportionately to Northern Ireland, given its greater reliance on heating oil compared with the rest of the country. The British industrial competitiveness scheme will reduce business energy costs for 10,000 manufacturing firms from this year, taking up to 25% off their electricity costs, and decoupling will reduce electricity prices for both businesses and households. When those contracts for difference come in, that will have a direct impact, but in the meantime the higher electricity generator levy that is coming in this year will provide revenues so that the Government can help cushion this shock for businesses and families.

[Several hon. Members rose—]

[Andrew Pakes (Peterborough) (Lab/Co-op)]

The Chancellor is right: this was not our war, but its impacts are being felt by businesses and families in my constituency. What is almost as shocking as the recent price hike is how exposed our country is because of a decade of under-investment by the Conservative party in nuclear, onshore wind and updating our power networks. Can the Chancellor reassure me that while we keep a razor-sharp focus on the cost of living for families, we will also do our utmost to speed up the development and renewal of our energy networks, so that we can power this country from our own sources and not just rely on imports?

[Rachel Reeves]

My hon. Friend is absolutely right. This is not our war—we chose not to join it, unlike the Conservative and Reform parties, which were egging us on to do so. However, we do need to become less exposed to global fossil fuel markets. That is why we passed the Planning and Infrastructure Act 2025, which will enable us to build the energy infrastructure we need. It is why we signed off Sizewell C and a fleet of small modular reactors; it is why we are giving planning permission to solar farms; and it is why we have ended the effective moratorium on onshore wind—the cheapest form of electricity—to keep prices down for families, businesses and pensioners.

[Munira Wilson (Twickenham) (LD)]

The Chancellor said in her statement:

“Every choice I make will be about keeping costs down for families and businesses”.

However, when I speak to small business owners on high streets across my constituency of Twickenham, Teddington and the Hamptons—especially café and restaurant owners—they tell me that the soaring energy and food prices that are a result of war are only compounding the pain they were feeling as a result of the Chancellor’s choices to hike national insurance for employers and, in some cases, double their business rates. What action will she take this month and this quarter, not in a year’s time, to help those businesses stay afloat? We need them to stay open for the sake of our communities.

[Rachel Reeves]

The best thing we can do as a Government is to keep inflation and interest rates down. Since I became Chancellor, wages have risen faster than prices in every single month, giving people more money to spend, and interest rates have been cut six times—which will benefit all of our constituents, but those in London perhaps most of all, given that house prices are more expensive in places such as Twickenham—putting more money in people’s pockets. Today’s announcement about the British industrial competitiveness scheme will take up to 25% off energy bills for 10,000 businesses from this month, and decoupling will help all businesses with their energy costs. The electricity generator levy will bring in money this year, and then the new contracts for difference will reduce volatility and price spikes for all businesses.

[Alex Baker (Aldershot) (Lab)]

In my constituency, I hear from many small businesses that are worried about rising energy bills and what that means for their ability to grow and create jobs. As such, I welcome the measures that the Chancellor has outlined today, particularly decoupling gas and electricity, which will help to safeguard my constituents from these international spikes. However, everyone in this situation has to play their part. The Government are doing their bit, but could the Chancellor set out what conversations she is having with the energy companies themselves on how they can further support businesses with their energy costs at a time of global instability?

[Rachel Reeves]

I thank my hon. Friend for that question, and I understand the concerns that families and businesses have about the cost of energy and the risk of second-round effects if those costs are passed on to other goods and services in the economy. That is why my focus is on keeping interest rates and inflation down for everybody, and it is also why we are working to de-escalate this conflict. We are also working with energy companies to ensure that people who are struggling with energy debt, for example, are supported, and that people are not taken off contracts.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

On 3 March, during the Chancellor’s vacuous spring statement, I raised with her that the war which had just started in the middle east would have an inevitable and immediate consequence for energy prices. I asked her what she was going to do about it, and she said that she had no plans to do anything about it. Today, the Chancellor comes to the Chamber like the coo’s tail, talking about fiddling about with contracts for difference next year while my constituents are currently paying nearly £2 a litre for diesel. In Ireland, the Government spent €750 million to support farmers, hauliers, agriculture, fisheries and household energy bills. If the Chancellor were to do the same, the figure would be £8 billion. Where is the £8 billion for our communities, Chancellor?

[Rachel Reeves]

In the past two weeks, we have announced up to 25% off energy bills for 10,000 manufacturers, starting this month. Today, we have announced tiebacks to exploit more of our energy resource in the North sea, which has been welcomed by OEUK, and we have announced an increase in the electricity generator levy to bring in money to help with the costs of energy. We are one of the few countries in the world where energy bills went down in April, because of the decisions that I made in my Budget. Since I became Chancellor, wages have risen by more than prices in every single month and interest rates have been cut six times. That is the difference we are making. It would be nice if the SNP used the record funding we have given it to cut NHS waiting lists, rather than seeing them rise and rise.

[Torcuil Crichton (Na h-Eileanan an Iar) (Lab)]

I thank the Chancellor for her statement and her nimble response to the energy shock, including support for heating oil consumers, who make up half the households in Na h-Eileanan an Iar. The future of energy security is not an either/or. We must pursue renewables with a community share in the wealth of wind, and we must use the tiebacks that she detailed to exploit existing licences in the North sea fully. Will the Chancellor encourage other Ministers to match her commitment by hastening the review of Jackdaw and Rosebank? That would not just ensure energy security, but send a message to workers that we are with them in the North sea and the wild Atlantic for years to come.

[Rachel Reeves]

My hon. Friend is absolutely right that we need a balanced energy policy. While some parties oppose renewables, some parties oppose nuclear and some parties—oh, they have gone—oppose any oil and gas, this Government have a balanced energy policy. We are investing in new nuclear—small modular reactors and Sizewell C; we are investing in renewables—solar and onshore and offshore wind; and we are ensuring a bright future for North sea oil and gas. That is why today we set out our policy and more detail on tiebacks. It is also why, in the not-too-distant future, the Energy Secretary, in a quasi-judicial way, will make a decision on Jackdaw and Rosebank after the courts quashed the previous Government’s decision.

[Pippa Heylings (South Cambridgeshire) (LD)]

We welcome the Government’s announcement on cutting the link between wholesale gas and electricity prices, which will help to shield families across the UK from volatile fossil fuel prices. They are using the very measure that the Liberal Democrats proposed more than a year ago. It is now time to go further and faster to fix a broken energy market that results in households and businesses that are powered by solar and wind not having cheaper energy bills, and even having to pay on their energy bills to turn off wind farms in British waters. I have written to the Chancellor and the Secretary of State for Energy Security and Net Zero. Will the Chancellor meet me to discuss our proposals to accelerate reforms, bring down energy bills and secure our energy supply?

[Rachel Reeves]

I agree with the hon. Lady about decoupling. We are using an increase in the electricity generator levy to bring in money immediately and to incentivise companies to move on to contracts for difference. In terms of having to pay when solar and wind cannot be used, what the hon. Lady says would be a little more plausible if the Liberal Democrats had not sat on their hands during consideration of the Planning and Infrastructure Bill. That legislation will enable the energy infrastructure to be built that will bring electricity to people’s homes, lower people’s bills and give us the energy security that we want to see.

[Perran Moon (Camborne and Redruth) (Lab)]

The Chancellor will know that AutoTrader announced last week that, for the first time, the average cost of a new electric vehicle has fallen below the average cost of a new petrol vehicle. There has never been a better time to switch to EVs. Can the Chancellor elaborate on how these targeted announcements, and some of the changes she is making today, will support the switch to electric vehicles?

[Rachel Reeves]

My hon. Friend makes a good point. There are a couple of things we are doing today to make it more cost-effective to get an electric vehicle. First, the decoupling of gas and electricity prices will mean that electricity prices will not be set by high gas prices. That reduces the costs of filling up an electric vehicle with electricity. We are also making it easier for people to install electric vehicle charge points, including on their streets and in their homes. We are making solar panels more available, including in high street shops, to enable people to benefit from that cheap electricity, which they can use to power their homes and their cars.

[Robert Jenrick (Newark) (Reform)]

Kevin Brewer is a domiciliary care worker from Northern Ireland. He says that he loves his job, but he drives 70 miles every day. He told the BBC this week that for the first time he considered phoning in and saying that he could not do his job. In the end, he decided to put the cost of the fuel on his credit card. Chancellor, people are suffering across the country. I invite her to meet people such as Kevin at the national fuel tax protest on Whitehall on Monday, where motorists, white van men and women, care workers and many others from across the United Kingdom will come together to ask her to take action now to cut VAT on fuel and to say that she will not increase fuel duty in September.

--- Later in debate ---

[Rachel Reeves]

Fuel duty was never lower in the 14 years when the right hon. Gentleman was a Conservative Member of Parliament than it is now. As I have said on numerous occasions, we are keeping fuel duty under review. The best way to reduce costs for people who are reliant on their cars is to de-escalate this conflict, which is the exact opposite of Reform UK’s policy. It wanted to join in this conflict and said when the conflict started that we should stand with America. I do not agree that we should be standing with America; we should be standing up for our own country and families and businesses in our country.

[Harpreet Uppal (Huddersfield) (Lab)]

It is important that we look at long-term measures such as decoupling gas and electricity prices, because we know that previous temporary measures have not stopped our exposure to these shocks, leading to further insecurity for residents and businesses. Can the Chancellor say how quickly households and businesses such as textile manufacturers in Huddersfield will benefit from this new pricing model? Can she say a little more about accelerating vital grid infrastructure?

[Rachel Reeves]

I thank my hon. Friend for raising the concerns of people in Huddersfield. From this month, we are helping 10,000 manufacturing businesses in the industrial strategy sectors with the cost of electricity, reducing it by up to 25%. Today, we have announced that we are increasing the electricity generator levy, which will bring in more money to the Exchequer. We can use that money to help people with the costs of this war which we did not start, but of which people in Huddersfield, Leeds and around the country are feeling the consequences.

[Steff Aquarone (North Norfolk) (LD)]

On heating oil, members of the Chancellor’s Treasury team have been keen to point out that the small amount of funding—the equivalent of about £35 a household—was just the first step. Can she outline when the next step will come to support houses that are dependent on heating oil?

[Rachel Reeves]

We were pleased to be able to announce tens of millions of pounds to help people with the cost of heating oil, in the same way that we brought down gas and electricity bills for families and pensioners across the UK because of my Budget decisions last year. It is important that local authorities now make sure that that money is available to people. We heard from my hon. Friend the Member for South Norfolk (Ben Goldsborough), for example, that 60% of applications in Norfolk have not been processed. We need to make sure that that money gets to the people who need it. As I have said, we will keep additional support under review. The best way to bring down bills for families, businesses and pensioners—the hon. Gentleman’s party agrees with this—is to de-escalate this conflict and reopen the strait of Hormuz. That is why our diplomatic policy is so important.

[John Whitby (Derbyshire Dales) (Lab)]

According to modelling from the National Energy System Operator, gas will still set the price of electricity 30% of the time by 2030, despite most of the energy being produced from renewables. Solar and wind are far cheaper than other forms of energy, and it is right that households across the UK, and in Derbyshire Dales in particular, can benefit from the lower prices. Will the Chancellor therefore outline what steps she is taking to decouple the price of renewables from the price of gas and to drive down energy prices for homes in Derbyshire Dales?

[Rachel Reeves]

This is the second energy price shock caused by a lack of availability of oil and gas in just four years. It shows that we need to invest more in home-grown energy to ensure security of supply and price to help people in Derbyshire Dales and right across the country. That is why we are increasing the electricity generator levy. We are using that money to help people now, but crucially as an incentive to get electricity providers on to contracts for difference, so that we do not have to pay more for electricity just because the price of gas is high.

[Ayoub Khan (Birmingham Perry Barr) (Ind)]

The Chancellor said that we did not start this war and have not joined this war, and the reason for that is that this war is illegal. Iran never posed an imminent threat. Pakistan has taken valiant steps to negotiate a deal, which led to Iran opening the strait of Hormuz, but unfortunately and absurdly, Donald Trump is blocking the strait, causing a major economic crisis for everyone. I welcome the 5p cut in fuel duty and the £150 reduction in energy bills, but the reality is that they are having an insignificant impact on families, especially vulnerable families. What imminent steps will the Chancellor take to help and shield them?

[Rachel Reeves]

I join the hon. Gentleman in paying tribute to Pakistan for the work that it is doing to de-escalate this conflict by hosting peace talks. I would expect all Members of the House to urge all parties to return to those negotiations as quickly as possible, so that we can end the bloodshed but also ensure that bills come back down for families and prices fall at the pumps. We are already taking action to reduce household energy bills through the help with heating oil. Today’s announcements on decoupling and tiebacks, and last week’s announcement on reducing business energy costs through the BIC scheme, are all things that we are doing to help families and businesses with the cost of electricity.

[Catherine Atkinson (Derby North) (Lab)]

Does the Chancellor agree that economic security, energy security and national security all go hand in hand, which is why home-grown lower-carbon power that we control is so important? Can she tell us more about how small modular reactors, which are being delivered by Rolls-Royce and are backed by this Labour Government, will play their part in delivering power, security and good British jobs?

[Rachel Reeves]

It was great to meet Rolls-Royce apprentices with my hon. Friend in Downing Street last week to see what difference this Government’s investment in small modular reactors through the National Wealth Fund will make. The investment in nuclear is creating good jobs that pay decent wages, providing export opportunities through this new technology and, crucially, giving us energy security on both supply and price.

[Sorcha Eastwood (Lagan Valley) (Alliance)]

Just so the Chancellor is aware, my constituents in Lagan Valley did not get £150 off their electricity bills. I am sure the Chancellor knows that that is because Northern Ireland is not in the same electricity market as the rest of the UK. Even if we add together the sums that we received through the Barnett consequentials, they do not total £150. We hope that her lack of knowledge does not reflect the importance of Northern Ireland when this Government come to tackling the cost of living crisis. When will the Chancellor meet my colleagues in the Northern Ireland Executive to discuss how to help us through this crisis?

[Rachel Reeves]

Northern Ireland benefited from the Barnett consequentials, with the money going to the Northern Ireland Executive. As the hon. Lady says, Northern Ireland is in a different electricity market. At the same time, we listened carefully to what MPs and Members of the Northern Ireland Executive said about Northern Ireland’s exposure to heating oil. When we made the support available, we did so through local authorities and locally, rather than as a national scheme, recognising the higher exposure to heating oil in Northern Ireland than anywhere else in the country.

Middle East: Economic Update

Rachel Reeves Excerpts

Tuesday 24th March 2026 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

Thank you, Mr Speaker, for granting me permission to make this statement to the House about the Government’s continued response to the war in the middle east.

Let me start by paying tribute to our armed forces; my thoughts and the thoughts of the whole House remain with them and with those whose lives have been disrupted by this conflict.

Since I last addressed the House, the costs of oil and gas have remained high, and last week the Bank of England estimated that inflation could be between 3% and 3.5% in the next few quarters. The full economic impact of the war remains uncertain, but it makes our economic plan even more important: to build prosperity that is secure and resilient and to bear down on the cost of living and protect the public finances, with delivery through our iron-clad fiscal rules. Today, I will set out further action that I am taking.

First, on global collaboration, last week the Prime Minister authorised the US to use UK military bases to defend the strait of Hormuz. It remains the case that the best way to protect families and businesses is rapid de-escalation of this conflict. To strengthen our collective security, I have announced that we will explore a new defence financing and procurement mechanism with the Netherlands, Finland and other EU and NATO partners. I welcome the International Energy Agency’s decision to authorise a co-ordinated release of our collective oil reserves to alleviate the immediate pressure on supply, and the UK has now begun the release of our share of 13.5 million barrels of oil.

Secondly, on our energy security, the last Government’s failure to invest in energy was a failure to protect our country, but through determined action, this Government are taking control of our own energy supply: we are investing in renewables, lifting the ban on onshore wind and streamlining grid connections; we ran the biggest offshore wind auction in European history last year, and we are bringing the next renewables auction forward to this July; and we are driving forward negotiations on the UK’s participation in the EU internal electricity market. We must guarantee that our domestic oil and gas industry can also play a role in our energy system for decades to come, so I can confirm that we are encouraging investment in tiebacks to make the most of our existing production facilities.

We are rewriting the story on nuclear, too. We have construction on Sizewell C, have agreed an extension to Sizewell B, and are due to sign the contracts on the UK’s first small modular reactors in Anglesey, in partnership with Rolls-Royce. I will not tolerate red tape and vested interests holding back our energy security, so our new planning rules will unblock the pipeline of critical infrastructure projects. I can announce today that we will legislate to implement the Fingleton review in the next Session, and I recently wrote to industry and regulators to get them to set out their plans to fast-track that implementation in full.

To the Opposition parties, which like to talk big about energy security but then vote against the very infrastructure to build it, let me say this: it is time to put our country first. I can confirm today that we are developing options to back critical energy projects with indemnities if their planning consent is challenged, so that we do not waste a single moment in protecting our energy security, because energy security is national security.

Thirdly, on households and businesses, I know that when prices rise and incomes are squeezed, people look to the Government and ask, “What are you doing to help?” That is why, since the election, we have delivered and funded 30 hours of free childcare to working parents, with wages rising faster than prices for every month that I have been the Chancellor and free breakfast clubs being rolled out at primary schools. From next week, this is what will see: the two-child limit—gone; day one sick pay—in; another rise in the national living wage; prescription charges—frozen; train fares—frozen; fuel duty—frozen; and the state pension increasing by £575. For businesses, there is £4.3 billion in business rates support; the regulation action plan, which will cut admin costs; and the supercharger discount, which will be followed next year by the British industrial competitiveness scheme to take money off business energy bills. But I know that there is more to do.

On trade, I can confirm to the House that we are aiming to conclude negotiations with the EU this year on the sanitary and phytosanitary agreement, which will directly impact food prices in our shops. I have also asked officials to look at where targeted reductions to agrifood tariffs can help bring down food prices, balancing this against the implications for domestic producers and food security. Later this week, I will be holding meetings with supermarkets and banks to discuss how they can further support their customers.

We have a world-class competition and consumer protection regime. Since my last statement, the Competition and Markets Authority has stepped up its statutory monitoring of fuel prices, and I will update on fuel pricing within the next month. The CMA is working with Government to monitor the cost of household essentials for both price rises and disruption, and has launched a market study into heating oil. Today, I can announce that we are going further to make sure that the Competition and Markets Authority has the powers it needs—powers that were denied to it by the previous Government—to detect and crack down on price gouging, bringing in a new anti-profiteering framework and considering time-limited, targeted powers for the CMA and other regulators. This week, the Business Secretary and I will convene the regulators’ council to discuss its work to protect consumers, because—let me say it again—this Government will not tolerate any company exploiting this crisis at consumers’ expense.

Finally, I want to update the House on how I am preparing for this conflict as it goes on. I know that families and businesses are worried about the impact of rising prices. I have said that we will be responsive to a changing world and responsible in the national interest, and today I want to set out in more detail what that means.

First, we will be responsive. We do not yet know what the full impact of this conflict will be, so we must be agile in responding appropriately at each moment. We extended the 5p fuel duty cut and have pushed out the cheaper fuel finder, empowering people to avoid rip-off prices, and chasing down the last few filling stations to reach 100% compliance. When wholesale kerosene prices more than doubled overnight, we stepped in within a matter of days with £53 million of support for those who needed it most. From next week, households will benefit from £150 off their energy bills thanks to the action that I took in my Budget, with the price cap giving households certainty on their bills until July, ahead of the winter months, when people use 78% of their gas.

Secondly, we will be responsible. The spring forecast showed that the Government have the right economic plan, restoring stability to our country’s finances and family finances. I will not put that stability at risk. As we respond to this crisis, we must learn from the mistakes of the past. The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss. That gave the most support to the wealthiest households: between 2022 and 2024 under the last Government, households in the top income decile received an average of £1,350 of direct energy bill support. That left us with high levels of national debt—a cheque written then for a bill that is still being paid today. I can confirm to the House that contingency planning is taking place for every eventuality, so that we can keep costs down for everyone and provide support for those who need it most, acting within our iron-clad fiscal rules to keep inflation and interest rates as low as possible.

This is not a war that we started, nor is it a war that we joined—notwithstanding the advice of the Opposition parties—but it is a war that will have an impact on our country. The challenges may be significant, but I promise to do what is right and fair, being responsive in a changing world and responsible in the national interest. I commend this statement to the House.

[Mr Speaker]

I call the shadow Chancellor.

[Sir Mel Stride (Central Devon) (Con)]

I thank the Chancellor for advance sight of her statement.

The right hon. Lady comes to the House with an economy in tatters. She would have us believe that she has delivered the stability and resilience that can weather the storm ahead, but she has done nothing of the kind. When she came to office, she ramped up borrowing and spending and hiked taxes to record levels. She was warned at the time, by the Office for Budget Responsibility and others, that her policies would mean higher inflation, higher borrowing costs and higher interest rates, and that she would destroy jobs. All of that has come to pass. Her mismanagement and foolish choices have given us the highest inflation in the G7, the highest borrowing costs in any major advanced economy—with gilt yields higher than those of Greece and Morocco—fragile fiscal headroom, the highest unemployment since the pandemic and rising, and GDP per capita falling. Under this Government we are getting poorer, and our economy is increasingly fragile and far from secure and resilient.

Despite what the right hon. Lady has said about tiebacks, nothing exemplifies this Government’s economic folly more than their approach to oil and gas. The utterly misguided net zero obsessions of the Energy Secretary have led to the absurdity of reduced extraction, while we see jobs destroyed, tax revenues forgone, and energy security smashed. The greatest tragedy of all is that in Jackdaw and Rosebank we have fields ready to go. In just months, they could be pumping vital relief to millions. Jackdaw alone has enough gas to supply more than 1.5 million homes, yet the right hon. Lady has nothing to say on that matter. Less oil and gas extraction means greater dependency and less security: this road leads to ruin. On energy, on the cost of living, on jobs, on growth, on public finances, on every measure that matters, the Chancellor has left us weak, weak, weak, and in the face of this energy shock, millions are about to suffer as a result.

With respect to her statement, may I ask the right hon. Lady the following questions? How many fuel retailers have yet to engage with the new fuel finder service, and can she comment on the widespread reports of technical glitches and out-of-date price information? She mentioned the small modular reactor planned for Wylfa, but given the need, can she explain why she has chosen not to go ahead with the large-scale nuclear site that was signed off by the last Conservative Government? On the specific subject of energy cost support, may I ask what fiscal capacity she believes she has to support those in need, and what plan she has to ensure that any targeted approach truly reaches all of them?

In her statement, the Chancellor criticised the last Conservative Government’s support package for not being targeted, but what she failed to mention was the fact that the present Prime Minister was then urging for support to be universal. Indeed, he said at that time that Labour’s approach would ensure

“that no household would pay a penny more on their bills.”—[Official Report, 8 September 2022; Vol. 719, c. 404.]

We have had no consistency from the right hon. Lady. How is she going to ensure that support for people depending on heating oil reaches those who need it most? Of course, that support, under this Government, will be funded through the taxes of hard-working people. Indeed, the reduction to energy bills this April is simply being taken from bills and dumped on to the shoulders of hard-pressed taxpayers.

It does not need to be this way. Is not the critical question this: where is the control of public spending? Where is the renewed resolve to grasp the welfare bill to get people off benefits and into work? I will tell you, Mr Speaker: it is nowhere, because the right hon. Lady is a captive of her own Back Benchers and has brought our economy one step from its knees. She knows it, the country knows it, and now we must all brace ourselves for what is to come—not from a position of strength, as the right hon. Lady is so desperate to have us believe, but from a position of weakness of her own making.

[Rachel Reeves]

That statement revealed only that the shadow Chancellor is utterly out of his depth. In the past 20 months, we have had six cuts in interest rates. We have more than doubled the fiscal headroom compared with the headroom that I inherited from the Conservative party. For the first time in six years, our deficit is less than 5% of GDP, and wages have increased by more than inflation in every single month that I have been Chancellor of the Exchequer. Compare that with the record of the previous Conservative Government, who oversaw the only Parliament on record in which people were poorer at the end of it than they were at the beginning. I prefer my record to their record any day of the week.

The shadow Chancellor says that we should act. Well, we have acted, but what he fails to mention is that his party supported our being involved in this conflict. Whereas we have called for de-escalation, the Leader of the Opposition said that we should be a participant in this conflict. The damage that that would have done to our economy would have been immense, yet the Conservatives make no apology for that.

The Leader of the Opposition said yesterday about the Prime Minister:

“If he’s creating a support package, that’s going to be done with taxpayers’ money.”

She thinks that we should be doing things that are not going to cost taxpayers money. The shadow Chancellor says that we should do more and put in more money, but the Leader of the Opposition says that we should not do anything. Where does the Conservative party now sit on the £53 million of support that we gave on heating oil? That was using taxpayers’ money to support those who needed it most. It was the right thing to do, but now the Leader of the Opposition seems to suggest that it was the wrong thing to do.

The shadow Chancellor asked a few specific questions. On the cheaper fuel finder that we have introduced, more than 90% of retailers have signed up to it, and of that 90%, all of them are updating their prices regularly. Along with the Competition and Markets Authority, we are chasing down the final few that have not submitted their prices.

On small modular reactors, the Conservatives say they supported it. They had 14 years, and they put not a single penny into it. The same is true of Sizewell C. They cannot say that we should spend less money and at the same time say that we should support Sizewell C and small modular reactors, because everything has to be paid for.

On fiscal capacity, we have more than doubled the headroom compared with what I inherited from the Conservatives. It was less than £10 billion when I became Chancellor of the Exchequer; it is now nearly £24 billion because of the actions that I have taken. The shadow Chancellor says that we have not built contingency, but the exact opposite is the case.

The shadow Chancellor asks about Rosebank and Jackdaw. It was because of the failure to do the work properly that they were challenged in the courts. One month after the previous Government left office—because they were kicked out—the courts came back and said that we had to reconsider scope 3 emissions. The energy companies Shell and Equinor resubmitted their plans at the end of last year. [Interruption.] The regulators—

[Mr Speaker]

Order. Members can go and have a discussion outside if they cannot be quiet here.

--- Later in debate ---

[Rachel Reeves]

Thank you, Mr Speaker.

The energy companies came back at the end of last year with their revised plans, and the regulators are now considering those. Ahead of the autumn, my right hon. Friend the Energy Secretary will to decide whether it is legal to go ahead with them, but we made a commitment in our manifesto to honour existing licences. It is only because of the failure of the previous Government to consult that we are in this position in the first place.

The shadow Chancellor says that if we cut the welfare bill we will be able to help people. Well, I am afraid the Conservatives had 14 years in office and he was the Welfare Secretary when the bill ballooned. Frankly, we will take no lessons from the Conservative party. It is only the Labour Government who can be responsive to the immediate challenges, because we have been responsible with the public finances. We are committed to our long-term energy security, and committed to making the right decisions in the national interest.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As the Prime Minister said yesterday, we have no idea how long this conflict will be and he is not assuming that it will be over quickly. We live in troubled times, and it is quite right that the Chancellor of the Exchequer is making serious contingency plans as we move through spring and summer and into autumn and winter. As she well knows, one of the challenges of targeting support is the availability of data. What is she doing to make sure that the data is available—not just across Whitehall, but in local government and in the energy companies themselves—to target support at those who need it most?

[Rachel Reeves]

That is a really important point. The previous Government had not done the contingency planning, so when the energy price shock came along, they said, “We are not going to provide any support.” In the end, they had a choice between doing nothing or providing blanket support. It was that blanket support that cost £78 billion. We have been working with the Department for Work and Pensions, local Government and others to ensure that we will be able to target support at those who need it most, but that is in addition to taking £150 off everyone’s energy bills already. We are doing the work. The prices come down in April for the following three months, and we are a long way off the winter, when 78% of gas is used by households.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I thank the Chancellor for advance sight of her statement. Our thoughts are with our brave armed forces at this time.

I agree that the last Government’s failure to invest in energy was a failure to protect our country. Today we face the stark reality that we cannot guarantee our national security, our energy security or our food security. When the Liberal Democrats were in government, we launched the auction for onshore wind and established the Green Investment Bank, helping to drive down costs and quadruple renewable energy. The Conservatives’ decision to scrap the Green Investment Bank has left our energy system more exposed, and should be worn as a badge of shame.

To shore up our energy security and to tackle the energy crisis, we Liberal Democrats have consistently argued for a three-pronged approach: first, to reduce energy demand by incentivising households and businesses to invest in energy efficiency, without the tax penalties built into the business rates system or prohibitive up-front costs; secondly, to fix the broken energy market that is unfairly inflating prices, especially for small businesses on our high streets; and thirdly, to provide targeted support for the most vulnerable and for those with the highest energy needs. I urge the Chancellor to consider our proposals to create an energy security bank that can offer low-interest loans for energy-saving improvements for households and small businesses, to reverse the cuts to home insulation programmes, and to exempt business investment in energy efficiency from business rates calculations.

Although the action from the Competition and Markets Authority is welcome, it is not enough. Small businesses have been blocked from the best energy deals for years—well before Donald Trump started bombing Iran—yet there has still been no CMA investigation into suppliers blocking access to those fair deals. I ask the Chancellor again: will she please instruct the CMA to do that investigation without delay?

On targeted support, families are fearful. Will the Chancellor consider zero-rating VAT on heating oil and liquefied petroleum gas and introducing a price cap mechanism for off-grid fuels? Will she commit to halving energy bills over the next decade by reforming pricing structures? If bills rise to more than £400 a year, as some are warning, will the Chancellor commit to coming back to this House and outlining a broader support package so that many struggling households do not face a crippling hit of that scale?

[Rachel Reeves]

I thank the hon. Lady for her questions. Nick Clegg once said that it would take 10 years to get nuclear power up and running so there was no point in doing it, as it would come on stream only in the 2020s. Imagine if that Deputy Prime Minister had not blocked investment in nuclear energy then—we would have the benefits of it today. The Liberal Democrats had a chance when they were in government, and they did absolutely nothing. The Conservatives opposed onshore wind, which is also helping to bring down bills.

In terms of supporting investment in renewables and energy security, we have created the National Wealth Fund, which is prioritising investment in defence and energy security, including in critical minerals in Cornwall, carbon capture and storage and the roll-out of chargers for electric vehicles. We have also put £14 billion into the warm homes plan to subsidise and support people to make energy improvements in their homes in order to reduce their energy consumption and therefore their bills, alongside doubling the number of people eligible for the warm home discount. We are looking at improvement relief through the business rates consultation to ensure that if people do make improvements, including on energy efficiency, they will not then be whacked with higher business rates.

The hon. Lady said that we should cut VAT on heating oil. When the Liberal Democrats were in government, they increased VAT on everything, so it is a bit rich to say that they want to cut it now. We have asked the Competition and Markets Authority to do a review into heating oil, which I set out today, in addition to the £53 million of support we have put in.

There seems to be a slight contradiction in what the hon. Lady is saying—does she want targeted support or blanket support? I argue that the progressive, universal approach that we are taking is the right one. It means £150 off everyone’s energy bills, but also targeted support for those who need it most. We cannot repeat what happened when Liz Truss was Prime Minister—we are still paying the price for the cheque that was written then with higher interest rates, inflation and taxes than we would otherwise have had.

[Jon Trickett (Normanton and Hemsworth) (Lab)]

I welcome the Chancellor coming to the House as soon as possible to make a statement. On profiteering in the fuel sector, the last time there was a problem with oil prices was after the war began in the east, when the then Government, following their laissez-faire market policies, allowed prices to rip to an extraordinary extent. The consequence, as we saw, was outrageous profiteering in the energy sector. Will the Chancellor indicate that we will not follow the Conservatives’ failed laissez-faire ideology, and that we will instead intervene directly in the market to prevent outrageous profiteering from occurring on this occasion?

[Rachel Reeves]

I thank my hon. Friend for that question. That is why we have the energy profits levy and the electricity generator levy—so that we can claw back any excess profits. It is also why we believe in an active and strategic state, including through empowering our regulators, like the Competition and Markets Authority, to ensure that the price gouging we have seen in the past cannot happen after the conflict in the middle east.

[Mr Speaker]

I call the Father of the House.

[Sir Edward Leigh (Gainsborough) (Con)]

In an attempt to get some consensus here, I commend one part of the Chancellor’s statement, where she said:

“We must guarantee that our domestic oil and gas industry can…play a role in our energy system for decades to come”.

Is there not a sensible, middle-of-the-way approach here? We should by all means proceed with green energy—such as offshore wind, in which we lead the world, in the North sea off the Lincolnshire coast—but we should also keep an open mind about new extraction from the North sea. I was listening carefully to what she said to the shadow Chancellor. Will the Chancellor confirm today that the Energy Secretary will keep an open mind when he considers these licences, so that we can guarantee our resilience in the future?

[Rachel Reeves]

I thank the right hon. Gentleman for his approach and for his question. The oil and gas industry plays an important role in our energy system and will do so for decades to come. We very much welcome the jobs that it creates, the tax revenue that it provides and, most importantly, the energy security that it offers. In my Budget, I set out the new North sea oil and gas strategy, which includes allowing the use of tiebacks or infills on existing sites. For the reasons I have explained, the Secretary of State for Energy Security and Net Zero now has to take a quasi-judicial decision on Rosebank and Jackdaw. He will, of course, approach that decision with an open mind because this Government recognise the importance of our oil and gas sector.

[John Grady (Glasgow East) (Lab)]

Does my right hon. Friend agree that the essential truth is that the Government have introduced a package of measures to make the poorest families in Glasgow and across the United Kingdom better off, whereas the Conservatives propose plunging those families back into extreme poverty? They left us with ridiculous levels of debt and the weakest defence since the 1930s—their record is absolutely shameful.

[Rachel Reeves]

My hon. Friend is right, but I would say it is worse than that in Scotland, where there is the legacy of two awful Governments: the Conservatives made people poorer, while the SNP Government fail to back our nuclear sector, which could deliver cheaper bills for people in Scotland.

[Sir Jeremy Hunt (Godalming and Ash) (Con)]

Could I gently ask the Chancellor to be less partisan at a time of crisis? If she brings before the House difficult measures that are right for the country, she will have the support of the whole House, but if she is partisan, she will not. I actually rise to support her basic instinct, which is for targeted rather than universal support. Four years ago, energy bills were heading to £4,000. We are at nothing like that now, and we do not know what the oil price will be next week, let alone this winter. Although we gave support to households and families last time by increasing borrowing, with her support, we cannot react to every single economic shock by further increasing our national debt. Will she confirm that when she comes to the House to announce targeted support, it will be fully funded in her Budget and not funded by increasing our national debt yet again?

[Rachel Reeves]

I thank the right hon. Gentleman for that question. When he became Chancellor, it was on the back of lots of promises that there would be no support for energy bills. He and others recognised that that position was not sustainable, but work had not been done on how to introduce a targeted system, so the choice was a binary one between blanket support or no support. The right hon. Gentleman took the right approach then by ensuring that people’s energy bills did not go through the roof; however, a targeted approach would be more appropriate, because under the previous approach, the top third of families got more than a third of the benefit. That is not right or sensible—all it does is drive up inflation, interest rates and taxes in the future. It is not the fault of the former Chancellor that that approach was taken, but we are using this period, when energy prices are actually falling because of the approach I took in the Budget, to ensure that we are in a position to take a targeted approach in the autumn.

[Luke Murphy (Basingstoke) (Lab)]

I am grateful to the Chancellor for her statement, and in particular for setting out the long list of interventions this Government have made on the cost of living, which stands in stark contrast to the record of the Conservatives, who left behind the worst legacy on living standards in a generation. Can the Chancellor confirm that in the weeks and months to come, as she takes decisions on encouraging regulators to take action and in contingency planning, she will keep in mind the need to protect our constituents’ living standards while ensuring economic stability?

[Rachel Reeves]

That is why what we did in the Budget last year was so important. In other countries, domestic energy bills are now going up, but because of the measures that I took in my Budget last November, energy bills will fall from 1 April, despite everything that is happening in the middle east. However, what would have the biggest impact on bills is an escalation in this conflict, which is what the Conservative party initially wanted to happen.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Shetland is home to one of the largest onshore wind farms in the country, the operators of which are paid millions not to generate electricity because of grid constraints. As a result, the announcement this morning of a trial of discounted energy rates for communities such as ours will be met—possibly—with some excitement. When will we hear the details of how that will work and what it will mean in terms of reductions to the bills of my constituents?

[Rachel Reeves]

On the point about national grid infrastructure and why we end up paying for energy that cannot be used, we have to speed up those connections. That is why I spoke about consulting on indemnities for building out infrastructure, even in the case of judicial review. We must act in the national interest and get this infrastructure built. At the same time, the Secretary of State for Energy Security and Net Zero will set out in more detail the specific ways in which we can bring down prices for communities, including those of the right hon. Member.

[Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)]

My constituents are appalled by supermarkets and other petrol retailers that are price gouging and profiteering from global instability and a middle east war that was backed by both the Tories and Reform. Let us make no mistake: if they were in government, our country would be right in the middle of it. Will the Chancellor set out the action that she is taking to clamp down on price gouging? I thank her for the £9 million announced yesterday to help my constituents in Cowdenbeath and elsewhere affected by the changes at Mossmorran.

[Rachel Reeves]

I thank my hon. Friend for those questions and for her campaigning work on Mossmorran to ensure that we can properly support her community, which we are also doing with our growth mission fund. We have introduced the cheaper fuel finder to ensure that price gouging does not happen, as it provides greater transparency on the prices offered by different fuel retailers. This is something that the previous Government could have done in their 14 years in power. France already has a cheaper fuel finder available on a number of apps, which can be used when people are travelling. We are introducing that system here because we want to ensure that our constituents pay the lowest price possible when they fill up their tanks.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

Given the current crisis, does the Chancellor regret in her first Budget increasing unfunded borrowing by £150 billion over this Parliament, which the Office for Budget Responsibility said at the time was

“one of the largest fiscal loosenings of any fiscal event in recent decades”?

[Rachel Reeves]

The Conservative party once believed in fiscal discipline, but that has gradually eroded over time. It is because of the fiscal rules that I introduced that we have been able to invest in Sizewell C and in small modular reactors. That was not possible under the fiscal rules of the previous Government. I would also say that borrowing fell in the last year. That did not happen in the last few years of the previous Conservative Government.

[Rachael Maskell (York Central) (Lab/Co-op)]

I thank the Chancellor for her statement. I am sure she will agree that our biggest concern is the intersection between poverty and food and energy price hikes for our constituents. As she looks ahead, will she consider a warm homes prescription to protect people’s health by keeping their homes warm, which would also save money, and will she ensure sufficiency in the crisis and resilience fund, so that local authorities can invest in those in the greatest need?

[Rachel Reeves]

I thank my hon. Friend for that question. From next month, families with children will benefit from the abolition of the two-child cap in the universal credit system. We have also doubled the number of recipients of the warm home discount and put £14 billion into upgrading people’s homes through the warm homes plan. Of course, as we look at targeted support, we will consider vulnerabilities within that.

[Wendy Chamberlain (North East Fife) (LD)]

The Chancellor has mentioned several times that households will benefit from £150 off their energy bills, but I had a constituent on the phone this morning who has been told that his energy bills are still rising and will not see the savings that the Chancellor is talking about. What conversations is she having with energy companies to make sure that people do actually benefit from the fall in bills that she is so keen to talk about?

[Rachel Reeves]

I would be very happy to see the particular details of that constituent, because energy companies—through both fixed and variable tariffs—are passing on that £150 reduction that I introduced in the Budget by getting rid of the energy company obligation levy entirely and by moving other levies from bills on to general taxation. I am happy to look at the particular circumstances of that individual, but people should be getting, on average, a £117 cut in their energy bills from 1 April.

[Jim Dickson (Dartford) (Lab)]

I thank the Chancellor for her statement. As she says, we have made good progress on stabilising our fiscal and economic situation since the 2024 election. Most notably, we have increased the headroom available on our public finances, but as a result of the previous Government failing to invest in sustainable energy and nuclear, we are much more exposed to price shocks than we could be. Does she agree that it is vital that we do all we can to protect the most vulnerable in our community, including those among my constituents in Dartford, from the energy price hikes will result from this middle east war?

[Rachel Reeves]

For my hon. Friend’s constituents in Dartford and for people around the country, there have been six interest rate cuts since the general election. The more than doubling of the headroom means that we have a bit more room for manoeuvre in the face of shocks. However, gas has set the price for energy at a third less than it was just four years ago, because of this Government’s investment in renewables.

[John Glen (Salisbury) (Con)]

I welcome the targeted nature of these measures, but three weeks ago it looked like inflation was going to return to the level that the right hon. Lady inherited when she took office in July 2024. That is no longer going to happen, but we are now seeing it the cost of borrowing. Given that we are spending well over £100 billion a year on debt interest, what assessment has the Chancellor made of the implications for the public finances of higher inflation and higher borrowing costs?

[Rachel Reeves]

It is because of those concerns and not wanting to put any upward pressure on borrowing costs or inflation that we are looking at what targeted support can be offered, rather than the blanket support we saw the previous time energy bills went up. The Bank of England offered its assessment on the potential impacts on inflation, but as the Governor of the Bank of England has also said, the upward pressure on inflation because of the conflict in the middle east is tempered somewhat by the action that I took in my Budget last year, which reduces inflation by between 0.4 and 0.5 percentage points, taking off some of that upward pressure on inflation.

[Dan Carden (Liverpool Walton) (Lab)]

I thank the Chancellor for her statement. May I ask her to do something for a specific group of people? Constituents who have to rent their home in the private rented market, especially those in more deprived communities like mine, will see their energy bills go up, but their biggest outgoing each month will still be their rent, which all too often is exploitative in areas like mine. We had rent controls in this country from the first world war up until the dying days of Margaret Thatcher’s Government. What can she do, thinking outside the box, to tackle this issue?

[Rachel Reeves]

I recognise that in my hon. Friend’s constituency, like in mine and many others, more people are in private rented accommodation than own their own home. One reason for introducing the Renters Rights Act 2025, which was opposed by the Conservative party, is to give people greater certainty, to enable them to challenge increases in their rents, and to give them greater rights over eviction, which was done to help his and all of our constituents.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

Just three weeks ago at the spring statement, I cautioned the Chancellor that significant fiscal intervention would be required to protect businesses and households in the face of the war in the middle east. She said at that time that, thanks to her actions, the finances of the UK were in robust condition. Now she prevaricates in order to protect those self-same public finances. Those two things cannot be true at the same time. Some 13% of my constituents are reliant on oil; in Scotland the figure is 5%, in England 2%, and in Leeds West and Pudsey it is 0%. Perhaps that is why she provided just £53 million to support oil users, which will not even touch the sides.

[Rachel Reeves]

It took 200 days for the previous Government to act on heating oil, and it took us under two weeks. We have put in £53 million, and that money is allocated based on heating oil usage in different parts of the country. None of the £53 million will go to help my constituents in Leeds West and Pudsey because we do not use heating oil, but there will be support for Scottish and Northern Irish constituencies and many others, because it is the right thing to do.

[Brian Leishman (Alloa and Grangemouth) (Lab)]

It is expected that food inflation will hit 4%. That means that a typical family’s annual grocery bill will increase by approximately £240. In Scotland, approximately 1 million people experienced food insecurity in the last year, and food insecurity is closely linked to access to and consumption of fruit and vegetables. The Chancellor said that she will meet with supermarkets, but what will the asks and demands be so that people can access nutritious and affordable food?

[Rachel Reeves]

The two-child limit for universal credit will be lifted from next week, and food banks have said that that will reduce reliance on them from families with children. That is a very good thing, but there is more that the Government could do to try to bring down food inflation, including getting a sanitary and phytosanitary deal with the EU, which would bring down prices in the shops. We are committed to achieving that this year. It is opposed by the Conservatives and Reform because of their ideological dislike of the European Union, but it is the right thing to do to reduce food inflation for all our constituents.

[Esther McVey (Tatton) (Con)]

The sad truth is that the Chancellor weakened the UK economy with her tax-busting Budgets and jobs tax, and that has been exposed by this middle east crisis. The Energy Secretary’s actions are making things worse: he has just refused to maximise drilling in the North sea and issue new licences, which would provide much-needed energy security and affordability. Will she now see sense and overrule the Energy Secretary’s decisions?

[Rachel Reeves]

Since I became Chancellor, we have had six cuts in interest rates, and for every month that I have been Chancellor, wages have risen faster than prices. Compare that with the previous Parliament, where people were worse off at the end than they were at the beginning. If the right hon. Lady believed in energy security so much, why was she part of the Government who refused to fund small modular reactors or Sizewell C and opposed onshore wind, which is the cheapest form of energy? If she believes in energy security, she should back it.

[Andrew Cooper (Mid Cheshire) (Lab)]

My constituents are being exploited by unscrupulous petrol retailers who are not letting a crisis go to waste. At BP in Winsford unleaded is 10p more per litre than the cheapest price in the area, and at Shell in Middlewich it is 15p more per litre. Does the Competition and Markets Authority have the powers that it needs to clamp down on this unscrupulous behaviour?

[Rachel Reeves]

We have introduced the cheaper fuel finder to ensure that my hon. Friend and, most crucially, his constituents have that information. People in France can already see the different prices of petrol at different filling stations on a map via an app or their sat-nav. That is where we will be in just a few weeks’ time once we have the technology working with those companies. The previous Government had 14 years to introduce something like that, and other countries have already done so while we went without. Having the fuel finder tool means that all our constituents can fill up at the cheapest cost.

[Gavin Robinson (Belfast East) (DUP)]

I thank the Chancellor for recognising the disproportionate reliance on home heating oil in Northern Ireland, but the £17 million made available for half a million homes reliant on oil equates to £34 per household, and there is no data to target that support. There is £81 million available from the renewables obligation for electricity. We were told by the Prime Minister and the Northern Ireland Secretary that that could be targeted, yet Treasury officials are blocking that, so I ask her to look at that again.

The Chancellor has made a commitment not to restore the 5p duty on fuel, but could she also look at the rebate for red diesel to help support construction, transport, haulage and energy regeneration in our country to stimulate the parts of our economy that have a disproportionate reliance on it and have lost the support that they gravely need?

[Rachel Reeves]

I thank the right hon. Gentleman for what he said about heating oil. Obviously, a disproportionate amount of support has gone to Northern Ireland, given its greater reliance on heating oil, and we encourage local authorities to target the money at those who need it most. At the same time, to ensure that everybody is supported, the Competition and Markets Authority is doing an urgent review to make sure that price gouging is not going on. We acted in a matter of days on heating oil, because that was the right thing to do.

When we froze fuel duty, we also took action on red diesel, but I am happy to ensure that the relevant Minister meets with the right hon. Gentleman to talk further about what needs to be done.

[Several hon. Members rose—]

--- Later in debate ---

[Rachel Reeves]

My hon. Friend is right about the importance of manufacturing in Huddersfield and more widely across Yorkshire. We are introducing the supercharger from the beginning of April, which will take £420 million off the energy bills of the most energy-intensive industries. The British industrial competitiveness scheme will also help over 5,000 businesses when it comes in next year.

[Dr Ellie Chowns (North Herefordshire) (Green)]

The fuel price shock caused by Trump’s reckless war highlights just how risky it is for the UK to be locked into the global fossil fuel markets. The Climate Change Committee recently pointed out that the cost of achieving net zero by 2050 is less than the cost of a single fossil fuel price spike, reinforcing the point that we need to invest in clean, green technologies and get ourselves off being hooked on fossil fuels.

The key problem in the UK is that gas is coupled to electricity prices, so decoupling is crucial. Will the Chancellor look at the report last week from Common Wealth, which points out that decoupling could be achieved right now and would save households at least £200 each year?

[Rachel Reeves]

I agree that de-escalation is the best way to reduce bills for families and businesses. I gently say to the hon. Lady that we want investment in renewables, and we introduced the Planning and Infrastructure Act 2025 to make it easier to build them, but her party voted against that—a vote which would have kept people’s bills higher than they need to be. We have had a one-third reduction in gas imports, and gas is setting the price of our energy at something like a third less than it was just four years ago. The electricity generator levy and the energy profits levy are ensuring that excess profits are taxed, and we can use that money to support the public finances and public services.

[Justin Madders (Ellesmere Port and Bromborough) (Lab)]

The consumer-focused, pragmatic approach being taken by this Government is in such contrast with the rhetoric of some on the Opposition Benches, who would only see military action escalate—and be in no doubt that our constituents would be paying the price for that.

I welcome the CMA’s report this morning about action to tackle rip-off vet fees, but that report took several years. The Chancellor spoke of new powers for the CMA to tackle price gouging, but can she confirm that it will be able to act swiftly, nimbly and in real time to tackle companies seeking to exploit this particular crisis?

[Rachel Reeves]

My hon. Friend is absolutely right: the Conservative party’s gung-ho approach would have made the crisis worse, not better. Our approach diplomatically has been to de-escalate the crisis at every stage, in part because we do not want that cost of living impact on families. As he knows, we met the Competition and Markets Authority a couple of weeks ago to talk through what more can be done, including on rolling out fuel finder for cheaper fuel and investigating the impact on heating oil. The CMA will be coming back to us in the next few weeks following that investigation, and looking more widely at how to keep prices down for all our constituents.

[Simon Hoare (North Dorset) (Con)]

The £474,000 awarded to Dorset council last week as part of the Chancellor’s announcement is welcome, but I must tell her that it really will not touch the sides; more will need to be done to support rural communities. Unwillingly and unwittingly, the Government will be profiteering through a massive hike in VAT and duty take. May I urge the Chancellor to ringfence, either in whole or in great part, the excess receipts that she will be receiving—this would not add to Government borrowing—to support rural communities across the country as they face this cost of living crisis?

[Rachel Reeves]

I thank the hon. Gentleman for what he said about heating oil. As well as the direct support for his local authority and many others, the CMA’s work is crucial to stop businesses exploiting the crisis to increase their profits. As I said in response to my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), the CMA will report on that shortly. On ringfencing certain tax revenues, it is clear that a prolonged conflict will reduce other tax revenues and push up borrowing costs, so it is not possible to ringfence a particular tax for a particular use, because other tax revenues will be coming down. But the whole reason for the energy profits levy and the electricity generator levy is to have some stabilisation in the system to bring in money to support the Government and our constituents when that is most needed. Of course, we will be using it to do that.

[Andrew Pakes (Peterborough) (Lab/Co-op)]

I thank my right hon. Friend for the serious approach she has taken to the conflict, unlike the hokey-cokey approach we have seen from the Conservative party. Peterborough is willing to play its part in developing our energy infrastructure, and we have already had £1 billion-worth of private investment to upgrade the gas networks based out of Peterborough, but my constituents know that the price hike is not just about what is happening now in the middle east; it is about that decade when we did not build the energy infrastructure the country needs. Will she reassure me that her plan will speed up new nuclear, speed up investment in renewables and get the country building the energy infrastructure we need if we are to tackle this challenge for the long term?

[Rachel Reeves]

I thank my hon. Friend for that question. It is great to see that investment in the gas networks coming into Peterborough, supported by him. That is in stark contrast to the Conservatives, who got rid of our gas storage facilities, stalled on nuclear and stalled on renewables. As a result, they left us more vulnerable to an energy price shock.

[Ben Lake (Ceredigion Preseli) (PC)]

What contingency planning is taking place to support non-domestic energy bills, especially in rural areas such as mine where a great number of small businesses and community organisations rely on heating oil and LPG?

[Rachel Reeves]

I am sure that the hon. Member will agree that the best thing we can do to support households and businesses is to de-escalate the crisis and bring it to an end as quickly as possible. But, as I set out in my statement, I will not tolerate businesses price gouging and earning excessive profits because of the conflict in the middle east. The CMA therefore has new powers to ensure that does not happen, and we are targeting support at those who most need it.