Chancellor of the Exchequer Rachel Reeves is set to announce a series of measures designed to mitigate the financial impact of the ongoing conflict in Iran on British households. The package includes the suspension of import tariffs on more than 100 food products, a move projected to save consumers over £150 million per year.
Great British Summer Savings Scheme
As part of the 'Great British Summer Savings' initiative, children aged five to 15 in England will enjoy free bus travel on participating local routes throughout August. The government is allocating more than £100 million to fund this scheme and support bus services facing increased operational costs.
Tariff Suspension Details
The full list of products subject to tariff suspension will be published next week, but it is expected to include biscuits, chocolate, dried fruit, and nuts. Chief Secretary to the Treasury Lucy Rigby declined to specify the exact price reductions, noting that pricing decisions ultimately rest with supermarkets. The temporary suspension will cost the Exchequer approximately £40 million.
Prime Minister Sir Keir Starmer emphasized the practical benefits of the measures, stating: 'We know many hard-working families are still feeling the squeeze and too often think they have to hold back. By giving every child free bus travel throughout August and cutting tariffs on everyday food items, we’re putting money back into people’s pockets and making life that bit easier.'
Context of Rising Energy Costs
The household energy price cap is anticipated to rise by £209 per year from July, driven by the closure of the Strait of Hormuz, which has elevated global oil and gas prices. While Ms Reeves is expected to outline contingency planning, she is likely to delay any targeted support for winter energy bills until September, when energy consumption increases.
Energy analyst Cornwall Insight predicts that Ofgem's cap for a typical dual-fuel household from July to September will reach £1,850, a 13% increase from April's £1,641 annual cap. The government remains cautious about implementing a universal bailout similar to that of Liz Truss's tenure, warning that unfunded giveaways could exacerbate borrowing costs and inflation, ultimately worsening household finances.
Previous Measures and Inflation Trends
The latest package follows the extension of the 5p fuel duty cut until the end of the year, along with tax breaks for hauliers and assistance with red diesel costs for farmers. Ms Rigby did not deny speculation that Ms Reeves might announce an increase in the 45p-per-mile mileage rate, unchanged since 2011.
The Office for National Statistics reported that Consumer Prices Index inflation fell to 2.8% in April, down from 3.3% in March, marking the lowest level since March 2025. This decline was largely attributed to Ofgem's 7% reduction in the energy price cap in April, which was supported by government measures. However, inflation is expected to surge again as Middle East conflicts drive fuel prices higher, with the energy price cap set to rise significantly from July.
Political Reactions
Conservative shadow chancellor Sir Mel Stride criticized the measures, arguing that the cost-of-living pressures stem from the Chancellor's own decisions, including tax increases on businesses that stoked inflation and slowed economic growth. He stated: 'I don’t think it’s going to make a massive difference if a packet of peanuts is a bit cheaper or a chocolate bar is slightly cheaper than it would otherwise have been.'
Ms Reeves defended her approach, asserting: 'My number one priority is protecting households from rising costs. This summer I want every family to be able to enjoy themselves, that’s why we’re launching the Great British Summer Savings Scheme, and why we’re helping kids with free bus travel throughout August. As the war in Iran pushes prices up at home, my economic plan is the right one.'
