Prime Minister Keir Starmer will issue a stark directive to his cabinet to intensify efforts to slash the cost of living when they convene for their first meeting of the new year. This comes amid fresh polling pressure and an analysis revealing that poorer households are becoming worse off under his administration.
Pressure Mounts on Beleaguered Government
Sir Keir's call for action follows a challenging period for Labour, with the party still trailing behind Nigel Farage's Reform UK in national polls. The government is also braced for potentially heavy losses in the upcoming local, Scottish, and Welsh elections in May. In this context, the Prime Minister will instruct ministers to urgently identify new ways to reduce household bills for struggling families across Britain.
"I know families across the country are still worried about the cost of living," he is set to say. "There will be no let-up in our fight to make life better for them." He will pledge to use every available tool at the government's disposal to achieve this goal in 2026.
Stealth Tax Warning Overshadows Pledges
The renewed push coincides with weeks of difficult economic news. A significant concern is a new analysis by the Centre for Policy Studies (CPS) think tank, which warns that workers are set to be "hammered" by stealth taxes introduced by Chancellor Rachel Reeves.
In her November Budget, Ms Reeves stated she was "asking everyone to make a contribution" to fund public services after months of sluggish growth. However, her decision to freeze tax thresholds, dragging millions more into higher rates, will disproportionately impact workers. The CPS analysis found that an employee earning £50,000 today would be £505 worse off in real terms by 2030-31, despite an expected salary increase of over £6,000.
Meanwhile, pensioners and those on benefits are projected to see their incomes rise.
Highlighting Progress and Promising 'Renewal'
In an attempt to woo disgruntled voters, Sir Keir will use an event on Monday to spotlight measures already enacted. He is expected to point to the six interest rate cuts in recent months, which Labour says have brought mortgage costs to their lowest point since Liz Truss's mini-budget.
Further measures coming into effect include a £150 reduction in energy bills for millions from April and an increase to the National Living Wage worth around £900 for low-paid workers.
Speaking ahead of Tuesday's cabinet meeting, the Prime Minister will declare that 2026 is the year Britain turns a corner. "This Labour government is on your side, doing everything we can to ease the cost of living - and make life better," he will say. "In 2026 the choices we made will mean more people begin to feel that positive change... Britain is turning the corner and 2026 is the year more people will feel renewal becoming reality."
