Reeves Cost-of-Living Package Starts to Bite as Brent Drops
Chancellor Rachel Reeves’s cost-of-living package this week — the cancellation of a planned 5p rise in fuel duty, free bus travel for children over the summer holiday, a VAT reduction from 20% to 5% on tickets for summer attractions (theme parks, zoos and museums), the removal of import tariffs from 100 food items including biscuits and baked beans, a VAT cut on children’s meals, and a £120 million support package for the ceramics industry — provides the Treasury-side answer to the political-economy challenge that has dogged Labour since the Iran war began on 28 February. Friends of Reeves believe there is a world in which she survives the transition to a Burnham premiership precisely because it would reassure the markets.
The Stoke component of the package is politically specific: Stoke was won by Boris Johnson’s Tories in 2019, taken back by Labour in 2024, and is now a Reform UK target. Inflation has slowed to 2.8% — the lowest level in over a year — and the economy has been growing above expectations. The Bank of England’s lower-interest-rate stance is likely to remain in place with unemployment beginning to rise. Reeves’s allies have been lobbying Labour MPs in defence of her job, warning the “biggest fear for the bond markets and the unions is Ed Miliband” if Burnham becomes Prime Minister. The chancellor question is now “almost as important as that for prime minister”.