Chancellor to cut tariffs on some food and freeze fuel duty to give families 'breathing space'
Making higher tax-free mileage rates permanent and the removal of import taxes on some food items are among the measures being announced ahead of Wednesday's Budget.
The BBC understands the government will also freeze fuel duty again in the Budget, while the Times reports it may also slow the pace of pay increases for younger workers on the minimum wage.
The series of small announcements are part of Chancellor John Healey's pledge to give families what he is calling "breathing space" with the cost of living.
The government is also planning to end the so-called cliff-edge for those receiving carer's allowance payments.
Speaking ahead of his first Budget, Healey said that the ongoing wars in Iran and Ukraine had "hit families here at home through higher everyday costs".
"We can't control global events, but we can act where we can make a difference," he added.
Business Secretary Jonathan Reynolds defended the government's plan to remove tariffs from 100 food items, which it calculates could save households up to £21 per year - or 40p a week - when combined with existing tariff suspensions that were introduced in June.
"We're not going to say it is everything," he told the BBC, but taken alongside the changes implemented in the summer on goods such as pasta, fruit juice and tuna, he said it would save around £500m a year.
Other measures the government announced include:
- Making permanent a 55p per mile tax-free mileage rate for those driving up to 10,000 miles for work, with the rate rising from 25p per mile to 35p above that
- Allowing carers to earn more than an existing earnings limit without losing their entire allowance, replacing it with a taper mechanism instead
- Giving two weeks of paternity pay to self-employed fathers, who have previously missed out on payments of up to £194 a week for the period
- And rolling out hundreds of additional Post Office drop boxes to make sending parcels easier
The government will also freeze fuel duty again in the Budget, the BBC understands. The 5p duty discount is also set to continue. That discount was first introduced in 2022, and was due to last 12 months, but has been extended ever since.
Minimum wage rise
Healey will announce the new National Minimum Wage for 18 to 20-year-olds on Wednesday as well as the National Living Wage for those aged 21 and over.
Labour had promised in its manifesto it would remove "discriminatory age bands so all adults are entitled to the same minimum wage".
The business secretary would not comment on the new pay rates but appeared to confirm the pace of rises would slow for people on the National Minimum Wage.
Reynolds told the BBC: "The manifesto pledge on equalisation still applies but we were always clear it could happen over time.
"Of course, you want not just good wages but good work, " he added. "It is a balance of making sure the pressures on the labour market are taken into account."
The Times has reported that the National Minimum Wage is likely to rise by 3.9% from £10.85 an hour to around £11.27. It is far below the 26% increase the Labour government has put in place since returning to power in 2024.
Even after the reported rise, the rate remains below the National Living Wage which is currently £12.71 an hour. It is set to rise by 3.9% to £13.20, the Times said.
The list of products the government is removing tariffs on includes:
- Garlic
- Gherkins
- Chocolate-coated wafers and waffles
- Boiled sweets
- Toffees, caramels and similar sweets
- Citrus jams, marmalades and pastes
- Throat pastilles and cough drops
- Plant-based drinks including soya, nut, cereal or seed
- Kerosene
- Fertilisers
The government said removing tariffs on fertiliser aimed to help farmers, while changes to import levies on kerosene is targetted at households that rely on heating oil.
But the Conservatives said the government's "everyday fixes" had already been wiped out by higher borrowing costs, taxes and inflation.
Shadow chancellor Andrew Griffith said: "Shoppers face rising costs at the till and families are struggling to make ends meet, but Burnham's plan is cheaper gherkins. This is an insult to families hammered by Labour's tax rises."
