Here are the plans to cut the cost of living under Reeves’s new Budget
Rachel Reeves has delivered her latest budget, with the Chancellor pledging to cut the cost of living, bring down inflation, and deliver economic stability.
Data from the Treasury and the Office for Budget Responsibility show that inflation is past its peak, and measures announced in this Budget, such as bringing down energy bills and freezing rail fares, are set to bring inflation down further. The OBR has forecast that the Budget will reduce CPI inflation by 0.4 percentage points next year.
Some of the major cost-of-living cuts announced by Reeves during her Budget include:
- Taking levies off energy bills to save families £150 on average next year, and up to £300 for some poorer households.
- The decision to remove the two-child limit in full from April 2026 will lift 450,000 children out of poverty -rising to around 550,000 alongside other measures announced this year, such as the expansion of free school meals – the biggest reduction at any Budget this century.
- Raising the National Living Wage and National Minimum Wage means full-time workers on the National Living Wage see a rise of £900 a year, while full-time workers on the 18-20 National Minimum Wage rate will see a £1,500 rise.
- Pensioners on the full new State Pension across the UK are set to receive an extra £575 a year, which they’ll start seeing from April 2026.
- Over three-quarters of pensioners in England and Wales will benefit from a Winter Fuel Payment this winter.
- Freezing regulated rail fares in England this year – saving commuters hundreds of pounds off season tickets and easing pressure on household budgets.
- Extending the freeze on prescription fees for another year, keeping the cost under £10.
- The Universal Credit Standard Allowance for a single person aged 25 or over will increase by around £295 a year, over £110 more than if uprated by inflation alone. For couples, where one partner is aged 25 or over, it will increase by around £465 a year, approximately £180 more than if uprated by inflation alone.
