Rachel Reeves

Thank you, Mr Speaker, for granting me permission to make this statement to the House about the Government’s continued response to the war in the middle east. Let me start by paying tribute to our armed forces; my thoughts and the thoughts of the whole House remain with them and with those whose lives have been disrupted by this conflict. Since I last addressed the House, the costs of oil and gas have remained high, and last week the Bank of England estimated that inflation could be between 3% and 3.5% in the next few quarters. The full economic impact of the war remains uncertain, but it makes our economic plan even more important: to build prosperity that is secure and resilient and to bear down on the cost of living and protect the public finances, with delivery through our iron-clad fiscal rules. Today, I will set out further action that I am taking. First, on global collaboration, last week the Prime Minister authorised the US to use UK military bases to defend the strait of Hormuz. It remains the case that the best way to protect families and businesses is rapid de-escalation of this conflict. To strengthen our collective security, I have announced that we will explore a new defence financing and procurement mechanism with the Netherlands, Finland and other EU and NATO partners. I welcome the International Energy Agency’s decision to authorise a co-ordinated release of our collective oil reserves to alleviate the immediate pressure on supply, and the UK has now begun the release of our share of 13.5 million barrels of oil. Secondly, on our energy security, the last Government’s failure to invest in energy was a failure to protect our country, but through determined action, this Government are taking control of our own energy supply: we are investing in renewables, lifting the ban on onshore wind and streamlining grid connections; we ran the biggest offshore wind auction in European history last year, and we are bringing the next renewables auction forward to this July; and we are driving forward negotiations on the UK’s participation in the EU internal electricity market. We must guarantee that our domestic oil and gas industry can also play a role in our energy system for decades to come, so I can confirm that we are encouraging investment in tiebacks to make the most of our existing production facilities. We are rewriting the story on nuclear, too. We have construction on Sizewell C, have agreed an extension to Sizewell B, and are due to sign the contracts on the UK’s first small modular reactors in Anglesey, in partnership with Rolls-Royce. I will not tolerate red tape and vested interests holding back our energy security, so our new planning rules will unblock the pipeline of critical infrastructure projects. I can announce today that we will legislate to implement the Fingleton review in the next Session, and I recently wrote to industry and regulators to get them to set out their plans to fast-track that implementation in full. To the Opposition parties, which like to talk big about energy security but then vote against the very infrastructure to build it, let me say this: it is time to put our country first. I can confirm today that we are developing options to back critical energy projects with indemnities if their planning consent is challenged, so that we do not waste a single moment in protecting our energy security, because energy security is national security. Thirdly, on households and businesses, I know that when prices rise and incomes are squeezed, people look to the Government and ask, “What are you doing to help?” That is why, since the election, we have delivered and funded 30 hours of free childcare to working parents, with wages rising faster than prices for every month that I have been the Chancellor and free breakfast clubs being rolled out at primary schools. From next week, this is what will see: the two-child limit—gone; day one sick pay—in; another rise in the national living wage; prescription charges—frozen; train fares—frozen; fuel duty—frozen; and the state pension increasing by £575. For businesses, there is £4.3 billion in business rates support; the regulation action plan, which will cut admin costs; and the supercharger discount, which will be followed next year by the British industrial competitiveness scheme to take money off business energy bills. But I know that there is more to do. On trade, I can confirm to the House that we are aiming to conclude negotiations with the EU this year on the sanitary and phytosanitary agreement, which will directly impact food prices in our shops. I have also asked officials to look at where targeted reductions to agrifood tariffs can help bring down food prices, balancing this against the implications for domestic producers and food security. Later this week, I will be holding meetings with supermarkets and banks to discuss how they can further support their customers. We have a world-class competition and consumer protection regime. Since my last statement, the Competition and Markets Authority has stepped up its statutory monitoring of fuel prices, and I will update on fuel pricing within the next month. The CMA is working with Government to monitor the cost of household essentials for both price rises and disruption, and has launched a market study into heating oil. Today, I can announce that we are going further to make sure that the Competition and Markets Authority has the powers it needs—powers that were denied to it by the previous Government—to detect and crack down on price gouging, bringing in a new anti-profiteering framework and considering time-limited, targeted powers for the CMA and other regulators. This week, the Business Secretary and I will convene the regulators’ council to discuss its work to protect consumers, because—let me say it again—this Government will not tolerate any company exploiting this crisis at consumers’ expense. Finally, I want to update the House on how I am preparing for this conflict as it goes on. I know that families and businesses are worried about the impact of rising prices. I have said that we will be responsive to a changing world and responsible in the national interest, and today I want to set out in more detail what that means. First, we will be responsive. We do not yet know what the full impact of this conflict will be, so we must be agile in responding appropriately at each moment. We extended the 5p fuel duty cut and have pushed out the cheaper fuel finder, empowering people to avoid rip-off prices, and chasing down the last few filling stations to reach 100% compliance. When wholesale kerosene prices more than doubled overnight, we stepped in within a matter of days with £53 million of support for those who needed it most. From next week, households will benefit from £150 off their energy bills thanks to the action that I took in my Budget, with the price cap giving households certainty on their bills until July, ahead of the winter months, when people use 78% of their gas. Secondly, we will be responsible. The spring forecast showed that the Government have the right economic plan, restoring stability to our country’s finances and family finances. I will not put that stability at risk. As we respond to this crisis, we must learn from the mistakes of the past. The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss. That gave the most support to the wealthiest households: between 2022 and 2024 under the last Government, households in the top income decile received an average of £1,350 of direct energy bill support. That left us with high levels of national debt—a cheque written then for a bill that is still being paid today. I can confirm to the House that contingency planning is taking place for every eventuality, so that we can keep costs down for everyone and provide support for those who need it most, acting within our iron-clad fiscal rules to keep inflation and interest rates as low as possible. This is not a war that we started, nor is it a war that we joined—notwithstanding the advice of the Opposition parties—but it is a war that will have an impact on our country. The challenges may be significant, but I promise to do what is right and fair, being responsive in a changing world and responsible in the national interest. I commend this statement to the House.