Healey unveils pre-Budget cost of living fixes as fuel duty freeze expected

Chancellor John Healey has announced a package of pre-Budget measures aimed at easing cost of living pressures, with tariff cuts on around 100 imported goods, changes to carers allowance and parental pay, and an expected freeze in fuel duty.

The Treasury said the tariff cuts would cover items such as chocolate, baked beans, gherkins, marmalade, toffees and heating oil. Tariffs of 8% to 12% will be reduced to zero on selected goods. The government said the average family would save about £21 a year, or 40p a week. That is around 0.5% of average annual food spending of about £3,800. Ministers also announced tariff cuts on fertilisers and kerosene for heating, and said the changes would help farmers and households.

Other measures include a permanent 55p per mile tax-free mileage rate for the first 10,000 miles driven for work, two weeks of paternity pay for self-employed fathers, and an extension of parental pay to more than 150,000 parents a year. Carers will be able to earn above the existing limit without losing their entire carer's allowance, as the government moves to soften the so-called cliff edge. More post office drop boxes will be rolled out to help people send and receive parcels.

The package is a curtain raiser to John Healey's first Budget. Fuel duty is expected to be frozen again, which would be the 16th Budget in a row. A rise in the minimum wage from April is also expected, though younger workers are unlikely to get more generous rises than older ones because of concerns about job creation. The government has said the measures are not a fundamental transformation but will give people and businesses some breathing space.

The political reaction has been mixed. The Conservatives called the plans 'cheaper gherkins' and an insult to families hit by tax rises. The Food and Drink Federation and the National Farmers Union have been sceptical about whether tariff cuts will have a material impact on food price inflation. Business groups have warned that higher minimum wages will add to their costs.

The Budget is being framed by many as a tight fiscal event. Government debt and inflation have increased the cost of interest payments, which now account for £1 in every 13 the government spends. The war in Ukraine and the conflict with Iran have pushed up energy and food prices. EDF has warned that the energy price cap could rise from around £1,700 to about £2,200 in January, an increase of about £500, though other reporting put the expected rise at around £400. The Chancellor is also under pressure to fund defence spending, with the government committed to spending 3.5% of GDP on defence by 2035 and facing calls to set out a path to 3% by 2030.

Ministers have defended the package. The Business Secretary said the government was not powerless and would act where it could make a difference, while acknowledging it was not everything. The Chancellor has described the Budget as a chance to give people breathing space and a sense of hope for the future.