Chancellor Rachel Reeves has unveil edthe government’s “Great British Summer Savings” campaign, committing hundreds of millions of pounds to lower costs for families by taxing energy companies more. 

Under a new price adjustment set by the government, children aged five to 15 will be able to travel free on participating local bus services across England from 1 to 31 August, with unlimited journeys and no registration required. 

The scheme, confirmed by Reeves ahead of a broader announcement today on summer support for households and businesses, will cost taxpayers £100m. 

She also said VAT would be cut for children’s food and access to entertainment, including museums and theme parks.

It adds to an announcement to freeze fuel duty that was slated to rise, costing around £455m next year. The fuel duty has remained frozen since a “temporary” 5p cut was announced by Rishi Sunak in 2022 after Russia’s full-scale invasion of Ukraine. The policy has not been properly costed by the fiscal watchdog as a result of a series of freezes. 

Reeves told MPs that she was changing the way energy companies were taxed on their “foreign branches”, ensuring the government can get receipts from UK trading activity profits.

She said it would add in hundreds of millions of pounds in extra revenue each year. The Office for Budget Responsibility will only score the policies at this year’s Budget.

The government has already funded measures to reduce and freeze prices on household energy bills, prescription charges and train fares through general taxation.

Taxpayer-funded campaign led by Reeves

Reeves’ campaign will be laid out in a speech on Thursday morning as the government faces pressure to demonstrate it is protecting households from rising prices. 

The Chancellor is set to point her finger at the ongoing conflict in Iran for a rise in costs for businesses and households. The Office for National Statistics said on Wednesday that raw material prices jumped by 7.7 per cent in the year to April, adding to pressures on firms. 

The Chancellor said her economic plan was “the right one” as the UK was put down as the fastest-growing economy in the G7 at the start of the year. Inflation was lower than expected on Wednesday.

Alongside the bus fare scheme, the government has stated its intention to make further targeted cuts to agri-food tariffs, suspending levies on more than 100 product types including biscuits, chocolate, and dried fruit and nuts. 

The Treasury said the expected benefit to consumers would exceed £150 million a year, on top of between £100m and £400m in annual savings already expected from tariff suspensions announced in April.

The government has claimed that “higher growth” than expected helped to fund some of the policies, though Tory officials have slammed the claim as “complete nonsense”. 

Reeves is also facing more intense scrutiny over urging supermarkets to cap food prices. The cap would come alongside a temporary suspension of the packaging tax and regulation on healthy diets. 

She confirmed that she had asked supermarkets to keep prices down.

“She said: “I know that the cost of the weekly shop is often one of the biggest worries for families. So last month, I met with supermarkets to urge them to do all they can to keep prices low.

“And today I am taking action by suspending tariffs on over different 100 foods sold in supermarkets. And I am clear that I expect supermarkets to pass these savings on in full to their customers.”

The Treasury claims removing tariffs on foods like biscuits, chocolate and nuts will save British shoppers more than £150m per year.

Sir Keir Starmer’s spokesman declined to comment on whether the government had made the demands and refused to rule out a U-turn on the packaging tax and food regulation.