Households across the UK are bracing for fresh cost of living pressures as conflict in the Middle East threatens to hit essentials like fuel, energy and even food.
Speaking on Monday, Sir Keir Starmer warned that the Iran war will “affect the future of our country” but insisted the UK was “well-placed” to weather the storm as the conflict hits the economy and pushes up costs for consumers.
The prime minister sought to reassure Britons that there would be a “long-term plan” in place to emerge a “stronger and more secure nation” amid widespread concerns about the impact of the crisis on household costs.
There is a “five-point plan” to help people through the immediate crisis, he added, including investing in energy security to make Britain less susceptible to market volatility and de-escalation in the Middle East.
Several of the pledges announced during the speech were not new, a point the PM addressed.
“That is my point”, Sir Keir said, “everything I’ve done in politics, certainly since the Ukraine War in 2022 is a response to this new and dangerous world.”
The prime minister pointed to several government pledges aiming to lower the cost of living in 2026, including a freeze on prescription charges and fuel duty (until September). Here are some of the other plans the government is putting in place from this month onwards:
New government-backed support fund
From April, councils will be able to administer Labour’s new ‘Crisis and Resilience Fund’, designed to support low-income households at times when affording the essentials becomes a struggle.
This new scheme will continue to offer vital assistance to those facing financial hardship, complementing standard benefits and grants. It will also integrate discretionary housing payments, which are one-off grants for housing costs.
Operating similarly to a current scheme, eligible households across the UK will be able to access support such as essential appliances, contributions towards utility bills, and direct cash payments of up to £300.
The government has committed £1 billion a year for at least three years to authorities for this change, replacing the previous annual confirmation model.
While council leaders have welcomed this longer-term commitment, the Local Government Association told The Independent last year that a vast majority (98 per cent) are not confident the funding will adequately meet local demand.
Energy bill reductions
Ofgem has announced an average £117 reduction to its energy price cap from April, broadly broadly in line with Labour's pledge to cut energy bills by £150 from the start of the new financial year through scrapping an energy efficiency scheme.
The cap for April to June was set in February, meaning bills are effectively protected until July.
However, respected energy consultancy Cornwall Insight has predicted the July price cap will rise by nearly £300 from July as conflict in the Middle East threatens to push up costs.
Heating oil relief fund
The government has added £53 million more to its funding for the Crisis and Resilience Fund to support those struggling with the rising cost of heating oil.
Used by around 1.5 million households in the UK – including two-thirds of those in Northern Ireland – the product has seen one of the sharpest price hikes since the US-Iran war began.
Due to the nature of the fund, it will only be the households which are being pushed into financial hardship by the price rises that will be eligible for support.
Benefits and wages go up – but not for all
April 2026 sees an above-inflation income boost of approximately 6.2 per cent to the standard allowance for all universal credit claimants.
For a single person over 25, this translates to a £6 per week increase, rising from £92 to £98. Couples with one or both partners over 25 will see a £9 per week increase, from £145 to £154.
Most other benefits, including PIP, DLA, attendance allowance, carer’s allowance, and ESA, are expected to be uprated by September’s inflation rate alone, increasing by 3.8 per cent.
The state pension will also rise by 4.8 per cent from next April, in line with annual earnings growth, bringing the weekly amount to £241.05.
However, at the same time, the monthly payment rate for the health-related element of universal credit for new claimants will be cut from £105 to £50. The rate for existing claimants will also be frozen until 2029.
At the same time, the national living wage increases by 4.1 per cent to £12.71 an hour for eligible workers aged 21 and over. The government estimates this will boost the gross annual earnings of a full-time worker on this rate by £900, benefiting around 2.4 million low-paid workers.
The national minimum wage rate for 18- to 20-year-olds also rises by 8.5 per cent to £10.85 an hour, narrowing the gap with the national living wage.
End of the two-child benefit cap
The chancellor announced an end to the two-child benefit cap at last year’s Budget, following intense pressure from backbenchers, campaign groups and political opponents.
The move will increase the benefits for 560,000 families by an average of £5,310, the Office for Budget Responsibility’s (OBR) fiscal outlook has calculated.
Set to come into effect this month, the government estimates that the change will reduce the number of children living in poverty by 450,000 by 2029/30.
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