Chancellor warns of more cost-of-living pain because of Iran war but promises to be hands on to protect the public
Daily Telegraph 01/08/26
John Healey, the Chancellor, has warned supermarkets that he will not allow them to take the public “for a ride” as a result of the Middle East crisis.
Writing for The Telegraph, Mr Healey said he would be watching closely for “any suggestion” that customers are being ripped off, either when shopping for essential groceries or when filling up their car at the petrol pump.
He promised to get tough on “price-gouging” at the pump or the till, cautioning that regulators “have the powers to clamp down on it if it happens”.
The higher oil and petrol prices triggered by the Iran conflict threaten to undermine Andy Burnham’s pledge to give families and businesses “breathing room” after years of a cost-of-living crisis.
Increased energy prices have a knock-on effect on the cost of transporting goods as well as the price of fertiliser for food production, feeding into inflation.
In an admission that there will be more pain for British people as the Iran war continues, Mr Healey said: “Being frank, we can’t completely stop the squeeze that families and businesses will feel with a global shock of this scale.”
But making a direct appeal to voters, he added: “I have confidence in our resilience as a nation. In our British grit, and the determined hope that still runs through our communities.”
Mr Healey’s downbeat comments are likely to add to fears that his autumn Budget will be overshadowed by poor economic growth forecasts and tax rises.
According to the Financial Times, officials said Mr Burnham and Mr Healey agreed the Budget must build in a £23.6bn buffer against the Government’s self-imposed borrowing rules.
Buffer in Budget could be halved
But after a series of spending announcements by Mr Burnham, including a £2 cap on bus fares, a 5 per cent cut in VAT on energy bills and a reduction in business rates for pubs, analysts said the combination of the energy shock, higher borrowing and a weaker outlook on the economy could halve the buffer.
The conflict has triggered sharp rises in fuel costs after Tehran cut off the Strait of Hormuz, through which around a fifth of the world’s oil and gas supplies passed before the war.
On Friday, petrol prices hit their highest level since the start of the Iran war amid renewed fighting in the Middle East.
Unleaded climbed to 160p per litre, according to the RAC. Petrol is now the most expensive it has been since 2022, when Russia’s invasion of Ukraine sent energy prices surging.
Mr Healey said: “We’ll be watching closely for any suggestions that customers are being taken for a ride at the pump or the till.
“Companies’ willingness to work with the Government throughout this crisis has been positive, and there has been no significant evidence of so-called price gouging, but I want to be blunt in reassuring the public that our regulators have the powers to clamp down on it if it happens.”
His intervention signals that he will be a hands-on Chancellor, ready to intervene to protect consumers from price rises.
Mr Healey said: “I know how people will feel as they watch the conflict grow, casualties rise and trade ships stuck motionless. They’ll be worried about the impact on their daily lives here at home, on their energy bills, petrol prices at the pump and the cost of their weekly shop.
“Of course, the conflict affects our national security, our UK bases, personnel and allies in the Middle East. But it also threatens our economic security: impacting the family finances of millions of British people.
“And I know that many British businesses have been put under pressure by increasing costs too. Conflict and uncertainty increases inflation, threatens growth and pushes up costs for businesses and governments alike.”
In a message to Telegraph readers, he pledged to “always put the interests of the British people first”, no matter what “is thrown at us in this dangerous new world”.
Earlier this year, Rachel Reeves, the then chancellor, attempted to put pressure on supermarkets to cap food prices to limit inflation unleashed by the Iran war.
The proposals led to a backlash from supermarket executives and economists, forcing Ms Reeves to back away swiftly from the idea.
Stuart Machin, the chief executive of M&S, called the plans “preposterous”, while Andrew Bailey, the Governor of the Bank of England, said it would be “unsustainable” and risked backfiring.
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