Chancellor Rachel Reeves has unveiled a package of support measures worth more than £1 billion to boost consumer spending and ease pressure on households amid economic uncertainty and elevated energy prices.
At the centre of the package is a temporary reduction in VAT on family entertainment and leisure activities, with the rate cut from 20% to 5% on admission fees for theme parks, zoos, museums and theatres.
The reduced rate Chancellor unveils VAT cut amid economic pressures will also apply to children’s meals, cinema tickets and soft play centres between June 25 and September 1, covering the peak summer holiday period.
The Government estimates the measures could save a typical family around £20 on visits to major attractions, alongside smaller reductions on meals and cinema outings.
Additional support measures include maintaining the fuel duty freeze for the remainder of the financial year, targeted aid worth £470 million for energy-intensive industries such as chemicals and ceramics, tariff reductions on selected food imports and free bus travel for children during August.
Reeves stopped short of announcing broader support for household energy bills but said ministers remain prepared to introduce more targeted assistance later in the year if utility prices continue rising.
The Chancellor said the package would be funded in part through revised taxation arrangements for multinational energy companies, which the Treasury expects to generate hundreds of millions of pounds annually.
The business community responded cautiously positively to the announcements. Merlin Entertainments confirmed it intends to pass on the VAT reductions through lower ticket and meal prices at attractions including Alton Towers and Legoland.
Kate Nicholls described the VAT cut as one of the fastest ways to lower prices and support consumer confidence, though industry groups called for similar relief to be extended to accommodation providers facing rising employment and operating costs.
The package comes amid signs of slowing economic activity. Recent purchasing managers’ index data from S&P Global showed UK private sector activity contracting for the first time in more than a year, with services activity weakening sharply.
Manufacturers have also warned of deteriorating order books and softer summer demand, with the Confederation of British Industry urging the Government to take further action on industrial energy costs, infrastructure bottlenecks and investment barriers.
Opposition politicians questioned whether the measures go far enough. Shadow Chancellor Mel Stride argued the delayed decision to maintain the fuel duty freeze offered limited relief for households and businesses already facing financial strain.
The Office for Budget Responsibility is expected to assess the fiscal impact and effectiveness of the package later this year.
