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Written question asked by Wendy Morton (Conservative) on Tuesday, 2 June 2026, in the House of Commons. It was due for an answer on Monday, 8 June 2026 (named day). It was answered by Lucy Rigby (Labour) on Monday, 8 June 2026 on behalf of the Treasury.

Armed Conflict: Iran

Question

To ask the Chancellor of the Exchequer, what estimate she has made of (a) the total cost to the Exchequer and (b) the potential impact on inflation and household disposable income of the measures announced in her statement of 21 May 2026 on the Government’s economic response to the conflict in Iran; and if she will publish a breakdown of the expected cost, funding source and forecast impact of each measure.

Original answer

The Chancellor set out a package of measures on 21 May to support families and businesses. This covered:

  • A package to support motorists including through changes to fuel duty, the Heavy Goods Vehicle (HGV) Levy and tax-free mileage rates, estimated to cost approximately £600 million in total across the forecast period.
  • A temporary reduced rate of VAT on children’s meals in restaurants, children’s tickets for theatres and cinemas and tickets for certain family attractions, estimated to cost approximately £300 million in 2026-27.
  • £350m in sectoral support for critical chemicals and £120m for ceramics over the forecast period; and over £100m in support for the bus sector this year, including funding free travel for children aged 5-15 on local buses throughout August.

The government is also engaging businesses on a tariffs suspension package. The precise fiscal impact of that package depends on final decisions following said process of business engagement.

The government also announced reforms to the Foreign Branch Exemption regime, which are expected to raise hundreds of millions a year and fund the package of measures set out above.

The costings of measures will be subject to certification by the OBR and set out in the next forecast in the usual way. The OBR will also publish an updated inflation and real household disposable income outlook, reflecting the impact of these and other policy measures announced alongside or before that forecast.

The answer was corrected by Lucy Rigby (Labour)

on Tuesday, 7 July 2026 on behalf of the Treasury.

Corrected answer

The Chancellor set out a package of measures on 21 May to support families and businesses. This covered:

  • A package to support motorists including through changes to fuel duty, the Heavy Goods Vehicle (HGV) Levy a 12-month Vehicle Excise Duty (VED) holiday for the majority of HGVs and tax-free mileage rates, estimated to cost approximately £600 million in total across the forecast period.
  • A temporary reduced rate of VAT on children’s meals in restaurants, children’s tickets for theatres and cinemas and tickets for certain family attractions, estimated to cost approximately £300 million in 2026-27.
  • £350m in sectoral support for critical chemicals and £120m for ceramics over the forecast period; and over £100m in support for the bus sector this year, including funding free travel for children aged 5-15 on local buses throughout August.

The government is also engaging businesses on a tariffs suspension package. The precise fiscal impact of that package depends on final decisions following said process of business engagement.

The government also announced reforms to the Foreign Branch Exemption regime, which are expected to raise hundreds of millions a year and fund the package of measures set out above.

The costings of measures will be subject to certification by the OBR and set out in the next forecast in the usual way. The OBR will also publish an updated inflation and real household disposable income outlook, reflecting the impact of these and other policy measures announced alongside or before that forecast.

Secondary information

Type
Written question
Reference
5941
Session
2026-27
Related items
Middle East: Economic Response
Thursday, 21 May 2026
Parliamentary proceedings
House of Commons
Subjects
Costs Armed conflict Economic situation Inflation Iran Disposable income
Contains statistics
Yes
Link
View this Written question on www.parliament.uk