HM Treasury is monitoring the situation closely following Iran’s attack against Israel. The UK is working urgently with our allies to de-escalate the situation.

The Office for Budget Responsibility (OBR) estimated the potential UK economic impacts of a widening of conflict in the Middle East in their March 2024 Economic and Fiscal Outlook (https://obr.uk/efo/economic-and-fiscal-outlook-march-2024/ ).

The overall core school budget will total £60.7 billion in the 2024/25 financial year, the highest ever level in real terms per pupil. School funding is therefore set to have risen by £11 billion next year, compared with 2021/2022.

The Secretary of State for Work and Pensions is required by law to undertake an annual review of State Pension and benefit rates. Most of these will increase by 6.7% from April 2024, in line with the increase in the Consumer Prices Index in the year to September 2023. The basic State Pension, full rate of the new State Pension and Standard Minimum Guarantee in Pension Credit will increase by 8.5%, in line with the growth in average weekly earning in the year to May-July 2023. The increase to all these State Pensions and benefits in April 2023 was 10.1%, in line with the increase in the Consumer Prices Index in the year to September 2022 and the Government’s manifesto commitment to the triple lock for the new and basic State Pensions.

The Government will also be investing £1.2 billion restoring Local Housing Allowance rates to the 30th percentile of local market rents. This significant investment will ensure 1.6 million low-income private renters will gain on average, nearly £800 per year in additional help towards their rental costs in 2024/25.

From April 2024, the National Living Wage is set to increase by 9.8% to £11.44 an hour. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the National Living Wage and is expected to benefit over 2.7 million low-paid workers. The equivalent increase in April 2023 was 9.7%.

The Government understand the pressures people have been facing with the cost of living and is committed to reducing poverty and supporting low-income families. This commitment is demonstrated by the package of additional support for the most vulnerable provided by one of the largest support packages in Europe. This includes the current Household Support Fund, which is worth £842 million and runs until 31 March 2024 in England. The Devolved Administrations receive Barnett Formula funding as a result of this, bringing the total investment to £1 billion.

Taken together, including the measures outlined above, support to households to help with the high cost of living in total amounts to £104 billion over the period 2022/23 to 2024/25.

High inflation is the greatest economic challenge that we must address, which is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Monetary policy, including all decisions on Bank Rate, is the responsibility of the independent Monetary Policy Committee at the Bank of England, and they have the Government’s full support as they take action to return inflation back to target.

MPC decisions over Bank Rate guide commercial banks’ decisions over the retail interest rates they charge on loans and pay on deposits. However, banks also make commercial judgements that influence the degree of pass‐through from changes in Bank Rate into retail interest rates, with conditions in financial markets and in the banking sector also influencing interest rates paid on deposits or charged for lending.

Nevertheless, we recognise this will be a concerning time for mortgage borrowers, particularly those who are due to come to the end of their existing deal in the immediate future.

Following the commitments agreed to support borrowers in December, the Chancellor met with mortgage lenders, UK Finance and the Financial Conduct Authority on 23 June. At this meeting, lenders agreed to a new Mortgage Charter to support borrowers struggling with their mortgage payments, which was published on 26 June. This sets out the standards lenders will adopt when helping their customers, including new flexibilities to help customers manage their mortgage payments over a short period. More information can be found at: https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter

This is in addition to the measures the Government has already taken aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans, and protection in the courts through the Pre-Action Protocol.

High inflation is the greatest economic challenge that we must address, which is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Monetary policy is the responsibility of the independent Monetary Policy Committee at the Bank of England, and they have the Government’s full support as they take action to return inflation back to target.

Consistent with monetary policy independence, the Chancellor has regular meetings with the Governor of the Bank. Open exchange of views in these meetings is critical for the Government and the Bank to understand each other’s views on the outlook for the economy and monetary and fiscal policy, to support policy making in both institutions. These meetings are therefore confidential.

The fiscal steps that are being taken to tackle inflation have been set out in the recent open letter from the Chancellor of the Exchequer to the Governor of the Bank of England.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1164809/Chancellor_Open_CPI_Letter_-_June_2023.pdf

Further, active policy decisions that reduce inflation this year, including extending the Energy Price Guarantee and maintaining the 5p cut in fuel duty, were set out at Spring Budget 2023.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1144441/Web_accessible_Budget_2023.pdf

High inflation is the greatest immediate economic challenge that we must address. That is why the Government has made it a priority to halve inflation this year, and we will not hesitate in our resolve to support the Bank of England as it takes action to return inflation to the 2% target. We are on track to do this: the majority of major forecasters agree in forecasting inflation to halve by the end of the year and subsequently return to target.

As is the practice of successive administrations, the details of internal meetings are not routinely disclosed.

On 1 January 2023, the mileage rate for staff who use their vehicles to make journeys in the performance of their duties increased from 56p to 59p per mile, above the HMRC-approved mileage rate of 45p per mile, to recognise the increased cost of motoring.

We are ensuring record funding is invested in the country’s transport network, sustainably driving growth across the country while managing the pressures of inflation. We intend to publish the Rail Network Enhancements Pipeline shortly which will confirm the latest position on all Network Rail schemes.

The Government published a consultation on minimum service levels for Fire and Rescue Services on 9 February. An Impact Assessment to accompany the consultation is available on gov.uk,

The final Local Government Settlement published by the Department for Levelling up, Communities and Housing on 6th February 2023 confirms that Revenue Support Grant and Baseline Funding Levels will increase in line with September CPI (10.1%).

Additionally, the council tax referendum limits for Fire and Rescue Authorities (FRAs) have been set at £5 which will provide an additional £67m of income if all standalone FRAs choose to make full use of the flexibility. This settlement represents a good deal for fire and rescue and will help to manage their inflationary pressures

Schools, like families and businesses across the world, are facing global inflationary pressures. The Prime Minister

has pledged to halve inflation, and school funding will increase by £2 billion next year as well as the year after that. This will be the highest real-terms spending on schools in history, totalling £58.8 billion by 2024-25. In 2010, school funding stood at £35 billion, so we will be delivering a 68% increase in cash terms. The Government have also announced further support for parents worth £26 billion next year.

The autumn statement announced significant additional investment in core schools funding. The core schools budget will increase by £2 billion in 2023-24 and 2024-25. That will be paid into schools’ bank accounts in April, and I am sure they will welcome that additional funding.

The 2022 Autumn Statement announced significant additional investment in schools. The core schools budget will increase by £2 billion in both 2023/24 and 2024/25. This is over and above totals announced at Spending Review 2021. This year, schools' funding is £4 billion higher than last year, rising by another £3.5 billion in 2023. Taken together, that means a 15% increase in funding in two years. The Institute for Fiscal Studies have said that this additional funding will fully cover expected increases in school costs up to 2024, and will take per pupil spending back to at least 2010 levels in real terms.

The additional funding will enable head teachers to continue to concentrate funding in the areas that the Department knows has a positive effect on educational attainment, including high quality teaching and targeted support to the children who need it most, as well as help schools to manage higher costs, including higher energy bills and staff pay awards

The Department also provides a range of school resource management tools, designed to help schools get the best value from their resources, and help direct funding towards improving outcomes for their pupils.

The Department understands that each school’s circumstances are different. Where schools are in serious financial difficulty, they should contact their Local Authority or the Education and Skills Funding Agency.

The Department is in regular communication with the Chancellor of the Exchequer on all matters related to schools. The Chancellor announced in the 2022 Autumn Statement that core schools funding will increase by net £2 billion in 2023/24 and 2024/25. This increase in funding, on top of the funding awards previously announced at the Autumn Budget and Spending Review 2021, means total schools funding will increase by 15% between 2021/22 and 2023/24 from £49.8 billion to £57.3 billion, nationally. These increases will deliver additional support to schools, helping to deliver on the Government’s commitment to levelling up education across the country.

Schools are also being supporting with energy costs over the winter months. From October 2022 to 31 March 2023, schools will benefit from the Energy Bill Relief Scheme. This will provide a price reduction to protect them from high energy bills over the winter period.

In announcing the Spending Review 2021, my Rt. Hon. Friend Mr Chancellor of the Exchequer reiterated the Government’s commitment to cement the UK as a ‘scientific superpower’.

All future funding decisions will be subject to the outcome of the Spending Review, and we are working with HM Treasury to agree an ambitious R&D package.

The Spending Review will conclude on 27 October. We will then undertake the Departmental allocations process.