Keir Starmer to tell cabinet to slash cost of living in new year message

Keir Starmer will warn his cabinet to slash the cost of living when they meet for the first time this year, after new figures suggested the poor were getting poorer under Labour.

With his beleaguered government still trailing Nigel Farage’s Reform UK in the polls, and expected to suffer heavy losses in May’s local, Scottish and Welsh elections, the prime minister will tell ministers to find ways to cut household bills.

“I know families across the country are still worried about the cost of living,” he will say. “There will be no let-up in our fight to make life better for them.”

As he tries to woo disgruntled voters, the Labour leader will use an event on Monday to highlight steps his government has already taken, but the renewed push follows weeks of negative economic headlines, including warnings that workers will get “hammered” by Rachel Reeves’ stealth taxes.

In her Budget in November, the chancellor said she was “asking everyone to make a contribution” to fund public services and investment after months of sluggish economic growth.

But her decision to drag millions more people into paying higher rates of tax, by freezing the thresholds at which they kick in, will “hammer” workers, while pensioners and those on benefits will see their incomes increase, a new analysis found.

An employee currently earning £50,000 would be £505 worse off in real terms by 2030-31, despite a forecast that their salary will increase by more than £6,000, an analysis by the Centre for Policy Studies (CPS) think tank found.

As he declares there can be no let-up in the fight against high living costs, the PM is expected to highlight the six interest rates cuts in recent months, which Labour says has left mortgage costs at their lowest since Liz Truss’ disastrous mini-budget.

Millions of households will also see their energy bills fall by £150 from April, while low-paid workers will see an increase to the national living wage worth £900.

Speaking at an event on Monday, Sir Keir will say more families this year will begin to feel the impact of Labour’s policies.

He will tell families: “This Labour government is on your side, doing everything we can to ease the cost of living, and make life better. In 2026, the choices we made will mean more people begin to feel that positive change.”

He will add: “This is real change that you will be able to feel day in day out. Britain is turning the corner, and 2026 is the year more people will feel renewal becoming reality.

“We’ll use every tool we have to help you with the cost of living and make your lives better. That’s my promise to all of you.”

The first cabinet meeting of the year will be on Tuesday.