Burnham cuts VAT on electricity bills amid funding dispute

New UK Prime Minister Andy Burnham announced on his first full day in office that VAT on household electricity bills will be removed from 1 October, saving the average household around £45 a year. The measure, estimated to cost £850m in the current financial year, is intended to ease cost-of-living pressures Source: BBC, The Guardian.

The policy

The tax cut will be funded by scrapping the previous government's digital ID scheme, projected to save £1.8bn over three years Source: DW News, Al Jazeera. Business secretary Jonathan Reynolds described the cut as "a statement of priorities" Source: The Guardian. Burnham also held his first cabinet meeting, appointing John Healey as chancellor and Ed Miliband as foreign secretary, and spoke with US President Donald Trump and Ukrainian President Volodymyr Zelenskyy Source: Euronews, Al Jazeera.

Funding dispute

Within hours, Darren Jones, a former Starmer ally sacked in the reshuffle, posted on X that the digital ID programme was "unfunded" and called for the government to explain how it would pay for the cut at the autumn budget Source: BBC, The Guardian. The Liberal Democrats said the policy was "coming apart at the seams", while shadow defence secretary James Cartlidge pointed out that the OBR had said the ID scheme itself lacked funding Source: The Guardian. The government maintains the savings are real and the cut is affordable.