Prime Minister Andy Burnham has announced a VAT cut on domestic electricity bills, effective from October 1, to provide immediate relief for households struggling with the cost of living. The move, confirmed on his second day in office, is expected to reduce the annual Ofgem price cap by approximately £45, with energy companies expected to pass the savings onto customers.
Details of the Energy Tax Cut
Speaking from Downing Street, Mr Burnham said: "Westminster has not been working for people for too long, with families struggling with the cost of living. That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister. We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope."
Chancellor John Healey added: "For too long, too many people have struggled with the cost of living. Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter." He confirmed the measure is funded this year by cancelling the Digital ID programme, and will help bring down inflation while supporting households across the country.
Broader Government Changes and Future Measures
In his first address as Prime Minister, Mr Burnham pledged the biggest change to British politics in 40 years, promising a new political and economic model. He also made sweeping Cabinet changes on Monday evening, appointing John Healey as Chancellor to succeed Rachel Reeves. Major figures from Sir Keir Starmer’s era, including former deputy prime minister David Lammy, former attorney general Lord Hermer, and former housing secretary Steve Reed, left government.
Mr Burnham indicated he is exploring further measures to help hard-pressed households, including rent controls and capping bus fares. The government aims to deliver early breathing space for families as winter approaches.
