Prime Minister Andy Burnham has removed VAT from household electricity bills, reducing the rate from 5% to 0% from October 1. The measure, funded by savings from the cancelled digital ID programme, is expected to cut the annual Ofgem price cap by around £45. Burnham described it as the first concrete policy of his premiership, saying: '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.'
Cabinet Reshuffle and First Meeting
Burnham chaired the first meeting of his newly-appointed Cabinet on Tuesday, following a sweeping reshuffle on Monday evening. John Healey was named Chancellor of the Exchequer, replacing Rachel Reeves. Other key appointments include Angela Rayner returning to a senior role, Lisa Nandy remaining as Culture Secretary, and Bridget Phillipson becoming Minister for Women and Equalities. Jonathan Reynolds was appointed Secretary of State for Business, Innovation, Science and Trade, merging the science and business departments.
Major figures from Sir Keir Starmer’s era left government, including ex-deputy prime minister David Lammy, former attorney general Lord Hermer, and former housing secretary Steve Reed. Burnham described the changes as 'the most significant change moment in our politics for 40 years.'
International Calls
Burnham spoke with Nato Secretary General Mark Rutte and German Chancellor Friedrich Merz on Monday evening. During the call with Rutte, Burnham emphasized his strong support for Ukraine and noted John Healey's appointment as a signal of intent. With Merz, both leaders pledged to strengthen cooperation under the Kensington Treaty and accelerate work on Ukraine peace efforts.
Policy Agenda
The VAT cut is part of Burnham's promise to provide 'breathing space' for households. The government estimates suppliers will pass savings to customers. Burnham also merged the Department of Science and Innovation with the Department of Business and Trade, appointing Jonathan Reynolds to lead the new department. Online safety minister Kanishka Narayan and Foreign Office minister Hamish Falconer entered Downing Street, while Environment Secretary Emma Reynolds and housing minister Matthew Pennycook also attended the Cabinet meeting.
