Prime Minister Andy Burnham has announced the removal of VAT on household electricity bills, reducing the rate from 5% to 0% from October 1, in a move aimed at easing the cost-of-living crisis for millions of households. The tax cut was unveiled as Burnham prepared to chair the first meeting of his newly-appointed Cabinet, following a sweeping reshuffle that ousted key figures from Sir Keir Starmer's administration.
Cabinet Reshuffle and New Appointments
On Monday evening, Burnham made major changes to his Cabinet, starting with the appointment of John Healey as Chancellor of the Exchequer, succeeding Rachel Reeves. Healey, formerly defence secretary, was described by Downing Street as a signal of the Prime Minister's intent. A swathe of major figures from Starmer's era left government, including former deputy prime minister David Lammy, former attorney general Lord Hermer, and former housing secretary Steve Reed.
Angela Rayner has been appointed as housing secretary, a role she previously held under Starmer. Bridget Phillipson remains in Cabinet as Minister for Women and Equalities, while Lisa Nandy keeps her role as Culture Secretary. Jonathan Reynolds MP was named Secretary of State for Business, Innovation, Science and Trade, following the merger of the Department of Science and Innovation with the Department of Business and Trade. Lucy Powell becomes Education Secretary, and Anneliese Midgley MP is appointed Chief Whip.
Cost-of-Living Measures
In his first address to the nation as Prime Minister on Monday, Burnham promised to provide early “breathing space” for households struggling with the cost of living. The VAT cut on electricity bills is the first such measure, expected to benefit millions. The tax reduction takes effect from October 1, lowering the rate from 5% to 0%.
International Calls
Burnham has spoken with NATO Secretary General Mark Rutte and German Chancellor Friedrich Merz. In a call with Rutte, Burnham congratulated him on the successful NATO summit in Ankara and updated him on Healey's appointment. The leaders discussed Ukraine, with Rutte welcoming Burnham's strong statement of support. In a separate call with Merz, both leaders underlined their ambition to increase cooperation under the Kensington Treaty and discussed the Coalition of the Willing supporting Ukraine.
Other Developments
Online safety minister Kanishka Narayan and Foreign Office minister Hamish Falconer entered Downing Street, followed by Environment Secretary Emma Reynolds and housing minister Matthew Pennycook. Wes Streeting, former health secretary who resigned in May after losing faith in Starmer's leadership, was also spotted heading to No 10.
