Prime Minister Andy Burnham has announced three key policies to ease the cost of living: a VAT cut on electricity bills, a £2 bus fare cap, and a 20% business rates reduction for hospitality venues.
VAT cut on electricity bills
VAT on electricity bills will be cut from this October for six months, saving the typical household around £45. VAT is currently charged at 5% and suppliers generally pass this cost on to customers. However, energy bills are forecast to rise again this winter, with the Ofgem price cap rising by around 13% this month and due for an update in October.
The Prime Minister said: “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.”
£2 bus fare cap
The £2 bus fare cap will be reintroduced from January 2027 and last throughout 2027. A previous £2 cap was in place between January 2023 and December 2024 under the Conservatives, but the incoming Labour administration increased it to £3, arguing it was not affordable.
Mr Burnham said: “Good, affordable transport links are an essential. No-one should be priced out of those and left behind. But for too long, people have said that cheaper transport isn’t an option. I don’t accept that. I’ve done it before and I will do it again now: a £2 cap on bus fares for millions across the country. Lower fares will help people get to where they need to – giving them breathing space to help with the cost of living.”
20% business rates cut
Business rates will be cut by 20% for pubs, clubs and live music venues across England from April next year. The discount comes on top of a 15% cut announced in January and will apply to around 32,000 hospitality businesses. It is expected to save a typical pub some £1,100 annually, but will not be available to the very largest live music venues.
The PM wrote on X: “I’m giving thousands of pubs, clubs and music venues a 20% cut in business rates. I won’t stand by while these cherished local spaces disappear, replaced by boarded-up windows and ‘For Sale’ signs. They’re the heart of our communities and it’s time we backed them.”
