Prime Minister Andy Burnham has announced that VAT will be removed from household electricity bills, cutting the rate from 5% to 0% effective October 1. The tax cut is expected to reduce the annual Ofgem price cap by around £45, with suppliers required to pass savings to customers. This marks Burnham's first major policy since taking office.
Cabinet Reshuffle and Key Appointments
On Monday evening, Burnham made sweeping changes to his Cabinet. John Healey was appointed as the new Chancellor, replacing Rachel Reeves. Other departures from Sir Keir Starmer's era include former deputy prime minister David Lammy, ex-attorney general Lord Hermer, and former housing secretary Steve Reed. Angela Rayner made a significant comeback, while Lisa Nandy retained her role as Culture Secretary.
Downing Street confirmed the merger of the Department of Science and Innovation with the Department of Business and Trade, with Jonathan Reynolds named Secretary of State for Business, Innovation, Science and Trade. Bridget Phillipson was appointed Cabinet Minister for Women and Equalities.
Trump Call Details Revealed
Donald Trump revealed details of his phone call with Burnham on Truth Social, stating the conversation was "very good" and covered topics including North Sea Oil, Trade, the Military Alliance, and demining of the Hormuz Strait. Trump said Burnham "has got a big job ahead of him, but he will be able to do it" and pledged US support. The call occurred within an hour of Burnham arriving in Downing Street.
International Calls
Burnham also spoke with Nato Secretary General Mark Rutte and German Chancellor Friedrich Merz. Regarding the call with Rutte, a Downing Street spokeswoman said: "The Prime Minister began by congratulating the Secretary General on the successful Nato summit... and the strong signal of unity it sent." The leaders discussed Ukraine, and Rutte welcomed Burnham's strong statement of support. In the call with Merz, both leaders underlined ambition to increase cooperation under the Kensington Treaty.
Funding and Impact
The VAT cut will be funded by savings from the cancelled digital ID programme. Burnham stated: "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."
