Prime Minister Andy Burnham has announced two motoring policies within his first week in office: a reduction in VAT on domestic electricity to 0% and a £2 cap on bus fares.
VAT cut on electricity
Less than 24 hours after entering Downing Street, Burnham committed to cutting the VAT rate on domestic electricity from 5% to 0%, effective October. While primarily aimed at reducing household bills, the move benefits the two million electric car owners who charge at home. According to Andersen EV, savings could be around £25 per year, with higher-mileage drivers saving up to £40. Carwow estimates that those fully charging their battery once a week could save as much as £65 annually.
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.”
Bus fare cap
The second update involves a reduction in bus fares. Starting January 1, 2027, bus tickets will be capped at £2 across the UK, down from £3. This is backed by £400 million in extra funding and is intended to particularly aid passengers in rural and coastal areas.
Burnham added: “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.”
