Burnham announces plans to cut VAT on electricity bills as first cost-of-living move

Andy Burnham has announced a fresh tax cut to remove VAT from domestic electricity bills from 1 October, a move that will funded from cancelling the Digital ID programme.

The prime minister said in a statement: “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.”

It is estimated that the change will reduce the annual Ofgem price cap by around £45 from October, with suppliers expected to pass savings on to their customers.

The newly appointed chancellor John Healey said the cut would be funded this year from cancelling the Digital ID programme.

“For too long, too many people have struggled with the cost of living,” he said.

“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.

Burnham said on Monday his arrival in power would “bring back hope” to Britain as he launched his premiership with the surprise appointment of Healey as chancellor.

In his speech outside No 10, he said the government would announce “some breathing space” on Tuesday for people regarding the cost of living.