Key facts
- UK Prime Minister Andy Burnham announced VAT on domestic electricity bills will be abolished from October 1.
- The VAT rate will be reduced from 5% to zero.
- The measure is expected to save the average household around £45 annually.
- The tax cut is expected to cost the government approximately £850 million in the current financial year.
- The government stated the funding would come from scrapping a proposed digital ID scheme.
UK Prime Minister Andy Burnham has announced that value-added tax (VAT) on domestic electricity bills will be abolished from October 1, a move expected to save the average household around £45 annually. The measure is projected to cost the government approximately £850 million in the current financial year. Burnham stated the tax cut would be funded by scrapping the previous administration's proposed digital ID scheme, which he claimed would have cost taxpayers £1.8 billion. However, Darren Jones, a former advisor to Keir Starmer, disputed this, arguing the ID program had been unfunded and urged ministers to clarify how the revenue loss would be covered. Burnham also reshaped his cabinet, appointing allies and notably bringing back former ministers John Healey as finance minister and Wes Streeting as defence secretary.