Key facts
- UK Prime Minister Andy Burnham announced VAT on household electricity bills will be cut from 5% to zero.
- The VAT cut will take effect on October 1.
- The measure is expected to save typical households £45 annually.
- The government plans to fund the VAT cut by scrapping the proposed digital ID scheme.
- The VAT cut is estimated to cost £850 million in the current financial year.
UK Prime Minister Andy Burnham has announced a cut in VAT on household electricity bills from 5% to zero, effective October 1. This measure is projected to save typical households approximately £45 annually and is estimated to cost the government £850 million in the current financial year. Burnham stated the funding for the VAT cut would come from scrapping the previous administration's proposed digital ID scheme, which had an estimated cost of £1.8 billion. However, Darren Jones, a former advisor to Keir Starmer, raised concerns about the funding, calling the digital ID savings unfunded and urging clarity on how the revenue loss would be covered. Opposition parties also questioned the public finances. Burnham chaired his first cabinet meeting, emphasizing his commitment to leading a "cost of living government" and making living expenses a key priority. Further measures to address costs are expected in the coming days. The reshuffle saw significant appointments, including John Healey as Chancellor and Ed Miliband as Foreign Secretary. A new Downing Street unit in Manchester, 'No 10 North,' and a new Office for the Prime Minister and the Cabinet are also being established.