Andy Burnham has scrapped plans for a government-issued digital ID for all British adults on his first day as prime minister, redirecting resources to cost of living measures that include slashing VAT on household electricity bills to zero.
“Time and resource that was going to be spent on a national ID scheme will go instead to where it’s most needed, such as helping with the cost of living,” a spokesperson for Burnham said. The move marks a sharp break from the approach of his predecessor, Sir Keir Starmer, who had initially argued that mandatory digital IDs would help clamp down on illegal immigration and modernise the state.
“Burnham scraps digital ID plan and cuts VAT on electricity to 0% from October, saving households £45 a year.”
The Office for Budget Responsibility estimated in November that the programme would cost £1.8bn over three years, though Downing Street rejected that figure at the time. After nearly three million people signed a petition opposing the plans, Starmer’s government had already watered down the scheme to a voluntary system. Now it has been dropped entirely.
Dame Karen Bradley, chair of the Home Affairs Committee, had described the launch of the digital ID policy as “nothing short of a fiasco” which “raised fears of government over-reach into people’s lives”.
On energy bills, Burnham announced that VAT on domestic electricity will be cut from 5% to 0% from 1 October, saving a typical household about £45 a year. The policy came after he pledged in his first speech as prime minister to give people more “breathing space” on their finances. He has also said he will “look at” the tax-free personal allowance ahead of his first Budget in the autumn.
Yet the new PM faces tough trade-offs. As Adam French of Moneyfacts put it: “A more volatile world is a more expensive world.” Energy costs remain largely driven by wholesale gas prices, and Labour’s manifesto pledge to cut household bills by £300 by 2030 is under scrutiny. Starmer and former chancellor Rachel Reeves had removed £150 from typical annual bills in April by cutting levies, but those savings were soon wiped out by the impact of US-Israeli strikes on Iran.
Burnham has appointed John Healey as chancellor, who will be responsible for delivering any changes and outlining how to pay for them. The government is also reportedly considering a “two-tier” road tax system that would make electric vehicle ownership cheaper than petrol or diesel under a pay-per-mile model. Other ideas include lowering the mansion tax threshold from £2m to £1.5m, cutting business rates for pubs and music venues by 20%, and replacing inheritance tax with a “national care levy” to fund a National Care Service.
“One of the first things this government will do is put its focus where people need it right now,” a spokesperson said. Whether Burnham can maintain that focus while managing the fallout from global events and the limits of public finances remains to be seen.