Within hours of entering No 10, Andy Burnham’s first major policy as prime minister has opened a bitter internal Labour row – after his own former minister called the flagship tax cut unfunded.
Burnham announced that VAT would be removed from household electricity bills from 1 October, a move the government said would take around £45 off the energy price cap. Chancellor John Healey said the cut was “funded this year from cancelling the Digital ID programme”.
“Andy Burnham's first policy as PM – a VAT cut on electricity bills – has been slammed as unfunded by his own former minister Darren Jones.”
But Darren Jones – sacked by Burnham as chief secretary to the prime minister and a key ally of predecessor Sir Keir Starmer – hit back on X, writing: “Good news that VAT will be cut on electricity bills. It’s a simple way for families to save a few quid, and to mechanically help to keep inflation that little bit lower. But the DigitalID program was unfunded. The government will have to set out how it will pay for its new policies at the budget.”
The intervention was seized on by the Conservatives. Shadow energy secretary Claire Coutinho said: “If Andy’s nicked our plan to cut VAT? Good. But everyone’s energy bills are up by £300 since Labour came to office, and the former minister in charge of the Digital ID scheme has said this VAT package is unfunded – which means more tax rises are coming in the Budget.”
The row erupted on Burnham’s first full day in office, after he spent Monday night appointing a cabinet that included Wes Streeting as defence secretary and Sir Chris Bryant as Northern Ireland secretary, replacing Hilary Benn. Benn had just begun talks with Stormont parties on a multi-year budget; DUP leader Gavin Robinson warned the reshuffle would “reverberate for months and months”.
Burnham has promised to give people “breathing room” on the cost of living and pledged an additional £340m to end rough sleeping. But the funding row over his first policy leaves a question hanging over his vow to be honest about the challenges – and over how he will pay for the rest of his agenda at the budget.