On his second day as prime minister, Andy Burnham announced a VAT cut on electricity bills that will knock £45 off the average household bill from October 1. The move, costing £850 million in 2026‑27 and funded by cancelling the digital ID programme, was teased in his debut Downing Street speech the day before, when he promised “breathing space now” on the cost of living. “We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope,” Burnham said.
The new Labour leader, who replaced Sir Keir Starmer on 20 July 2026, became the UK’s fourth prime minister in five years and seventh since 2016. In his first speech outside No 10 – delivered without notes or a lectern, a break from recent tradition – Burnham pledged to “end rough sleeping in our country”. The government said it would provide an extra £340 million over five years from the housing department budget, funding 1,200 homes and “intensive support” for at least 3,000 people in England. Burnham had made a similar promise as Greater Manchester mayor in 2017, but rough sleeping figures for the city region rose to 197 in 2025, while England recorded a record 4,793 rough sleepers on a single night last autumn.
“Andy Burnham cuts VAT on electricity bills by £45 and pledges £340m to end rough sleeping in his first days as PM.”
Cabinet appointments followed quickly. John Healey was named chancellor, taking Westminster by surprise after Rachel Reeves turned down another role. Ed Miliband became foreign secretary, Shabana Mahmood remained home secretary, and Louise Haigh took charge of the Cabinet Office as first secretary of state. Burnham said the country needed stability, stressing he was “acutely conscious” of the churn in No 10 and that politicians must “make politics work better”.
He also promised greater devolution of power away from Westminster – a pledge that will be tested with Scottish First Minister John Swinney. But Conservative shadow housing secretary Sir James Cleverly was quick to attack the rough‑sleeping plan, saying there was “precious little detail” on funding and that Burnham “failed” to deliver the same promise in Manchester. Burnham, who described his election as Labour leader as “the most significant change moment in our politics for 40 years”, will convene his new cabinet for the first time on Tuesday morning, with further appointments expected.