On his second day as prime minister, Andy Burnham fulfilled his promise to "bring back hope" by announcing the removal of VAT on domestic electricity bills from October 1 — an £850 million tax cut funded by cancelling the Digital ID programme.
The move, which Burnham said would reduce the annual Ofgem price cap by around £45, came after he pledged in his maiden speech outside No 10 to give people "breathing space" on the cost of living. "Westminster has not been working for people for too long," Burnham said. "We're taking immediate action to cut taxes on energy bills, put more money in people's pockets and bring back hope."
“Burnham cuts VAT on electricity bills, funded by scrapping Digital ID programme, in first major act as PM.”
Chancellor John Healey, appointed a day earlier after Burnham removed loyalists of former PM Sir Keir Starmer, said the cut would "give families some breathing room on bills, and provide some reassurance this winter." He added that the measure was "funded this year from cancelling the Digital ID programme" and would "help bring down inflation while supporting households in every postcode."
The reshuffle saw Rachel Reeves, David Lammy and Steve Reed replaced. Ed Miliband became foreign secretary, calling it "the honour of my lifetime"; Yvette Cooper moved to health; Shabana Mahmood remained home secretary; and Louise Haigh took on a cross-government role as first secretary of state. Angela Rayner returned as housing secretary, nearly a year after resigning over a stamp duty underpayment on her £800,000 Hove flat. Wes Streeting, the former health secretary, became defence secretary.
Conservative leader Kemi Badenoch welcomed Burnham to office but said he had not "set out a clear plan for government," accusing him of being "a people pleaser" who was "promising to undo Margaret Thatcher's policies."
Burnham has promised a 10-year "new plan for Britain" later this year and said he wants to honour defence spending commitments — a challenge Healey will have to fund. With the VAT cut covering only the current financial year, questions remain over how the government will sustain its cost-of-living relief beyond that.