Andy Burnham chaired his first cabinet meeting on Tuesday, telling ministers their mission was to “take that little bit of pressure off people’s shoulders” – but by the time he spoke, a row had already broken out over how his flagship cost‑of‑living policy would be paid for.
The new prime minister used his second day in office to announce that VAT on household electricity bills would be cut from 5% to 0% from 1 October, a six‑month measure he said would give families “breathing space”. Downing Street put the cost at £850m over the rest of the financial year and insisted it would be covered by scrapping the digital ID scheme inherited from Sir Keir Starmer – a programme for which £1.8bn had been earmarked over three years.
“Andy Burnham's first cabinet meeting was hit by a funding row after Darren Jones said his VAT cut on electricity bills was 'unfunded'.”
But Darren Jones, the former minister responsible for the ID scheme until he was sacked in Monday’s reshuffle, said the programme was “unfunded” and that Burnham would need to set out at the Budget where the money would actually come from. “We are only one day in and already Labour are playing fast and loose with the public finances,” said Conservative shadow chancellor Sir Mel Stride.
Burnham’s first cabinet meeting began with a round of applause from his new top team, which includes Ed Miliband as foreign secretary, Louise Haigh in the Cabinet Office and Miatta Fahnbulleh as energy secretary. Fahnbulleh denied that the sweeping changes amounted to a purge of Starmer loyalists, telling BBC Newsnight “no one has a right” to be in the cabinet. Appointments below cabinet rank are expected on Tuesday evening, with Scottish Labour leader Anas Sarwar set to become a business minister after being given a seat in the House of Lords.
The prime minister’s office confirmed that Burnham’s first conversation with Donald Trump was “extremely warm”. But the funding question hung over the day’s announcement. The Institute for Fiscal Studies noted that since the start of the Iran war, gas prices had risen 24% compared with 5% for electricity, and warned that the VAT cut was “not well targeted” at households hit hardest by the conflict.
Burnham told his cabinet that they must “always show how the policies will be paid for”. He now faces the challenge of proving that his sums add up before the Treasury publishes its first Budget.
