Andy Burnham to cut taxes on electricity bills, announces new UK cabinet

Andy Burnham cuts VAT on electricity bills, scraps digital ID scheme in first move as UK prime minister

UK Prime Minister Andy Burnham on Tuesday announced a tax cut on electricity bills, his first major policy move since taking office, as his new government seeks to address the cost of living crisis. The Labour leader, who succeeded Keir Starmer on Monday, said the government would remove value-added tax (VAT) from domestic electricity bills from October 1, a step intended to give households "some breathing space."

The policy will be funded by cancelling the planned digital ID scheme, which was championed by Starmer and had an estimated cost of £1.8 billion, according to Downing Street. The scheme, first announced last September, had faced sustained opposition and was modified from a mandatory to a voluntary system in January.

The VAT cut is estimated to cost around £850 million in 2026/27, The Guardian — World reported, citing government figures. The move is expected to take roughly £45 off the yearly price cap, the same outlet said.

Burnham's first full day in power also saw the appointment of John Healey as chancellor, a choice described as a surprise by The Guardian — World but regarded as a safe pair of hands. Ed Miliband was appointed foreign secretary, while Shabana Mahmood remains at the Home Office. Al Jazeera also reported Miliband's appointment.

In his first world leader calls, Burnham spoke with US President Donald Trump on Monday, inviting him to Manchester for next year's G20 summit, The Guardian — World reported. He also spoke with Ukrainian President Volodymyr Zelenskyy and European Union chief Ursula von der Leyen.

Coverage comparison

Al Jazeera and The Guardian — World both covered the VAT cut and the scrapping of the digital ID scheme, though with slightly different emphases. Al Jazeera focused on the tax cut as Burnham's first move as prime minister and described the digital ID scheme as "controversial" and "criticised." The Guardian — World, in its reporting on the same events, used language such as "welcome" and "positive" to describe the VAT cut, while also noting the campaign group End Fuel Poverty Coalition's view that the measure does not address the full scale of the problem.

The Guardian — World also reported on the UK's public sector borrowing figures for June, which came in at £16 billion — lower than expected, according to the Office for National Statistics. This was described as a "boost" for Burnham as he set out his economic plans.

Key claims

• Andy Burnham announced a tax cut on electricity bills on his first full day as Britain's new prime minister, as reported by both Al Jazeera and The Guardian — World.
• The tax cut will be funded by scrapping the digital ID scheme, which was expected to cost £1.8 billion, a claim carried by both Al Jazeera and The Guardian — World.
• The VAT cut is estimated to cost around £850 million in 2026/27, as reported by The Guardian — World.
• Public sector net borrowing was £16 billion in June, as reported by The Guardian — World.
• Andy Burnham spoke with Donald Trump on Monday, as reported by both Al Jazeera and The Guardian — World.
• Ed Miliband was appointed foreign secretary, as reported by both Al Jazeera and The Guardian — World.
• The UK government borrowed less than expected in June, as reported by The Guardian — World.

Perspectives

Cost of living campaigners — The End Fuel Poverty Coalition, through coordinator Simon Francis, said removing VAT from electricity bills is "a positive statement of intent" but does not address the scale of the problem. Francis called for further measures including an enhanced warm home discount, reformed cold weather payments, and an energy debt relief scheme, as well as structural changes to how energy bills are set.

Energy industry — Martin Pibworth, chief executive of SSE, welcomed the VAT cut, describing it as a "very welcome first step" to making electricity as cheap as possible. He said electrifying the economy through homegrown renewables would cut bills and reduce energy dependence.

New government — Chancellor John Healey said the VAT cut would be funded by cancelling the digital ID programme. He stated that "fiscal control is the first duty of any chancellor" and that fiscal credibility is the bedrock for economic stability. The government has said it will stick to Labour's fiscal rules and manifesto tax promises.