Andy Burnham, in one of his initial actions as Prime Minister, has declared the removal of VAT on electricity bills. The new PM, emphasizing relief on the cost of living, anticipates a reduction of £45 on average bills due to this decision.
The announcement from Downing Street specifies that this measure, projected to cost £850 million in 2026-27, will be financed through savings from discontinuing the digital ID program. Burnham, addressing the public, expressed the need for change, stating that the government aims to ease financial burdens on families.
Effective from October 1, the government plans to eliminate VAT on domestic electricity bills, with the next price cap update scheduled for late August. This reduction of £45 adds to the £150 previously deducted by the former government, though the actual savings were slightly lower due to other contributing costs.
Additionally, small businesses eligible for domestic energy VAT relief, charities, and residential care homes qualifying for reduced rates will also benefit from reduced bills. Newly appointed Chancellor John Healey MP highlighted the importance of alleviating the cost of living for struggling families through this energy tax cut.
As Burnham reshapes the Cabinet, following the removal of key ministers from the previous administration, he remains committed to addressing economic challenges faced by Britons. Promising immediate relief, Burnham aims to introduce a new political and economic framework to counter longstanding issues exacerbated by past policies.
Further long-term measures to tackle the cost of living are expected to be outlined in the upcoming autumn budget. Readers can stay updated on political developments through our live blog for the latest news updates.
