Burnham cuts VAT on electricity - Britain, plan will cost around 850 million pounds in 2026 and 2027
The new UK Prime Minister, Andy Burnham, has announced a reduction in VAT on electricity bills shortly after taking office, claiming he could use the money from Sir Keir Starmer's now-cancelled digital ID scheme.
The prime minister used the start of his second day in office to announce that he would scrap the tax from October 1, a move expected to cost £800m this year. However, questions have been raised about how Burnham will fund the scheme, as Keir Starmer never found the money to fund his flagship digital ID proposal.
"Westminster has not been serving people for far too long, with families struggling with the high cost of living. This must change," Burnham said. "I promised I wanted to give people breathing space and that is what I am announcing on my second day as Prime Minister," he added.
The policy will cost £850m in 2026/27, but Sir Keir's digital ID policy, which Burnham announced he would scrap at the weekend, would cost £1.8bn over three years. The Institute for Governance said this week that Keir Starmer had failed to identify any specific savings to fund the programme.
However, Jonathan Reynolds, the new Business Secretary, insisted that the electricity bill cut had been fully funded, despite an apparent discrepancy in the figures, saying savings from the policy would cover the costs.
However, Darren Jones, Keir Starmer's former chief secretary who oversaw the digital ID plan, said the plan to reduce VAT on electricity had not been funded and that Burnham would need to find funding to support the scheme.
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