Prime Minister Andy Burnham has announced a fresh tax cut for household electricity bills to “bring back hope” for families struggling with the cost of living.
The new premier promised to provide early “breathing space” for households struggling with the cost of living as he stood on the steps of No 10 on Monday.
And early on Tuesday, he and his new Chancellor John Healey announced that VAT will be removed from domestic electricity bills from October 1.
“Westminster has not been working for people for too long, with families struggling with the cost of living,” Mr Burnham said.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
It is estimated that the change will reduce the annual Ofgem price cap by around £45 from October, with companies expected to pass the reduction onto customers.
Chancellor John Healey said: “For too long, too many people have struggled with the cost of living.
“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.
He continued: “This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”
In his first address to the nation as Prime Minister, Mr Burnham pledged the biggest change to British politics in 40 years, and said he would deliver “a new political model and a new economic model” for Britain.
On Monday evening, Mr Burnham made sweeping changes to the Cabinet, starting with the appointment of John Healey as the new Chancellor to succeed Rachel Reeves.
A swathe of major figures from Sir Keir Starmer’s era joined Ms Reeves in leaving Government, including ex-deputy prime minister David Lammy, former attorney general Lord Hermer and former housing secretary Steve Reed.
Their replacements in senior Government roles were announced throughout Monday evening and will join Mr Burnham around the Downing Street Cabinet Room table on Tuesday.
