The cost of this immediate action for this financial year is being funded from the cancellation of the (£1.8bn) Digital ID programme.
Andy Burnham has unveiled a VAT cut to help people with the cost of living crisis, funded by axing Sir Keir Starmer‘s flagship digital ID programme. The new Prime Minister, alongside his new Chancellor John Healey, announced VAT will be removed from domestic electricity bills from October 1.
Mr Burnham, who has made helping Brits with rising prices one of his top priorities, said: “Westminster has not been working for people for too long, with families struggling with the cost of living. 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.”
New Prime Minister Andy Burnham has made a major announcement on VAT (Image: Getty)
The VAT cut is set to reduce energy bills (Image: Getty)
In his first speech as PM outside Number 10 on Monday, Mr Burnham promised to give houselds struggling with the cost of living more “breathing space”.
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.
The Government said cutting the rate of VAT from 5% to 0% will support the poorest households, who spend a higher percentage of their income on energy bills.
Chancellor John Healey said ‘for too long, too many people have struggled with the cost of living’ (Image: Getty)
Mr Healey, who replaced Rachel Reeves as Chancellor in the Cabinet reshuffle, 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.”
Mr Healey, who quit his role as defence secretary under Sir Keir over a deepening funding row, said: “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.”
The digital ID plan was set to cost £1.8 billion over the next three years.
Mr Burnham has pledged the biggest change to British politics in 40 years, saying he would deliver “a new political model and a new economic model” for the country.