Burnham announces plans to cut VAT on electricity bills as first cost-of-living move

Andy Burnham has announced plans to remove VAT from domestic electricity bills from 1 October, presenting the move as his first cost-of-living measure as prime minister.

According to a monitored public feed based on reporting by The Guardian Business, the proposed tax cut would be paid for this year by cancelling the Digital ID programme. The newly appointed chancellor, John Healey, said the change would be funded through that cancellation.

In a statement, Burnham said Westminster had not been working for people “for too long,” adding that families were struggling with the cost of living and that this needed to change. He said he wanted to give people “breathing space” and described the announcement as one of his first actions after taking office.

The plan would affect domestic electricity bills, with the VAT cut due to begin on 1 October if implemented as announced. The feed does not provide further detail on the scale of the tax change, any household savings, or the wider timetable for the Digital ID cancellation.

The move signals an early priority on household energy costs, a sensitive issue for voters facing pressure on everyday spending. By linking the tax cut to a separate spending decision, the government is framing the policy as part of a broader effort to ease immediate financial strain without adding to the fiscal burden this year.

This report is based on a monitored public feed. Source attribution is included below.

Source: The Guardian Business - https://www.theguardian.com/politics/2026/jul/21/burnham-announces-plans-to-cut-vat-on-electricity-bills-as-first-cost-of-living-move