Politics & Governance
Burnham sets out electricity VAT cut and cost-of-living focus
Andy Burnham told his first cabinet meeting on Tuesday that his government would focus on lowering living costs, after announcing a cut to value-added tax on household electricity bills on his first full day as UK prime minister.
Burnham replaced Keir Starmer in Downing Street on Monday. The electricity VAT cut was his first significant policy announcement as UK leader. The government said electricity bills would be VAT free from October 1, saving an average household about £45, or $61, a year.
In opening comments to ministers before the cabinet met privately, Burnham said the government needed to give the public a sense that help was coming. He said it should be a cost-of-living government looking at ways to bring costs down, but also said it must show fiscal discipline and explain how policies would be paid for.
The government said the tax cut would cost about £850 million, or $1.143 billion, in the current UK financial year. It said the measure would be funded by cancelling Starmer's planned digital ID scheme, which it said would have cost taxpayers £1.8 billion.
Former minister Darren Jones, described by AFP as a Starmer loyalist and among those removed from ministerial posts by Burnham, questioned that explanation. In a post on X, Jones said the ID programme had been unfunded and wrote that the government would have to set out how it would pay for new policies at the budget.
Burnham is also considering rent control measures and caps on bus fares. In his first speech outside Downing Street, he signalled a move to the left for the Labour government, pledging to re-industrialise the country, increase public control of utilities, build more public housing and set out a 10-year plan later this year. He also intends to move power away from London to other cities and regions.
Burnham became Britain's seventh prime minister in just over a decade. He returned to parliament four weeks ago after nine years as Greater Manchester mayor, and became Labour leader and prime minister after Labour MPs lost confidence in Starmer. Labour's parliamentary majority allowed him to take office without a general election.
His new 23-member cabinet removed many figures seen as close to Starmer and promoted Burnham allies. Rachel Reeves was removed as finance minister and replaced by John Healey. David Lammy left the deputy prime minister role. Ed Miliband became foreign minister, Wes Streeting became defence minister after dropping plans to run against Burnham for the Labour leadership, and Angela Rayner returned to government. The cabinet has 12 women and 11 men, although women were removed from two top posts.
Burnham also held calls on Monday with foreign leaders including US President Donald Trump, Ukrainian President Volodymyr Zelensky and French President Emmanuel Macron.
AFP reported that Labour MPs hope Burnham's public image can slow support for Nigel Farage's Reform UK before the next general election, due in 2029. Farage has questioned Burnham's mandate and called for a snap election.
Burnham faces challenges including a weak economy, high government borrowing costs, a growing welfare bill and irregular migrant arrivals in small boats. AFP also reported that unpredictable energy prices linked to the US-Iran war and volatile relations with Washington under Trump could affect his premiership.
Update
The government said household electricity bills will be VAT free from October 1.
The government said the change would save an average household about £45, or $61, a year.
The tax cut is expected to cost about £850 million, or $1.143 billion, in the current UK financial year.
The government said it would fund the cut by cancelling Keir Starmer's planned digital ID scheme, which it said would have cost £1.8 billion.
Former minister Darren Jones said on X that the digital ID programme had been unfunded and that the government would need to explain funding at the budget.
Burnham said ministers must give the public a sense that help is coming while also showing fiscal discipline.
Burnham is considering rent control measures and bus fare caps.
The new 23-member cabinet includes 12 women and 11 men, with Rachel Reeves replaced as finance minister by John Healey, David Lammy leaving the deputy prime minister role, Ed Miliband becoming foreign minister, Wes Streeting becoming defence minister, and Angela Rayner returning to government.
Burnham held calls with foreign leaders including Donald Trump, Volodymyr Zelensky and Emmanuel Macron.
The source lists economic, migration, energy price and foreign policy challenges facing Burnham's premiership.
Source note: AFP news report published on 21 July 2026 at 13:45:57 UTC.
Update
Electricity bills will be VAT free from October 1, according to the government.
The government said the measure would save an average household around £45 a year.
The government said the cut would cost about £850 million in the current UK financial year.
The government said it would fund the cut by cancelling Keir Starmer's digital ID scheme, which it said would have cost £1.8 billion.
Former minister Darren Jones questioned the funding claim, saying the ID programme had been unfunded.
Burnham was due to hold his first cabinet meeting at 12:30 pm, or 1130 GMT.
Source note: AFP news report published on 21 July 2026 at 11:18:33 UTC.
Update
The tax cut is expected to cost about £850 million in the current UK financial year.
The government said the tax cut would be funded by cancelling Keir Starmer's proposed digital ID scheme, which it said would have cost £1.8 billion.
The government said the start date is due to coincide with an expected rise in the energy regulator's price cap caused by the US-Iran war.
Official data showed public sector net borrowing was £16 billion in June, down one third from a year earlier.
The Office for National Statistics cautioned that debt remains high by historical standards and close to the annual value of the UK economy.
John Healey replaced Rachel Reeves as finance minister and commented on fiscal control and credibility.
UK markets were largely steady on Tuesday after some unease ahead of Healey's appointment as chancellor.
Separate official data showed unemployment was unchanged at 4.9 percent.
Burnham's longer-term goals include reindustrialisation and large-scale municipal housebuilding.
The source says the IMF forecasts Britain's economy to outperform other major economies this year.
Source note: AFP news report published on 21 July 2026 at 07:47:38 UTC.
Update
Burnham announced a cut to value added tax on consumer electricity bills on Tuesday morning.
The 5 percent tax will be removed from October, trimming about £45, or $61, a year from bills.
The measure will initially be funded by cancelling a plan to introduce digital IDs.
Business minister Jonathan Reynolds called the announcement a strong first-day measure for the new cabinet.
Trump said he had a very good conversation with Burnham and posted that they discussed trade, military cooperation and demining the Strait of Hormuz.
Source note: AFP news report published on 21 July 2026 at 07:27:27 UTC.
Update
Burnham was set to hold his first cabinet meeting on Tuesday.
He held separate calls with US President Donald Trump and Ukrainian President Volodymyr Zelensky before appointing his ministerial team.
Trump said he had a very good conversation with Burnham and said they discussed trade, military cooperation and demining the Strait of Hormuz.
Burnham said his first instruction would be a pledge to end rough sleeping, and he also promised public procurement-led re-industrialisation, more public housing, decentralisation and stronger public control of life's essentials.
The report adds political and economic challenges facing Burnham, including weak growth, high borrowing costs, welfare spending, small-boat migration, energy prices linked to the US-Iran war and relations with Washington under Trump.
Opposition politicians have questioned Burnham's mandate and called for a snap election.
Source note: AFP news report published on 21 July 2026 at 05:12:56 UTC.
Update
Burnham held separate calls with US President Donald Trump and Ukrainian President Volodymyr Zelensky after taking office.
Trump said he had a very good conversation with Burnham and said they would meet in the not too distant future.
Trump said they discussed trade, military cooperation and demining the Strait of Hormuz.
Downing Street said Burnham reaffirmed Britain's resolute commitment to Ukraine in a call with Zelensky.
John Healey replaced Rachel Reeves as finance minister, Ed Miliband became foreign minister, Angela Rayner returned to government, Wes Streeting became defence minister and Shabana Mahmood was reappointed interior minister.
French President Emmanuel Macron congratulated Burnham and urged him to give new momentum to the partnership with the European Union.
Source note: AFP news report published on 20 July 2026 at 23:40:26 UTC.
Update
Andy Burnham removed several Keir Starmer loyalists from the cabinet, including Rachel Reeves and David Lammy.
John Healey was made finance minister, Ed Miliband foreign minister, Angela Rayner returned to government, Wes Streeting became defence minister, and Shabana Mahmood was reappointed interior minister.
Burnham promised a 10-year plan, help with cost-of-living pressures, action to end rough sleeping, re-industrialisation, more public housing and more decentralised power.
Burnham held calls with Donald Trump, Volodymyr Zelensky and several European leaders, including Emmanuel Macron.
A UK government spokesperson said Burnham underlined his commitment to defence and security in his call with Trump.
Downing Street said Burnham reaffirmed Britain's support for Ukraine in a call with Zelensky.
Emmanuel Macron congratulated Burnham and urged him to give new momentum to the partnership with the European Union.
Source note: AFP news report published on 20 July 2026 at 22:03:36 UTC.
Uncertainty notes
The source says Burnham's appointment came without a clear plan for how he would achieve his aims.
The funding of the VAT cut is disputed by Darren Jones, who said the cancelled digital ID programme had been unfunded.
Source
AFP news report published on .