Andy Burnham to cut VAT on electricity bills as first cost of living move
Summary
New Prime Minister Andy Burnham announced that the government will remove VAT (a type of sales tax) from electricity bills starting in October, cutting the average bill by £45 a year. This move aims to help families manage high living costs and will be funded by canceling a digital ID project, although some officials have questioned how the cut will be fully paid for.Key Facts
- The VAT cut on electricity bills will begin in October and save the average household £45 annually.
- This is one of Burnham’s first actions as prime minister to ease the cost of living pressures for UK households.
- The government plans to fund this tax cut by scrapping a digital ID scheme, expected to save £1.8 billion over three years.
- Some officials, including Darren Jones, have questioned the funding, saying the digital ID scheme did not have confirmed funding.
- Chancellor John Healey said the tax cut will help families with bills and provide reassurance during winter.
- Burnham aims to further reduce living costs with future measures, possibly including lower bus fares and rent freezes.
- Northern Ireland will not see the VAT cut due to EU tax rules, but will receive equivalent financial support from the UK government.
- The VAT cut may encourage people to switch from gas boilers to electric heat pumps by reducing the price gap between gas and electricity.
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