UK Prime Minister Andy Burnham announced an energy tax cut on Tuesday as he pledged to lead a government focused on reducing living costs. The move marks his first major policy decision since taking office.
Burnham told his cabinet that the government must provide people with relief from rising expenses. He said ministers should explore all possible measures to reduce the cost of living.
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According to the government, electricity bills will become exempt from value-added tax from October 1. The measure is expected to save an average household about £45 annually.
Meanwhile, the government said the tax reduction would cost around £850 million during the current financial year. Officials said the funding would come from cancelling former Prime Minister Keir Starmer’s planned digital identity scheme.
However, former minister Darren Jones questioned the funding plan and said the government would need to explain its financial approach. Burnham maintained that his administration would show how it would pay for new policies.
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Additionally, Burnham is considering further measures, including possible rent controls and bus fare limits. He has also pledged a 10-year plan focused on industrial growth, public housing, and greater regional decision-making.
The new prime minister faces economic challenges, including high borrowing costs, public debt pressures, and welfare spending concerns. He also faces political pressure ahead of the next general election expected in 2029.