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Britain’s new Prime Minister, Andy Burnham, has announced a cut in value-added tax (VAT) on household electricity bills as his first major policy decision, promising immediate relief for families struggling with the rising cost of living.
Burnham, who assumed office on Monday after succeeding Keir Starmer, said the measure would provide households with “some breathing space” while signalling the direction of his new administration.
“Give people some breathing space now, some help with the cost of living,” Burnham said ahead of his first cabinet meeting on Tuesday.
The tax reduction will remove the five per cent VAT on domestic electricity bills from October, saving the average household about £45 annually. The government said the policy would initially be funded by cancelling plans to introduce digital identity cards.
Business Secretary Jonathan Reynolds described the move as “a tremendous announcement for the first day of the new cabinet,” saying it demonstrated the government’s commitment to easing financial pressure on households.
Burnham formally became Britain’s prime minister after meeting King Charles III at Buckingham Palace, becoming the monarch’s fourth prime minister since his accession in 2022. In his first address outside 10 Downing Street, Burnham pledged to restore confidence in government through economic reforms and greater regional empowerment.
“We need to regain stability,” Burnham said. “We will create a new political model and build a new economy.”
The new prime minister also promised to re-industrialise Britain, decentralise power away from Westminster and strengthen public services. He said his administration would soon present a long-term roadmap for national development.
“I will bring forward a new plan for Britain, a 10-year plan,” Burnham declared.
Addressing social welfare, Burnham vowed to tackle homelessness, making it one of the first priorities of his government.
“My first instruction will be to end rough sleeping,” he said, reviving a policy he championed during his tenure as Mayor of Greater Manchester.
Burnham also moved swiftly to reshape his government by dismissing several ministers who served under Starmer and appointing key allies into strategic positions. Former Defence Secretary John Healey was named Chancellor, Ed Miliband became Foreign Secretary, while Angela Rayner returned to cabinet. Wes Streeting was appointed Defence Secretary, and Shabana Mahmood retained her role as Home Secretary.
On the international front, Burnham held his first telephone conversation with United States President Donald Trump, reaffirming Britain’s commitment to defence cooperation and bilateral relations.
Reacting after the call, Trump described the discussion as productive.
“We had a very good conversation,” the US president wrote on Truth Social. “He has got a big job ahead of him, but he will be able to do it and, of course, the U.S.A. will be there to help!”
According to Downing Street, Burnham also assured Ukrainian President Volodymyr Zelensky of Britain’s continued support for Ukraine, while French President Emmanuel Macron congratulated the new prime minister and called for renewed cooperation between the United Kingdom and the European Union.
Burnham inherits an administration facing significant economic and political challenges, including sluggish economic growth, rising public debt, persistent inflationary pressures, high welfare spending, irregular migration and volatile global energy markets. Opposition parties have questioned his mandate and called for a fresh general election, but the new prime minister has insisted his government is focused on delivering economic stability and long-term reforms.
