New Prime Minister takes immediate action to cut taxes on electricity bills to give millions of households breathing space this winter
- New Prime Minister takes immediate action to cut taxes on electricity bills to give millions of households breathing space this winter
- Tax cut this year funded from cancelled Digital ID programme will see VAT on electricity bills removed from October 1
- In one of his first acts as Prime Minister Andy Burnham promises to “put more money in people’s pockets and bring back hope”

Millions of households across the UK will benefit from immediate action to help with their electricity bills this winter, the Prime Minister has announced as one of his first decisions in office.
This follows his commitment to the nation on the steps of Downing Street yesterday to give people some breathing space and help with the cost of living.
Government is tackling rising bills with a tax cut to remove VAT from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This immediate action applies and is funded for this financial year.
The cost of this immediate action for this financial year – taken now, before the next price cap – is being funded from the cancellation of the (£1.8bn) Digital ID programme.
Any further action, including on funding for longer-term measures, will be taken at the Budget alongside an OBR forecast. All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.

Prime Minister Andy Burnham said: “Westminster has not been working for people for too long, with families struggling with the cost of living.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.
By targeting electricity bills, more people will be supported with rising bills and the government is helping to keep inflation down.
All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.
Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit.

Chancellor of the Exchequer John Healey MP said: “For too long, too many people have struggled with the cost of living.
“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.
“This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”

Welcoming the announcement, local MP Tracy Gilbert MP said: “Families across Edinburgh North and Leith have been paying the price for the cost-of-living crisis for far too long. This VAT cut on energy bills is welcome news that will make a real difference to household finances.
“Labour is taking practical action to reduce costs for working people and deliver the change people voted for. This is a government that is on your side, helping families with the pressures they face every day.”

Responding to the announcement of the scrapping of the 5% VAT charge on electricity bills, Independent Age Chief Executive Joanna Elson, CBE, said: “Today’s VAT cut to electricity bills is an important and welcome acknowledgement that immediate action is needed to drive down energy costs.
“We hope the removal of the 5% VAT charge from October – reducing the typical annual bill by around £45 – signals the start of sustained action by the new Prime Minister to ease the relentless financial pressures on older people living on low incomes.
“We are already hearing from older people on low incomes who are rationing their energy use or cutting back on the essentials, and that’s before the winter months take hold when energy use increases.
“If Andy Burnham is to make good on his pledge to ease the cost-of-living pressures and help millions of older people living in poverty, we urge him to go further and lead his government to increase the Warm Home Discount from £150 to £400 without adding the cost to energy bills and develop a more comprehensive energy social tariff for people of all ages on low incomes.”
Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.
By targeting electricity bills, more people will be supported with rising bills and the government is helping to keep inflation down.
All suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.
Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit.
As part of the ‘day one commitment to bring back hope to Britain’, the change supports the poorest households, who spend a higher percentage of their income on energy bills.
Energy bills have risen since Russia’s invasion of Ukraine and have been exacerbated because of the war in Iran. But people need support now, which is why the government has acted to provide immediate breathing space for millions of households.























