New UK PM announces tax cut on electricity bills

LONDON: In a move aimed at providing immediate relief to households struggling with rising living costs, newly appointed UK Prime Minister Andy Burnham’s government has announced plans to remove VAT from domestic electricity bills.

The measure is expected to reduce energy expenses for consumers as the government focuses on easing financial pressures on families across the country.

Downing Street said on Tuesday that the VAT exemption on household electricity bills will come into effect from October 1.

The government said the cost of the measure for the current financial year will be covered by scrapping the £1.8 billion ($2.42 billion) digital ID programme.

The decision comes as Burnham seeks to fulfil his promise of tackling the cost-of-living crisis and demonstrate early action after taking office.

His government had earlier announced plans to cancel the proposed digital identity scheme, which was intended to require employees to hold a digital identity document as part of efforts to address illegal migration.

The digital ID programme had faced criticism, with a cross-party committee of lawmakers describing it as a “fiasco.” Burnham’s office said the funds saved from ending the scheme would instead support measures designed to ease financial pressures on families.

“Westminster has not been working for people for too long, with families struggling with the cost of living,” Burnham said. “That needs to change.”

The electricity tax cut marks one of the first major policy steps by Burnham’s administration as it focuses on improving living standards and addressing public concerns over household expenses.

The government’s decision is expected to provide financial support to consumers, while further details on the implementation of the VAT removal are expected ahead of its October rollout.