By SUNTV Global Channel – International Desk
Date: Tuesday, July 21, 2026
Time: London, United Kingdom
LONDON — British Prime Minister Andy Burnham has announced plans to abolish the 5% Value Added Tax (VAT) on household electricity bills from October, in a move aimed at easing the cost-of-living pressures on millions of households across the United Kingdom.
The proposal, unveiled just days after Burnham assumed office, is one of the first major economic policies of his administration. According to the government, the tax relief will be financed by cancelling the digital ID programme introduced under former Prime Minister Keir Starmer, with officials saying the decision will free up resources to fund the electricity VAT cut.
The announcement has sparked debate among opposition lawmakers, who questioned whether ending the digital ID scheme would generate sufficient savings to compensate for the revenue expected to be lost through the VAT reduction.
Former Treasury Minister Darren Jones challenged the government’s funding plan, arguing that the digital ID project had not been fully funded and urging the administration to provide a detailed explanation of how the policy would be financed in the forthcoming national Budget.
Responding to the criticism, Business Secretary Jonathan Reynolds defended the government’s position, maintaining that scrapping the programme was a legitimate policy decision and assuring the public that additional details on funding and implementation would be presented in the Budget.
The Burnham administration says removing VAT from household electricity bills is intended to provide immediate financial relief to families facing rising energy costs while supporting broader efforts to strengthen the economy and improve living standards.
The proposal is expected to feature prominently at the Prime Minister’s first Cabinet meeting, where ministers will discuss the government’s legislative agenda, fiscal priorities and long-term economic strategy.
Since assuming office, Prime Minister Burnham has pledged to restore economic stability, rebuild public confidence in government and introduce policies focused on reducing the financial burden on British households.
Keywords: United Kingdom, Andy Burnham, VAT, Electricity Bills, Cost of Living, UK Economy, Energy Prices, International News
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