Prime Minister Andy Burnham Caps Bus Fares and Cuts Electricity VAT

Prime Minister Andy Burnham has introduced a series of cost-of-living measures centered on transport and energy. He removed VAT on domestic electricity supplies, reducing the rate from 5% to 0% effective October, and implemented a £2 cap on bus fares for journeys outside of London starting January 1. Combined, these interventions could save some users up to £68 annually.

Despite these reductions, the government is maintaining the electric vehicle pay-per-mile tax (eVED) established by the previous administration. This 3p per mile tax, when paired with standard VED and a £425 supplement for vehicles priced over £50,000, may lead to annual bills exceeding £800 for owners of high-value electric vehicles from brands such as Tesla, BMW, and Mercedes.

In response to industry conditions, Business Secretary Jonathan Reynolds indicated that the government may relax the Zero Emission Vehicle (ZEV) mandate. This comes as the Society of Motor Manufacturers and Traders reported a 7.5% decline in vehicle production during the first half of 2026.