Andy Burnham Scraps Digital ID to Fund Electricity VAT Cut

Prime Minister Andy Burnham launched a cost-of-living agenda on July 21, 2026, by announcing the removal of VAT from domestic electricity bills starting October 1. The measure is estimated to cost £850 million and will reduce the average annual household price cap by approximately £45. To fund the cut, the government is cancelling a £1.8 billion digital ID programme previously established by former Prime Minister Keir Starmer.

The policy immediately sparked a funding dispute. Darren Jones, a former minister sacked during Burnham's wide-ranging cabinet reshuffle, claimed the digital ID programme was originally unfunded, rendering the tax cut unfunded as well. Conservative leader Kemi Badenoch and Shadow Chancellor Mel Stride echoed these concerns, accusing the government of playing fast and loose with public finances. Conversely, Chancellor John Healey defended the move as a reprioritization of budgets to provide families with breathing room.

Beyond energy, Burnham announced a 20% business rate reduction for the hospitality sector, funded by increasing rates on large out-of-town warehouses. He also pledged to increase defense spending by £4.7 billion over five years and established No 10 North in Manchester to oversee devolution. While consumer expert Martin Lewis called the VAT cut a welcome totemic step, he warned that a predicted rise in the Ofgem price cap could offset the savings.