The issue was raised during Burnham’s first Prime Minister’s Questions, when SNP Westminster leader Dave Doogan asked when Labour would fulfil its commitment on bills. Burnham said the VAT decision represented an initial move, while his government prepares for its first Budget in October and continues to place the cost of living near the centre of its programme.
Burnham Points to VAT Cut as a First Step on Energy Bills
According to The Guardian, Labour’s commitment at the last election was that its policies would make energy bills £300 lower than they otherwise would have been, rather than providing a direct £300 reduction to every household. That distinction formed the background to Doogan’s question to the Prime Minister.
Asked when the government would deliver the promised reduction, Burnham referred directly to the VAT measure. “When it comes to energy bills. I have acted already to bring in that cut on VAT on electricity bills,” he said. “I recognise it’s just a start, but I hope he sees that as a sign of intent.”
According to the Birmingham Mail, the tax cut was announced on Burnham’s second day as Prime Minister and is valued at £850 million. Electricity bills will become VAT-free from the beginning of October, with households expected to save about £45 a year as a result.
Burnham has presented the policy as part of a broader attempt to address household finances. When announcing the measure, he said he wanted to give people “breathing space” and described the action as an immediate reduction in taxes on energy bills.
Cost-Of-Living Policy Moves Towards the October Budget
Burnham has told his Cabinet that he wants to lead a “cost of living government”, according to the Birmingham Mail. Ministers have also been told they should be prepared to “reprioritise” the way departmental budgets are allocated as the government develops its economic plans.
Public expectations remain a factor. Matthew Howlett, research manager at Opinium, said most people did not expect Burnham’s first major economic announcement to make much difference to the cost of living. The finding came from a poll of 2,050 UK adults conducted between 29 and 31 July.
Howlett said voters were also looking towards the government’s first Budget in October. A majority, he said, believed that unfreezing the tax-free personal allowance would have a significant impact on their personal finances.
Burnham has himself highlighted that issue. Speaking to The Times, he said he wanted his government to produce a “tangible” improvement for households and recalled that the tax-free personal allowance threshold was “the thing I heard the most on the doorsteps” while campaigning in Makerfield.
For now, the government’s announced action on electricity bills remains the removal of VAT from October. Burnham has characterised it as the beginning of his response to energy costs rather than the completion of Labour’s wider commitment.
