LONDON — British Prime Minister Andy Burnham announced new tax-cutting measures aimed at easing pressure on households facing high living costs, including the removal of value-added tax (VAT) from domestic electricity bills and further steps to reduce everyday expenses.
The government said the electricity VAT reduction will take effect from Oct. 1, 2026, and is intended to provide immediate relief to households during the winter period. The measure will be funded this year through savings from the cancellation of the previous government’s digital identification programme, according to the Prime Minister’s Office and HM Treasury.
Burnham, who became prime minister this week, said his government would focus on measures that deliver practical support for families while preparing a longer-term economic strategy. In his first speech as prime minister, he said he wanted to provide “breathing space” for people struggling with living costs and promised further plans for the economy later in the year.
The government has also announced plans to reduce the cost of local transport, including a proposal to cap single bus fares at £2 from January 2027. Officials said the move was part of a broader package designed to lower household expenses and improve access to work and services.
The announcement comes as official data showed UK inflation eased in June, falling to 2.6% from 2.8% in May, according to figures reported by the Office for National Statistics. Economists said the decline provided some relief but warned that inflation pressures could remain a challenge because of energy costs and global economic uncertainty.
Burnham has said the government will maintain fiscal rules while seeking to support households and encourage economic growth. Before taking office, he indicated that his administration would examine a range of measures aimed at reducing costs, including changes affecting energy, transport and business expenses.
Opposition politicians have questioned how the government will balance tax reductions with commitments on public services and debt management. Burnham’s administration has said the funding arrangements for its wider economic programme will be set out through future budget decisions.
The government’s immediate focus remains implementing the electricity VAT cut and preparing additional cost-of-living measures as part of its planned economic agenda.
