Andy Burnham latest: Sacked minister attacks PM’s ‘unfunded’ electricity bill VAT cut – UK Times

Andy Burnham has scrapped VAT on household electricity bills from October in his first major measure to tackle the cost of living crisis since becoming prime minister.

The government said the cut will save the typical household £45 a year from 1 October by cutting VAT on domestic electricity from five per cent to zero.

Unveiling the policy on his first full day in office, Mr Burnham said the tax cut would give families “breathing space” after years of pressure from rising living costs.

But what does this mean for your energy bills? We take a look below:

A former British Army head has said he is “disappointed” that Wes Streeting has been made defence secretary.

Lord Dannatt told Times Radio: “A new defence secretary has a lot to learn, the defence portfolio is one of the more complicated ones in government and as far as I’m aware Wes Streeting has got no background in defence, no background in the military.

“So he’s going to have to do an awful lot of listening and learning over the next few days and weeks before he can start to make a contribution.”

He added there are other people who have more experience in defence, naming Dan Jarvis, who recently took over from John Healey.

“But if Wes Streeting is prepared to listen, to learn, then there’s no reason why, over time, he can’t be an effective defence secretary – but he’s got to remember that the man in Number 11 actually knows the stuff about defence, and there’s no point trying to pull the wool over his eyes.”

Andy Burnham assumed his role as prime minister on Monday and one of his top priorities is tackling the cost of living crisis.

Keir Starmer’s replacement told The Times he wanted to bring a “tangible” improvement to households, saying “the thing I heard the most on the doorsteps” when canvassing voters in Makerfield was the tax-free personal allowance threshold. While that’s not yet a confirmed policy, it’s clearly one of the options on the table after the new prime minister also removed VAT from household electricity bills.

The personal allowance – the amount of income a person can receive annually before starting to pay tax on earnings – has been frozen at £12,570 for five years. Tax band thresholds have similarly been stuck at the same level rather than rising as wages grow larger.

By the process called fiscal drag, that has meant more people being pulled into either paying tax for the first time or paying a higher tax bracket, as wages naturally rise along with inflation.

But if Mr Burnham was to lift the personal allowance, it would give a small amount of breathing space to basic rate taxpayers in particular.

The Independent’s business and money editor Karl Matchett takes a look below:

A former British Army head has said appointing John Healey to Chancellor is “a masterstroke” and makes him “poacher turned gamekeeper”.

Lord Dannatt told Times Radio: “John Healey, as we all know, resigned not that long ago, having said that the previous prime minister was unable to produce the funding that defence needed – and the previous chancellor was unwilling – so now he is the one behind the desk in Number 11, and has really got to answer his own question.

“Now, it won’t be an easy question to answer, but there’s no one that knows better than John Healey just what defence needs, and I think he’ll give it his best shot possible to try and find the money that he knows the nation needs to keep this country safe, and that we play our collective part in the collective security of Europe.

“So in a sense it’s very much a poacher turned gamekeeper, and physician heal thyself.”

He also said it is “not entirely by happenstance” that a Russian warship carried out a live fire artillery exercise off Plymouth on Monday, the same day the UK got a new prime minister.

“This is an indication from the Kremlin that ‘we’re here and we’re powerful, we’re strong, and what are you going to do about it?’ So it’s a challenge.”

The Independent’s political reporter Athena Stavrou reports:

A government minister has been forced to defend the sums behind Andy Burnham’s first major economic policy, after one of his sacked colleagues claimed it was unfunded.

Former chief secretary to the prime minister Darren Jones said on Tuesday morning that the Digital ID programme, which Burnham has cancelled in order to pay for his VAT cut on energy bills, is in fact unfunded.

But newly appointed business secretary Jonathan Reynolds still insisted the move would remove a fiscal “pressure” from the government, allowing it to carry out the reforms.

“The allocation for digital ID was £1.8 billion over three years. That is scored by the OBR, so it’s in the scorecard,” he told BBC Radio 4. “It’s a pressure that is within the system that is being removed in order to make this decision on reducing energy bills for people. So it’s a straightforward release of one pressure in order to have this decision made.”

Arguing that the money for Digital ID “would have to have been found”, he added: “They are part of the scorecard. They are part of the government’s pressure. It is a legitimate decision to remove that pressure and instead use the allocation of resources.”

Money saving expert Martin Lewis has said the government’s announcement it will cut VAT from electricity bills is a “good” first step but that “in practice people won’t feel much benefit”.

In a post on X, he said the energy price cap rise on 1 October is likely to mean any savings made are quickly eaten up.

“Ultimately though it does mean people will pay less than they would’ve done without this,” he wrote. “Yet it is going to need a lot more policy cost reductions, likely at the budget, for things to feel materially cheaper.”

Shadow defence secretary James Cartlidge has said new policies have “got to last more than a few minutes” of scrutiny, during a discussion on the Prime Minister’s announcement that new VAT cuts will be partly funded by scrapping Sir Keir Starmer’s digital ID project.

Mr Cartlidge’s comments came after former chief secretary to the prime minister Darren Jones posted on X that it is “good news that VAT will be cut on electricity bills” but “the DigitalID program was unfunded”.

The shadow defence secretary told Times Radio that the OBR (Office for Budget Responsibility) also said last year that the digital ID card scheme has not been funded.

He said: “They (the OBR) literally said that, so you can’t fund a tax cut with… with savings from a programme that itself wasn’t funded.

“So you know, big question here, backed up by someone who – as you can rightly say – was only recently was in the heart of government under Labour – so it’s a fairly extraordinary position… I certainly agree with the new prime minister that cost of living is a big issue, I think we all agree with that, it’s still the number one thing that comes up on the doorstep with my constituents.

“But if you’re going to have policies to deal with it, they’ve got to last more than a few minutes in terms of scrutiny, to be honest.”

The Independent’s political reporter Athena Stavrou reports:

A Starmer loyalist who was sacked from a senior Cabinet role by Andy Burnham has disputed the new prime minister’s funding claims underpinning his first major policy.

The Burnham government have said a fresh tax cut to remove VAT from domestic electricity bills would be funded from cancelling the Digital ID programme.

But shortly after the policy was announced, former Chief Secretary to the prime minister Darren Jones publicly claimed the policy was not funded.

He wrote on X: “Good news that VAT will be cut on electricity bills. It’s a simple way for families to save a few quid, and to mechanically help to keep inflation that little bit lower.

“But the DigitalID program was unfunded. The government will have to set out how it will pay for its new policies at the budget.”

He now becomes the first Labour backbencher to publicly criticise the Burnham government, something the former mayor may have to get used to.

The Independent’s political reporter Athena Stavrou reports:

A government minister has insisted Ed Miliband’s appointment as foreign secretary won’t negatively impact Britain’s relationship with the US, despite having vocally criticised Donald Trump in the past.

Mr Miliband, who will have to work closely with the US administration, previously called the US president a “racist, misogynistic, self-confessed groper”.

But asked if this could be an issue in his new role, business secretary Jonathan Reynolds told Sky News: “No, I think as ever that this government will work with allies across the world.

“I know from my experience last time on some of the trade deal negotiations, it can be a robust exchange with our US friends and allies. But they will stand up for what they believe their national interest is, and they will do the same.”

He added: “Well, sometimes I reflect on things that members of the US administration have themselves said about different people in US politics. So they are quite a robust bunch over there in the US and I know they’ll have their priorities. We’ve got ours.

“Can we work together on lots of things in mutual interest in both countries? Absolutely, we can.”

The Independent’s political reporter Athena Stavrou reports:

One of Andy Burnham’s newly appointed government minister’s has hailed his decision to cut Vat on energy bills as “a tremendous announcement for the first day of the new cabinet”.

Business secretary Jonathan Reynolds said the policy is a “clear statement of intent” from the Burnham government on how it will deal with the cost of living crisis.

“It’s about the government’s priorities,” he told Sky News. “It’s about showing we understand people need some breathing space for pressure that they are under, and being able to make an announcement like this, I think, is a real statement.”