By Ijeoma Agbafo
New UK Prime Minister Andy Burnham has announced plans to scrap VAT on household electricity bills from Oct. 1, in his first major policy move to ease cost-of-living pressure on families.
The measure is expected to save households about £45 a year on average electricity bills, with the government saying the move will provide financial relief to families facing high energy costs.
The policy is expected to cost about £850 million and will be funded partly through the cancellation of the previous government’s £1.8 billion digital ID programme.
Burnham, who became Prime Minister after replacing Keir Starmer, is the seventh person to hold the office in a decade. His administration has pledged to focus on easing the cost of living and addressing economic challenges facing households.
The announcement comes as energy prices remain a major concern for British households. Under the current system, VAT is charged at 5% on domestic energy bills, while the energy price cap is reviewed every 3 months by the regulator, Ofgem.
The move is expected to take effect on Oct. 1, with the government presenting it as part of broader efforts to reduce household expenses and provide immediate financial relief to families across the UK.
