UK PM Burnham Prioritizes Cost of Living, Announces Energy VAT Cut Amid Funding Row

Prime Minister Andy Burnham has declared his government will operate as a "cost of living government," making household expenses a central focus from his first cabinet meeting. He aims to assure the public that assistance is forthcoming for mounting living costs.

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There are things can be done, big and small.

Burnham's initial major policy announcement involves a value-added tax (VAT) cut on household energy bills, set to take effect in October. However, the plan to finance this measure by discontinuing Sir Keir Starmer's digital ID scheme has immediately sparked controversy. Critics question whether the VAT cut is adequately funded.

Downing Street suggests the estimated £850 million cost for the remainder of the financial year could be covered by £1.8 billion previously allocated by the prior government for the digital ID rollout over the next three years. Conversely, Darren Jones, a former minister, argued the ID program was "unfunded," demanding clarity on the source of funds for the VAT cut. Opposition parties, including Conservative shadow chancellor Sir Mel Stride, have criticized the move as fiscally irresponsible, citing the government's budget watchdog's previous assessments that digital ID funding was to come from existing budgets.

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Discipline over tax and spending would be his 'first duty'.

The Prime Minister's spokesperson maintained that the policy would be funded through "savings" identified within departments, intended to cover the digital ID scheme's cost. Meanwhile, the reshuffle saw significant changes in ministerial appointments, with Ed Miliband appointed foreign secretary and Louise Haigh heading the Cabinet Office. John Healey, previously Starmer's defense secretary, takes on the crucial role of chancellor, emphasizing fiscal discipline while also seeking to maximize public and private investment.

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We are only one day in and already Labour are playing fast and loose with the public finances.