Burnham Cuts Energy Bills Tax in First Cost-of-Living Help

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessBurnham Cuts Energy Bills Tax in First Cost-of-Living HelpThe UK will scrap a 5% tax on energy bills starting from October, new Prime Minister Andy Burnham announced, the first of several policies expected to offer households more “breathing space” with the cost of living.Author of the article:Alex Wickham, Jessica Shankleman and Tom ReesLast updated 11 minutes ago You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The UK will scrap a 5% tax on energy bills starting from October, new Prime Minister Andy Burnham announced, the first of several policies expected to offer households more “breathing space” with the cost of living.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountOn his second day as prime minister, Burnham removed value added tax from household electricity bills from Oct. 1, a move the government said would save families on average £45 ($61) a year. Burnham’s office said in a press release that the policy would cost £850 million in 2026-27 and be funded by dropping his predecessor Keir Starmer’s proposed digital ID program. Officials estimated it would reduce the headline inflation rate by 0.1 percentage point.“Westminster has not been working for people for too long, with families struggling with the cost of living,” Burnham said in a statement. “That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as prime minister.”Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againResponding to the announcement on social media, Darren Jones, a former senior minister in Starmer’s government, disputed the funding plan announced by Burnham. He said the digital ID program Burnham said he’ll abolish to pay for the tax cut was unfunded, meaning the new government will have to set out funding at the budget.Britain has some of the highest energy costs in the developed world. Prices spiked after Russia’s 2022 invasion of Ukraine and have remained elevated, especially since war broke out in the Middle East in February.The VAT cut marks a change from the previous government’s plans for winter energy support. The former chancellor Rachel Reeves had said she was working on targeted support that would help only the most vulnerable whereas the VAT cut will help everyone.At the start of this month UK households saw the biggest increase in energy bills since 2023 as the war in Iran drove up wholesale gas and power costs. Prices may rise again under the price cap model, which sets the maximum rate per unit that suppliers can charge households.It’s updated quarterly and the next price cap will be announced at the end of August and come into effect in October, when the heating season gets underway.The proposal of removing VAT from energy bills has previously been criticized by the International Monetary Fund as “costly” having “only a small impact on inflation.”The Institute for Fiscal Studies think tank has previously said the policy “would benefit poorer households most as a proportion of their budgets (since energy bills make up a larger share of their budgets), but it would benefit richer households most in cash terms.”“By providing more support to those who use more energy, removing VAT would be well targeted at those who face the biggest rise in their energy bills, but not at those – the poorest – who are least able to cope with the rise in costs,” it said.Burnham on Monday appointed as energy secretary Miatta Fahnbulleh, a left-winger ally of the previous holder of the post, Ed Miliband. Fahnbulleh would likely place a greater emphasis on cost—of-living concerns than Miliband given her previous role in the department as a junior minister for energy consumers, an official at the energy department said.—With assistance from Louise Moon.(Updates with Labour MP’s criticism and other detail from fourth paragraph.)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.