Burnham cuts VAT on electricity bills in first major policy announcement – UK politics live

The new business secretary, Jonathan Reynolds, defended the make-up of the cabinet, which has a majority of members based in the north of England, with five from Greater Manchester.

Asked if there was a risk of a north-south divide, Reynolds, the MP for Stalybridge and Hyde in Greater Manchester, told BBC Radio ۴’s Today: “No, there isn’t.”

“I don’t want to get touchy about it, but I can’t remember previous occasions where people have objected to too many people from a different part of the country being in there,” he said.

Andy Burnham, the Makerfield MP and former mayor of Greater Manchester, is making it his political mission statement as PM to devolve power across the UK, ensure growth in “every postcode” and, perhaps in an attempt to win back Labour voters from Reform, to target underinvested in small towns and cities that have struggled after the closure of factories.

While this may be popular with many voters, some experts warn that fetishising the industrial past is not the route to modern economic prosperity and devolution in itself is not a miracle cure, as my colleague Richard Partington notes in this story.

There is a lot of news to digest this morning. Andy Burnham made significant changes to the cabinet throughout the day and into the night in order to mark a shift in policy direction from his deeply unpopular predecessor. Helpfully, my colleagues Rowena Mason and Peter Walker have done a round up of whose in and whose out, with some insightful details on their careers and, for those who still have jobs, what challenges they will face in their briefs:

Andy Burnham promised to end rough sleeping in England in his first pledge as prime minister, allocating an additional £۳۴۰m over three years as he seeks to replicate the homelessness schemes he rolled out in Greater Manchester.

Speaking in front of Downing Street immediately after becoming prime minister on Monday, Burnham said he would try to get people off the streets “at the earliest opportunity”.

The announcement was welcomed by homelessness campaigners, who say the pledge can be met with enough money and political will.

The prime minister’s critics, however, greeted the promise with scepticism, pointing out that despite having set out a similar goal as Greater Manchester mayor, Burnham had overseen four years of rising street homelessness.

Officials said the government would now put an extra £۳۴۰m into its homelessness strategy – equivalent to £۱۱۳m a year – which would come from unused parts of the housing department’s budget.

The newly appointed business secretary, Jonathan Reynolds, has defended the policy, declaring the cut to VAT on electricity bills “a statement of priorities”.

Responding to Darren Jones’s claim that the cut remained unfunded, Reynolds told Radio ۴’s Today programme:

They are part of the government’s pressure, it is a legitimate decision to remove that pressure and instead use the allocation of resources … It’s a straightforward switch spend, it’s the right decision to make, and one that will be made by the British people.

In our opening post we mentioned criticism of the tax cut announcement on household electricity bills from the Lib Dem leader, Ed Davey, who has told Times Radio that the policy is “coming apart at the seams” already.

“It’s a bit confusing isn’t it? And I don’t think it’s the best way to help people with their bills,” Davey added.

He said his party was calling for an “essential energy guarantee”, which the Lib Dems claim will cut energy bills by giving every household an essential amount of energy, equal to ۵۰% of typical consumption, at a “discounted rate”.

Davey calls for Burnham to hold a budget as soon as possible so the figures can come under proper scrutiny. Sticking to the commitments not to raise the main rates of income tax, national insurance or VAT rule out the most obvious ways to raise revenue.

Also speaking on Times Radio, the shadow defence secretary, James Cartlidge, said that the Office for Budget Responsibility said last year that the digital ID card scheme had not been funded. He said: “They (the OBR) literally said that, so you can’t fund a tax cut… with savings from a programme that itself wasn’t funded.”

Good morning and welcome to our live coverage of UK politics. Andy Burnham has announced an £۸۵۰m tax cut on electricity bills to help ease cost of living pressures in his first significant policy announcement as prime minister. It means that electricity bills will be reduced by an average of £۴۵ a year from October.

Downing Street said the move will be partly funded by scrapping Keir Starmer’s digital ID scheme, which would have cost an estimated £۱.۸bn over three years.

The newly appointed chancellor, John Healey, said the cut will “bring down inflation while supporting households in every postcode”, signalling the political direction of the new cabinet. While welcomed as a positive initial step to help people save money off their bills, the policy has been criticised, including by Lib Dem leader Ed Davey, for not going far enough.

In an extraordinary intervention this morning, Darren Jones, Starmer’s former chief secretary, said the money had not been set aside for the digital ID scheme, which Burnham says will pay for the VAT tax cut. Jones, who was sacked as the Dunchy of Lancaster, wrote in an X post:

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.

Burnham will chair his first Cabinet meeting at ۱۲.۳۰pm after having removed Starmer loyalists from it yesterday. The ministers to lose their jobs included Rachel Reeves, David Lammy, Darren Jones, Steve Reed, Peter Kyle, Richard Hermer, Liz Kendall, Jo Stevens and Hilary Benn. But Reeves was understood to have turned down another job to return to the backbenches. We will bring you the latest throughout the day, which promises to be a busy one. Here is a non-exhaustive list of the members of the new cabinet:

• Chancellor: John Healey

• Foreign secretary: Ed Miliband

• Home secretary: Shabana Mahmood

• Health secretary: Yvette Cooper

• Work and pensions secretary: Pat McFadden

• Housing secretary: Angela Rayner

• Business secretary: Jonathan Reynolds

• Education secretary: Lucy Powell

• Equalities minister: Bridget Phillipson

• Culture secretary: Lisa Nandy

• Defence secretary: Wes Streeting

• Justice secretary: Alex Norris

• Environment secretary: Angela Eagle

• Energy secretary: Miatta Fahnbulleh

• Scottish secretary: Douglas Alexander

• Welsh secretary: Stephen Kinnock

• Northern Ireland secretary: Chris Bryant

• Transport secretary: Heidi Alexander

• Chancellor of the Duchy of Lancaster: Louise Haigh