Burnham asks cabinet to explore all options for cost of living relief
10 reported3 unconfirmed
Prime Minister Andy Burnham, on his first full day in power, urged his cabinet to examine all possible ways to address the cost of living crisis, according to a single-source report from The Guardian. He told ministers his would be a "cost of living government" and asked each department to look into measures, both big and small, to ease pressures. Burnham announced that VAT would be removed from electricity bills from 1 October, reducing the electricity price cap by £45 at a total cost of £850m next year. Sources say measures will also include reducing the national bus fare cap from £3 to £2, with an announcement expected on Wednesday. The prime minister is also working on accelerating a national care service, with a major social care announcement expected in the coming weeks. However, questions have been raised about how the policies will be funded, with the VAT cut's financing called into question by minister Darren Jones, who noted the digital ID scheme it would replace was unfunded. Downing Street said the tax cut is funded for the next financial year but money will need to be found from existing departmental budgets in future years, suggesting spending cuts.
What’s reported
Andy Burnham asked his cabinet to examine "all possible ways" to tackle the cost of living crisis.
VAT will be removed from electricity bills from 1 October, reducing the electricity price cap by £45 at a cost of £850m next year.
The national bus fare cap is expected to be reduced from £3 to £2, with an announcement on Wednesday.
Burnham plans to accelerate the timetable for implementing a national care service.
Darren Jones, the minister in charge of the digital ID policy until recently, said the DigitalID program was unfunded and the government must set out how it will pay for new policies.
Downing Street said the VAT cut is funded for the next financial year, but money must be found from existing departmental budgets in future years.
No 10 has ruled out using defence bonds to pay for higher military spending.
Burnham has abandoned a plan to raise the threshold at which workers start paying income tax, which had been frozen for several years.
More than half of outgoing Prime Minister Keir Starmer's cabinet were removed or demoted in Monday's reshuffle.
Scottish Labour leader Anas Sarwar is set to receive a seat in the Lords and a job in the business department.
Open questions
How the government will fund the VAT cut in future years beyond the next financial year.
How the national care service will be funded, with options including taxes or a social insurance model.
Whether the promised spending cuts will affect specific departmental budgets.
Key figures
Andy Burnham, prime minister
John Healey, chancellor
Darren Jones, minister
Louise Haigh, de facto deputy prime minister
Anas Sarwar, Scottish Labour leader
Louise Casey, reviewer of social care
Sources: The Guardian
