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Andy Burnham has announced a fresh tax cut to remove VAT from domestic electricity bills from 1 October, the first in what is expected to be a series of policy announcements on Tuesday morning.
Chancellor John Healey said the cut would be funded from cancelling the Digital ID programme. “For too long, too many people have struggled with the cost of living,” he said. “Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.”
Mr Burnham was still appointing his cabinet late into Monday night, with Angela Rayner returning to government as housing secretary, Healey named as chancellor and Wes Streeting appointed as defence secretary.
Ed Miliband secured a place as foreign secretary and Shabana Mahmood is remaining as home secretary.
Louise Haigh, who managed Mr Burnham’s Makerfield campaign, has been rewarded for her loyalty with a job at the heart of government as first secretary of state and chancellor of the Duchy of Lancaster.
Chancellor Rachel Reeves, deputy prime minister David Lammy and housing secretary Steve Reed, all allies of Sir Keir Starmer, were sacked by the former mayor of Greater Manchester and have returned to the backbenches.
VAT cut ‘good’ first step but people ‘won’t feel much benefit’, Martin Lewis says
Money saving expert Martin Lewis has said the government’s announcement it will cut VAT from electricity bills is a “good” first step but that “in practice people won’t feel much benefit”.
In a post on X, he said the energy price cap rise on 1 October is likely to mean any savings made are quickly eaten up.
“Ultimately though it does mean people will pay less than they would’ve done without this,” he wrote. “Yet it is going to need a lot more policy cost reductions, likely at the budget, for things to feel materially cheaper.”
Nicole Wootton-Cane21 July 2026 08:50
Shadow defence secretary says new policies have ‘got to last more than a few minutes’ of scrutiny
Shadow defence secretary James Cartlidge has said new policies have “got to last more than a few minutes” of scrutiny, during a discussion on the Prime Minister’s announcement that new VAT cuts will be partly funded by scrapping Sir Keir Starmer’s digital ID project.
Mr Cartlidge’s comments came after former chief secretary to the prime minister Darren Jones posted on X that it is “good news that VAT will be cut on electricity bills” but “the DigitalID program was unfunded”.
The shadow defence secretary told Times Radio that the OBR (Office for Budget Responsibility) also said last year that the digital ID card scheme has not been funded.
He said: “They (the OBR) literally said that, so you can’t fund a tax cut with… with savings from a programme that itself wasn’t funded.
“So you know, big question here, backed up by someone who – as you can rightly say – was only recently was in the heart of government under Labour – so it’s a fairly extraordinary position… I certainly agree with the new prime minister that cost of living is a big issue, I think we all agree with that, it’s still the number one thing that comes up on the doorstep with my constituents.
“But if you’re going to have policies to deal with it, they’ve got to last more than a few minutes in terms of scrutiny, to be honest.”
Nicole Wootton-Cane21 July 2026 08:40
Sacked Cabinet minister disputes funding claims for Burnham’s first major policy
The Independent’s political reporter Athena Stavrou reports:
A Starmer loyalist who was sacked from a senior Cabinet role by Andy Burnham has disputed the new prime minister’s funding claims underpinning his first major policy.
The Burnham government have said a fresh tax cut to remove VAT from domestic electricity bills would be funded from cancelling the Digital ID programme.
But shortly after the policy was announced, former Chief Secretary to the prime minister Darren Jones publicly claimed the policy was not funded.
He wrote on X: “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.”
He now becomes the first Labour backbencher to publicly criticise the Burnham government, something the former mayor may have to get used to.
Nicole Wootton-Cane21 July 2026 08:30
US politics are ‘robust’ and Miliband’s appointment won’t be an issue, minister says
The Independent’s political reporter Athena Stavrou reports:
A government minister has insisted Ed Miliband’s appointment as foreign secretary won’t negatively impact Britain’s relationship with the US, despite having vocally criticised Donald Trump in the past.
Mr Miliband, who will have to work closely with the US administration, previously called the US president a “racist, misogynistic, self-confessed groper”.
But asked if this could be an issue in his new role, business secretary Jonathan Reynolds told Sky News: “No, I think as ever that this government will work with allies across the world.
“I know from my experience last time on some of the trade deal negotiations, it can be a robust exchange with our US friends and allies. But they will stand up for what they believe their national interest is, and they will do the same.”
He added: “Well, sometimes I reflect on things that members of the US administration have themselves said about different people in US politics. So they are quite a robust bunch over there in the US and I know they’ll have their priorities. We’ve got ours.
“Can we work together on lots of things in mutual interest in both countries? Absolutely, we can.”
Nicole Wootton-Cane21 July 2026 08:25
Cabinet minister hails ‘tremendous’ VAT cut on energy bills
The Independent’s political reporter Athena Stavrou reports:
One of Andy Burnham’s newly appointed government minister’s has hailed his decision to cut Vat on energy bills as “a tremendous announcement for the first day of the new cabinet”.
Business secretary Jonathan Reynolds said the policy is a “clear statement of intent” from the Burnham government on how it will deal with the cost of living crisis.
“It’s about the government’s priorities,” he told Sky News. “It’s about showing we understand people need some breathing space for pressure that they are under, and being able to make an announcement like this, I think, is a real statement.”
Nicole Wootton-Cane21 July 2026 08:20
Burnham’s new business secretary ‘glad to be back’
The Independent’s political reporter Athena Stavrou reports:
Andy Burnham’s newly appointed business secretary Jonathan Reynolds is the first minister to be up on the morning broadcast round.
Mr Reynolds, who first served as Starmer’s business secretary before being moved to the role as chief whip, said he was “very glad to be back” in the role.
Asked if he did not enjoy the role of chief whip, he said: “It’s an important job. It’s a privilege to serve in any capacity.“
But look, I think for the kind of things that I think make the biggest difference to the country – I still get stopped in the street by people who work for British Steel, or what we did with Harland and Wolff, or the trade deal.
“So I think the chance to serve in that it’s a privilege in any capacity. But this is what I love doing.”
Newly appointed Business Secretary Jonathan Reynolds leaving number 10 Downing Street (PA)
Nicole Wootton-Cane21 July 2026 08:14
Questions raised over how cutting the digital ID project funds VAT cut
Former chief secretary to the prime minister Darren Jones said the digital ID project was unfunded and questioned how the VAT cut would be paid for.
In a post on X he said: “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.”
Rebecca Whittaker21 July 2026 08:02
Government determined to ‘creating real opportunities for young people’
The government aims to reform education to help young people get into work.
“The reality is too many young people are still locked out of work,” a Government spokesperson said.
“For too long, governments have paid for failure rather than invested in people’s success.
“We’re determined to turn that around by creating real opportunities for young people, reforming education so everyone has a clear path to a good job and providing the support people need to stay and get on in work.”
Rebecca Whittaker21 July 2026 07:51
Watch: Angela Rayner returns in cabinet reshuffle as Andy Burnham becomes prime minister Angela Rayner returns in cabinet reshuffle as Andy Burnham becomes prime minister
Rebecca Whittaker21 July 2026 07:45
The ‘economy is stuck in the slow lane’ warns MP
Responding to unemployment and borrowing statistics published by the ONS today, which show unemployment has risen and public borrowing at £16bn, Liberal Democrat Treasury Spokesperson Daisy Cooper MP said: “The new Chancellor needs to turn things around, and fast. The economy is stuck in the slow lane while job seekers and families pay the price.
“Healey now needs to urgently tackle unemployment, by scrapping Rachel Reeves’ unfair jobs tax that is stifling businesses and slamming the door shut on job opportunities.
“Today’s borrowing figures also show the huge pressure on our public finances. The only real answer is to boost growth, and protect our economy from the global shocks it faces, like Trump’s illegal Iran war. That’s why Andy Burnham must immediately begin negotiations for a new growth defence partnership with the EU, including joining the Single Market.”
Rebecca Whittaker21 July 2026 07:37