Economy · VAT scrapped · ArchiveBurnham Scraps VAT on Electricity in First Cost-of-Living MoveAired July 21, 2026 at 7:51 AM UTCWritten September 7, 2026 at 9:22 PM UTCRead the write-upThis storyTranscript · LOADING0:00Prime Minister Andy Burnham has0:01delivered his first concrete cost of0:03living policy since taking office,0:05scrapping the 5% VAT on domestic0:07electricity bills effective October 1st.0:09The government says it puts money back0:11in people's pockets this winter, but the0:13numbers tell a more complicated story.0:14>> The typical household saves £45 from the0:17VAT cut for the rest of this year, but0:19the energy price cap, currently at 1663,0:22is forecast to rise to 1747 in October0:25and then to 1838 by January. Much of0:27that VAT saving could be swallowed0:29before families see it. The policy costs0:31£850 million to pay for it. The0:34government is scrapping the digital ID0:35program, a project projected to cost 1.80:38billion over 3 years, and one that drew0:403 million petition signatures from0:42critics. But the funding only runs0:44through April 2027 with no ongoing0:47revenue stream identified. The Treasury0:49says the cut reduces CPI inflation by0:511/10 of a percent and RPI by 1400s.0:54Chancellor John Healey called it0:56breathing room for families this winter.0:57One notable exclusion, Northern Ireland.1:00Due to post-Brexit EU tax rules, the VAT1:03cut does not apply there. The government1:06says it will provide comparable funding1:08through a separate arrangement. The End1:10Fuel Poverty Coalition called the cut a1:12positive statement of intent, but warned1:14the government has not addressed the1:16full scale of the crisis, pointing to1:18the need for expanded warm home1:19discounts and energy debt relief. And1:22looming over everything, a £67 billion1:24defense spending black hole awaiting the1:26new government. The VAT cut offers1:28immediate relief, but the question of1:30what comes next after April next year1:32remains unanswered.Explore with HeyDexThe shortThe short ↗