In a decisive first cabinet meeting, Prime Minister Andy Burnham has declared a commitment to tackling the spiralling cost of living as a top priority for his administration. Burnham, who assumed office just yesterday, aims to instil a sense of hope among households struggling with rising expenses, announcing a significant VAT cut on energy bills set to roll out in October. However, his strategy has already sparked debate over funding sources, drawing scrutiny from opposition parties and former allies.
VAT Cut Announced for Energy Bills
Burnham’s first major policy initiative involves slashing the VAT on household energy bills from 5% to zero, a move expected to save the average family around £45 per year. This measure will be effective across England, Wales, and Scotland, though Northern Ireland will not benefit due to previous agreements made by the Conservative government.
The Prime Minister outlined that the estimated £850 million cost of this initiative could be offset by reallocating funds originally designated for Sir Keir Starmer’s digital ID programme. While the government insists this is a viable funding route, critics, including Darren Jones—who was dismissed from the cabinet just hours earlier—have raised concerns about whether the proposed savings are genuinely available.
Early Tensions Over Funding
The funding controversy has prompted immediate backlash, with Conservative shadow chancellor Sir Mel Stride accusing Burnham’s government of mismanaging public finances. He stated, “We are only one day in and already Labour are playing fast and loose with the public finances.” Meanwhile, Burnham’s spokesperson defended the approach, claiming it would be underpinned by “savings” identified by various departments.
Additionally, the opposition has pointed out that the Office for Budget Responsibility had previously indicated that the financial backing for the digital ID scheme would need to be sourced from existing budgets, raising further questions about fiscal responsibility.
Cabinet Reshuffle and New Appointments
Burnham’s inaugural cabinet meeting was marked by applause for the Prime Minister, as he introduced his new team, which includes notable reshuffles. Scottish Labour leader Anas Sarwar is poised for a ministerial role, potentially as a business minister, although he will have to resign his seat in the Scottish Parliament—a move that won’t trigger a by-election due to his election via the regional list system.
The reshuffle has seen the departure of several Starmer loyalists, with Ed Miliband being promoted to foreign secretary and Louise Haigh taking the helm of the Cabinet Office. Miatta Fahnbulleh, the new energy secretary, downplayed allegations of a purge of Starmer supporters, asserting that cabinet positions should reflect a “diversity of views” rather than allegiance to any one leader.
A Focus on the Future
As Burnham sets his sights on the challenges ahead, he has urged his ministers to come up with both large and small initiatives to alleviate household costs. He emphasised that any new policies would come with a clear funding plan, insisting that financial discipline will remain paramount as his government navigates its fiscal responsibilities.
In a further commitment to social issues, Burnham announced an additional £340 million over five years to combat rough sleeping, which will be funded from unallocated spending within the housing department’s budget.
Moreover, in a continuation of established foreign policy, Burnham has agreed to allow British military bases to be used for US defensive operations against Iran, a decision that echoes the previous administration’s stance.
Why it Matters
Burnham’s rapid move to prioritise the cost of living crisis signals a proactive approach to governance that resonates with many struggling citizens. The effectiveness of his proposed VAT cut and the ability to fund it without straining public finances will be critical tests for his administration. As the cost of living continues to challenge households, the government’s response will be scrutinised closely, shaping public perception and political landscapes in the months to come.
