The cost of living crisis has landed squarely on the desk of newly appointed Prime Minister Andy Burnham, who is under intense pressure to demonstrate his administration's commitment to addressing this pressing issue. As he begins his tenure, Burnham has instructed his cabinet to scrutinise every possible avenue for reducing the financial burden on UK households – a bold move that promises much but raises significant questions about how it will be funded.
The Prime Minister's most immediate response has been the decision to remove Value Added Tax (VAT) from electricity bills, set to take effect from 1 October. This measure is expected to trim £45 from the price cap on electricity bills, with an estimated total cost of £850 million for the next financial year. However, as with any major policy pledge, questions have begun to swirl around how this will be funded – a particularly pertinent concern given that Burnham's plan to scrap the government's digital ID scheme in order to fund it has been met with widespread scepticism.
Darren Jones, who was previously responsible for developing the digital ID policy, took to social media to express his reservations about the proposed saving. His assertion that the digital ID scheme is unfunded leaves little room for doubt: will Burnham's administration be able to make significant savings from scrapping this initiative? Or are they merely papering over a funding shortfall?
The Prime Minister faces further challenges in the weeks and months ahead, not least with regard to defence spending. John Healey, his new Chancellor, has a reputation for being a firm advocate of increased defence expenditure – a position that has put him at odds with some of his colleagues within the Labour Party.
As Burnham's team works on fleshing out the details of their cost of living strategy, it is clear that they will need to tread carefully in order to avoid exacerbating existing financial pressures. With reports emerging that a major social care announcement may be imminent – and potentially bringing forward a review into social care by several years – the Prime Minister's team has its work cut out if they are to deliver on their promises without putting further strain on an already stretched public purse.