As he settles into his first cabinet meeting as Prime Minister, Andy Burnham has sent a clear signal that tackling the escalating cost of living crisis will be an urgent priority for his administration. With households already feeling the pinch, families are crying out for help – and Mr Burnham is promising to provide it. His vision for a "cost of living government" aims to deliver a sense of relief, but critics are already questioning whether the measures announced so far will make a meaningful difference.
The key announcement from Tuesday's cabinet meeting was a reduction in VAT on household electricity bills, set to take effect from October. The change will see the VAT rate drop from 5% to zero across England, Wales, and Scotland – saving the average household around £45 per year. However, this welcome move comes with a catch: due to post-Brexit arrangements, Northern Ireland's ministers at Stormont are expected to receive additional funding from the Treasury for their own cost of living initiatives instead.
But how will the £850 million required for the VAT cut be financed? According to Downing Street, the funds will come from £1.8 billion earmarked by the previous government for a digital ID scheme over the next three years. However, not everyone is convinced this is possible – and some have questioned whether the money was ever actually set aside for this purpose.
Opposition parties are also weighing in on the issue. Conservative Shadow Chancellor Sir Mel Stride accused the new Labour government of "playing fast and loose with public finances" on its first day, highlighting that the government's own budget watchdog had previously indicated funding for the digital ID scheme would come from within existing departmental budgets. A spokesperson for Mr Burnham insisted the policy will be funded by redirecting "savings" identified by departments.
Against this backdrop of controversy and scrutiny, the cabinet meeting marked a significant reshuffle on Monday evening, with several key appointments including Ed Miliband as Foreign Secretary and John Healey as Chancellor of the Exchequer. Notably, Mr Burnham also confirmed plans for a new "No 10 North" unit in Manchester, designed to decentralise aspects of government operations – but questions remain over how this will work in practice.