Andy Burnham has confirmed a £45 change for households in England, Scotland and Wales. VAT will be cut from household electricity bills, the government has announced, as part of new Labour Party leader Mr Burnham's pledge to help with the cost of living.
The reduction from 5% VAT to zero will come into effect on 1 October, saving a typical household about £45 a year. Jonathan Reynolds, the new business secretary, said the cut would give people some "breathing space".
He said it was funded until "the end of the financial year" in March 2027 and any changes beyond that would have to be announced in the next Budget.
Conservative Party Shadow Chancellor Mel Stride has criticised the use of the Digital ID budget to fund the VAT cut. He said: "The cuts to the Digital ID card budget are not real because the money was never provided in the first place.
"We are only one day in and already it is smoke and mirrors on the public finances."
But Mr Reynolds told the BBC's Today programme a VAT cut to electricity bills would be funded through a "straightforward switch spend" redirecting money for digital ID.
He said money for digital ID "would have had to have been found" and that scrapping the scheme removed "pressure" from the budget allowing the government to "give real help to people".
Speaking to the BBC, Liberal Democrats leader Sir Ed Davey said: "I think we'll have a summer of these little headline grabbing small announcements.
"What we need is the big picture so people know they are getting real help with the cost of living."
Reform UK leader Nigel Farage said the VAT cut was "something that is only allowed because of Brexit".
But he said it would not "address the real issue of the cost of living" and of running a home, because "most houses are heated by oil or gas" and bills were being inflated by green levies.
