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Andy Burnham's Government Announces Withdrawal of British Electricity VAT

The measure will be financed in part by the cancellation of the project to launch the digital identity programme, the cost of which was expected to be around £600 million a year.

London (United Kingdom), 20/07/2026.- New British Prime Minister Andy Burnham delivers a speech outside 10 Downing Street in London, Britain, 20 July 2026. Burnham became British Prime Minister after Keir Starmer resigned. (Reino Unido, Londres) EFE/EPA/ANDY RAIN — Andy Burnham, after taking office. Photo: EFE

EITB

2026/07/21 - 11:16

Updated

2026/07/21 - 11:16

New British Prime Minister Andy Burnham has made his first high-profile decision within hours of coming to power. The UK Labour Government announced on Tuesday the abolition of VAT on electricity bills, the first economic measure by the executive sinceBurnham took office on Monday.

Electricity bills will not have to pay VAT (20% in the UK) from next October 1, in orderto alleviate the cost of living crisis, the government said.

Digital Identity Program

The measure will be financed in part by the cancellation of the project to launch the digital identity programme , the cost of which was expected to be around £600 million (€708 million) per year for three years.

The funding for this project was to come from the savings provided for in the budgets of the existing departments, but these funds willnow be used to cover the reduction in VAT.

"I said my intention was to give people a break, which is exactly what I announce on my second day as Prime Minister. We are immediately taking steps to cut energy bill taxes, leave more money in the pockets of the public and help them regain hope," Burnham said in a statement.