Andy Burnham has used his first major policy announcement as Prime Minister to deliver a cost-of-living package that will touch the lives of millions. The immediate measures, revealed in the early days of his premiership, are designed to offer relief on energy bills and transport costs, with the Prime Minister vowing to “bring back hope” as households continue to grapple with high inflation and stretched budgets.
VAT cut on electricity bills
The centrepiece of the announcement is a reduction in VAT on electricity bills. From October, the tax break will lower bills for almost every household in the country, saving the average family around £45 a year. The Prime Minister described the move as a “slight reduction”, but stressed that it is only the beginning of a series of measures intended to support people through the ongoing cost-of-living crisis.
The timing is significant: October is when energy regulators typically review price caps, and bills often rise as the colder months approach. By acting now, the government hopes to prevent a further increase in the autumn and provide a buffer for families preparing for winter. The move may also help to dampen the impact of any future wholesale price increases, according to the government.
Critics, however, have been quick to point out that £45 a year amounts to less than £1 a week, raising questions about whether the measure goes far enough. Burnham has defended the policy, insisting that it represents the first step in a broader programme of cost-of-living support. He acknowledged that more needs to be done, but said the government is committed to acting swiftly and effectively.
Burnham’s response to the criticism was firm, arguing that the government cannot solve every problem overnight, but that this is a start. He pointed to the bus fare cap as an additional measure that, combined with the energy tax cut, demonstrates the government’s commitment to taking pressure off households.
£2 bus fare cap announced
In addition to the energy tax cut, the Prime Minister unveiled a £2 cap on bus fares. The nationwide measure is particularly significant for people in rural and suburban areas who rely on buses for commuting, shopping, and accessing public services. By making bus travel more affordable, the government aims to support households hit by rising transport costs, while also encouraging a shift towards public transport.
The combination of the two measures is intended to address two of the biggest monthly costs for many families: energy and transport. Burnham said he wanted to take immediate action to demonstrate that the new government understands the difficulties people are facing. He has consistently described the cost of living as the major issue for voters, and these policies form the first direct response from his administration.
“Bring back hope”
In a statement accompanying the announcement, Burnham said: “I said I wanted to give people breathing space, and that’s what I’m announcing. We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
Chancellor John Healey also underlined the importance of the measures, saying: “(This) energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.”
The Chancellor’s reference to winter underscores the urgency of the package. With the colder months on the horizon, the government is keen to reassure the public that help is on the way. Both Burnham and Healey have stressed that these are the first of many steps.
The announcements have been made just weeks into Burnham’s time in office, signalling that cost-of-living support is at the top of his agenda. The Prime Minister has promised further action in the coming months, with speculation focusing on possible changes to benefits, housing, and business rates.
The £2 bus fare cap is already a familiar policy tool in some parts of the UK, and its extension to a national level will be welcomed by many commuters. However, campaigners have previously warned that without sustained funding, such caps could strain local transport budgets. The government has yet to confirm how the cap will be financed, but insists it is committed to making public transport accessible and affordable for all.
For now, the immediate focus is on the October changes. Households will see the VAT reduction reflected in their bills, and bus passengers across the country will benefit from the fare cap. While critics argue that the measures are modest, the government insists they are the first steps in a longer-term strategy to improve living standards and restore hope for families struggling to keep up with the cost of everything from food to fuel.
