British Prime Minister Andy Burnham has planned the removal of value-added tax from domestic electricity bills to ease pressure on consumers. The measure will take effect on October 1 and reduce the average annual electricity bill by around £45. The average household currently pays approximately £1,862 a year for electricity. However, just 14 pounds relief in a year with less than four pounds relief in a month is not less than a joke with the domestic consumers in the United Kingdom.
Burnham made the announcement during his second day in office as he seeks to address Britain’s prolonged cost-of-living crisis. The prime minister said the government would fund the measure by cancelling a £1.8 billion digital identity programme.
“We’re taking action to cut taxes on energy bills, put more money in people’s pockets and bring back hope,” Burnham said.
However, the announcement has already faced questions about government finances.
Policy faces funding questions
Darren Jones, an ally of former prime minister Keir Starmer, questioned whether the government had enough funds to finance the policy.
He said the government would need to explain how it planned to pay for its new measures at the upcoming budget.
Meanwhile, energy costs remain a major concern for British households.
Electricity prices surged after Russia launched its full-scale invasion of Ukraine in 2022, pushing wholesale gas prices higher.
The previous Conservative government spent billions protecting households through an energy price guarantee.
Although prices declined from mid-2023, they remain significantly above pre-crisis levels.
Furthermore, energy costs have increased again in recent months amid the Iran war.
The End Fuel Poverty Coalition welcomed the move but warned that millions still struggle with unaffordable energy bills and rising household debt.
