British Prime Minister Andy Burnham has announced plans to remove Value Added Tax (VAT) from household electricity bills, unveiling the proposal as the first major domestic policy initiative of his premiership.
Burnham said legislation to abolish the 5 percent VAT on residential electricity bills would be introduced in Parliament, describing the measure as part of a broader effort to reduce the cost of living and ease financial pressure on households across the United Kingdom. The government said the policy would take effect later this year if approved by lawmakers.
The proposal is expected to reduce annual energy costs for millions of households at a time when consumers continue to face high utility bills despite a recent easing in wholesale energy prices. Burnham said the measure forms part of his government’s commitment to provide targeted support for families while pursuing long term reforms to Britain’s energy market.
The announcement follows Burnham’s appointment as prime minister after winning the Labour Party leadership. His administration has pledged to prioritise economic growth, improve public services and introduce policies aimed at addressing the rising cost of living. The removal of VAT on electricity bills was among the commitments Burnham highlighted during his leadership campaign.
Economists said the tax cut could provide immediate financial relief for consumers, although they noted it would also reduce government tax revenues. Opposition parties are expected to scrutinise how the government intends to offset the loss in revenue while maintaining spending commitments in areas such as healthcare, education and infrastructure.
The government said further details of the proposal, including its projected fiscal impact and implementation timeline, will be outlined when the legislation is presented to Parliament. The measure is expected to feature prominently in the government’s broader economic agenda in the coming months.
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