LONDON, United Kingdom – United Kingdom Prime Minister and Labour Party leader Andy Burnham on Tuesday, July 21, 2026, announced a policy to remove value-added tax on household electricity bills starting in October.
Okay News reports that Andy Burnham said the value-added tax removal will cost the government about £850 million ($1.143 billion) in the current UK financial year while saving average households about £45 per year.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope,” Burnham said in a statement.
The government said the measure’s start date coincides with an expected rise in the energy regulator’s price cap on electricity and gas prices resulting from the US–Iran war. The government added that the tax cut will be funded by cancelling former Prime Minister Keir Starmer’s plan for a digital ID scheme, which would have cost taxpayers £1.8 billion.
Official data released on Tuesday by the Office for National Statistics showed public sector net borrowing was £16 billion in June, down one third from a year earlier. However, the Office for National Statistics cautioned that “debt remains high by historical standards and close to the annual value of the entire UK economy”.
Reacting to the data, United Kingdom Chancellor of the Exchequer John Healey, who replaced Rachel Reeves, said “fiscal control is the first duty of any” finance minister. Healey said, “And fiscal credibility is the bedrock for economic stability and for national security.” Healey added: “The prime minister and I have talked about how we will work in lockstep to meet the fiscal rules with a buffer against uncertainty and how we’ll make life more affordable for working people right across the UK,”
Separate official data released on Tuesday showed the UK unemployment rate unchanged at 4.9 percent, while the International Monetary Fund forecasts the British economy to outperform other major economies this year.
