What does an Andy Burnham-led government mean for your money?

Image source, Getty ImagesByKevin PeacheyCost of living correspondentPublished20 July 2026Updated 18 minutes agoIn one of his first moves as Prime Minister, Andy Burnham has announced that VAT will be cut from household electricity bills, as part of his pledge to help with the cost of living.

Burnham, in his first speech as prime minister, promised to give people more "breathing space" to help with their finances.

Cost of living is a key issue for the new PM. Many people, he has previously said, can't go out for a pint on a Friday, can't take the kids out and can't go on holiday owing to the pressure on their finances.

The cost of living has dominated people's lives in recent years, and - to some extent - our politics too. Easing that pressure hasn't been easy.

If Burnham plans more support in the form of transport costs and allowing people to earn more before being taxed, and makes care and somewhere to live more affordable, he'll face tough choices on funding those moves and managing the trade-offs that come with them.

And his new chancellor, John Healey, will be the one who has to deliver any changes, and outline how to pay for them.

A prime minister saying every minute not talking about the cost of living is "a wasted minute". A chancellor saying it is the "number one focus".

However, these words weren't spoken by the incoming PM and chancellor, but by Sir Keir Starmer and former chancellor Rachel Reeves - and only in January this year.

They removed £150 from a typical annual domestic energy bill in April, by cutting some levies and moving others onto taxation.

But, those bills soon went up again, as did the cost of food and mortgages, owing to the impact of the US-Israeli strikes on Iran. Events can have an instant and extreme impact on the best-laid plans.

"A more volatile world is a more expensive world," says Adam French, of the financial information service Moneyfacts.

The government has announced it is cutting VAT on domestic electricity bills from 5% to zero from 1 October, which it says will save a typical household about £45 a year.