Andy Burnham Cost of Living Crisis: VAT Cut & Cabinet Plans 2026

The cost of living crisis remains a top priority as Andy Burnham urges his cabinet to examine all possible ways to ease financial pressures on households. On his first full day in power, the prime minister outlined measures including VAT removal from electricity bills and a national bus fare cap reduction.

Key Measures to Tackle the Cost of Living Crisis

Burnham’s government is focusing on immediate relief, such as cutting VAT from electricity bills from 1 October, which will lower the electricity price cap by £45. This move costs £850m next year and is part of a broader strategy to make life cheaper for voters.

Bus Fare Cap Reduction

The prime minister plans to reduce the national bus fare cap from £3 to £2, a move aimed at lowering transportation costs for millions. This policy is expected to be announced on Wednesday.

National Care Service Acceleration

Burnham also intends to accelerate the rollout of a national care service, though this could require additional funding before the next election. Sources indicate that the government will stay within existing borrowing rules.

Comparison of Cost of Living Relief Measures

Key Takeaways

• VAT on electricity bills removed from 1 October, saving households £45 annually.
• Bus fare cap cut by a third, from £3 to £2, easing transport costs.
• National care service rollout accelerated, but funding details remain unclear.
• Defence spending uplift ruled out via defence bonds.
• Cabinet instructed to explore both big and small cost-saving measures.

Political Context and Challenges

Burnham faces mounting pressure to explain how he will fund these pledges, especially after his new chancellor, John Healey, resigned as defence secretary over funding disputes. The prime minister emphasized his government would be a “cost of living government,” focusing on making life cheaper.

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