Andy Burnham convened his first cabinet meeting at 10 Downing Street on Tuesday, using his initial full day as UK prime minister to announce a tax cut on household energy bills and unveil a reshuffled ministerial team that marks a clear departure from the direction set by his predecessor, Keir Starmer.
The new Labour leader confirmed that value-added tax (VAT) on domestic electricity bills will be eliminated from 1 October, a measure expected to save the average household approximately £45 (€52.73) annually. According to Agence France-Presse, the policy will cost the government around £850 million (€996 million) in the current fiscal 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 intends to finance the tax reduction by cancelling the previous administration's proposed digital identity scheme, which it claims would have cost taxpayers £1.8 billion. However, Darren Jones, a former adviser to Keir Starmer, disputed that assertion, arguing the ID programme had been “unfunded” and calling on ministers to clarify how they would compensate for the lost revenue in the autumn budget.
Cabinet Reshuffle Signals New Priorities
Burnham gathered his ministers for the first time after replacing Starmer on Monday, following a revolt by some Labour MPs that forced the former prime minister to resign. Although Burnham has pledged to end internal party divisions, one of his first acts was to remove several ministers closely associated with Starmer and promote allies who share his political agenda.
Among the most notable appointments, former defence secretary John Healey returned to government as finance minister, replacing Rachel Reeves. Former health minister Wes Streeting became defence secretary after abandoning his own leadership ambitions and backing Burnham. Ed Miliband, previously energy secretary, was appointed foreign secretary. Shabana Mahmood retained the home secretary brief, overseeing the government's approach to migration, while Angela Rayner returned to cabinet as housing minister after resigning when she breached the ministerial code by failing to pay the correct tax on a property purchase.
Burnham has pledged to tackle the cost-of-living crisis, explore rent controls and bus fare caps, and draw up a 10-year plan focused on reindustrialising Britain, expanding public housing, and devolving more power from London to the regions. This agenda echoes themes from his earlier leadership campaign, as detailed in our coverage of his ascent.
The new prime minister also held calls with US President Donald Trump, Ukrainian President Volodymyr Zelenskyy, and French President Emmanuel Macron, as he prepares to confront slowing economic growth, high borrowing costs, and continued pressure over migration before the next general election, due by 2029.
Burnham's energy tax cut comes amid broader European concerns about household debt and energy affordability. According to recent data, Europe's most indebted households are in the north, not the south, highlighting the continent-wide challenge of managing household finances in a high-cost environment.
The cabinet reshuffle also draws parallels to other European leadership changes, such as Friedrich Merz's signals of a possible cabinet reshuffle in Germany after Jens Spahn's resignation, and Zelenskyy's cabinet reshuffle in Ukraine, which sparked protests over the defence minister's dismissal.
