New UK prime minister targets energy costs in first major move

The UK government will abolish VAT on household electricity bills from October 1, Prime Minister Andy Burnham’s office has announced.

According to the statement, the measure will be funded by cancelling plans introduced by the previous government to create digital identity cards, a project estimated to cost £1.8 billion ($2.4 billion).

The move is expected to save households around £45 ($60) per year. VAT on electricity bills currently stands at 5%.

Burnham’s office said the policy would also help reduce inflation in the United Kingdom by 0.1%.

The abolition of VAT on electricity bills marks the first major economic decision of the new government.

Burnham took office as prime minister on July 20, succeeding Keir Starmer, who stepped down under pressure from lawmakers in the ruling Labour Party following its defeat in local elections held in May.

By Jeyhun Aghazada