ANDY Burnham will slash taxes on electricity bills from October to help households in the cost of living crisis.

He has pledged to take VAT off electricity bills which is expected to take £45 off the annual price cap from the autumn.

John Healey was appointed chancellor yesterday in a surprising move Credit: Reuters

Andy Burnham arrives at 10 Downing Street as prime minister for the first time yesterday Credit: Crown Copyright

Energy bills could see another jump in energy bills later in the year in the wake of the Middle East conflict.

The VAT cut will see it cut on electricity bills from 5 per cent to 0 per cent.

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The new Prime Minister vowed to give the public “breathing space” as they battle higher bills and help bring down inflation.

The move comes on top of the £150 reduction brought in at the last Budget.

The policy will cost £850 million in 2026/27 and will be paid for by cancelling the Digital ID cards scheme, which would have cost £1.8 billion.

Mr Burnham said: “Westminster has not been working for people for too long, with families struggling with the cost of living.

“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.

“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”

Other policies that are being weighed up include cutting bus fares and rent controls. A longer term measure could be to raise the tax free personal allowance that has been frozen at £12,570 for five years.

Number 10 said any further action which will include longer-term measures will be taken at the Budget later this year.

Energy firms are expected to pass on the VAT cut to consumers.

Chancellor of the Exchequer John Healey MP said: “For too long, too many people have struggled with the cost of living.

“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.

“This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”

The reduction will be extended to small businesses who qualify for domestic energy alongside eligible charities and residential care homes.

This is this first act which the PM has introduced to help families with the cost of living.

In his speech yesterday he said he had measures to “give people some breathing space now”.

In a big surprise Mr Healey was appointed as chancellor yesterday.