Prime Minister Andy Burnham has announced the removal of VAT on household electricity bills in his first major policy decision since taking office.
The VAT rate on domestic electricity will be cut from 5% to 0% from October 1, saving a typical household about £45 a year.
The government said the measure will be funded by cancelling the Digital ID programme.
UK Chancellor John Healey said the tax cut would help reduce inflation while supporting households across the country.
“For too long, too many people have struggled with the cost of living,” Healey said.
“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter,” he added.
Burnham said the policy would provide “breathing space” for people struggling with the cost of living as his government seeks to ease pressure on household finances.
The announcement came a day after Burnham became prime minister and appointed his cabinet.
Ed Miliband was named foreign secretary, Louise Haigh became Chancellor of the Duchy of Lancaster and Wes Streeting was appointed defence secretary.
Angela Rayner returned as housing secretary, while Shabana Mahmood retained her role as home secretary.
Faridah Abdulkadiri
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