Andy Burnham has announced change to utility bills after just 24 hours in charge

The policy will be funded by scrapping the digital ID scheme.

On Monday, Burnham officially replaced Keir Starmer as prime minister and delivered his first speech outside Number 10.

In the address, he pledged to announce immediate measures to help tackle the cost of living for millions of Brits across the country.

On Tuesday, Burnham confirmed that the first policy would be to scrap VAT on electricity bills, a move that will bring down bills by an average of £45 a year from October.

In a statement, he said: “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.”

New chancellor Jonathan Healey said the policy would be funded by the cancellation of the controversial digital ID scheme.

In a post on social media, he wrote: “Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.

"This will be funded from the cancelled Digital ID scheme this year, helping to bring down inflation while supporting households in every postcode."

Downing Street have said the electricity bill tax cut will cost £850m in 2026-27, whilst scrapping the ID scheme is predicted to save £1.8bn over three years, the Guardian reports.

Burnham is expected to lay out further detail on his plans to tackle the cost of living on Tuesday.