Burnham tells cabinet to tackle living costs at first meeting

ByPaul Seddon

Political reporter

Andy Burnham has promised to lead a "cost of living government," as he chaired his first cabinet meeting as prime minister.

He told his newly-assembled top team that he wanted to make living expenses a key priority, and give people a "sense that help is coming" on costs.

It comes after he announced a VAT cut to household energy bills from October, in his first major announcement since taking office.

But his plan to pay for the policy by scrapping Sir Keir Starmer's digital ID scheme led to an early row over whether the plan was properly funded.

Downing Street said the estimated £850m cost of the VAT cut over the rest of the financial year could come from £1.8bn earmarked by the previous government to roll out the digital ID scheme in the next three years.

But Darren Jones, who was among a clutch of Starmer loyalists sacked from the cabinet on Monday, said the ID programme was "unfunded" and Burnham would need to set out where the money would be found.

Opposition parties also seized on the announcement, pointing out the government's budget watchdog has previously said the money to fund digital ID was due to be found from within existing budgets.

"We are only one day in and already Labour are playing fast and loose with the public finances," said Conservative shadow chancellor Sir Mel Stride.

The PM's spokesman insisted the policy would be funded by redirecting "savings" identified by departments to cover the cost of the ID scheme.

Burnham was given a round of applause by his senior ministers earlier, as he opened the first meeting of his new cabinet after appointing his top team on Monday evening. More junior picks are expected to follow on Tuesday.

Monday's wide-ranging reshuffle saw Starmer loyalists such as Rachel Reeves and David Lammy out of government, with Ed Miliband promoted to foreign secretary and Burnham ally Louise Haigh given a big job running the Cabinet Office.

In a move that took Westminster by surprise, John Healey, who resigned as Starmer's defence secretary in a row over military spending, has been given the crucial role of chancellor.

Speaking at the start of the meeting attended by broadcasters, Burnham said the cost of living would be an early priority, with further measures to be announced in the coming days.

He said he would be asking ministers to come up with suggestions to lower costs to households, adding: "There are things can be done, big and small."

He insisted his government would always show "how we are going to pay for" policies, adding "discipline" would be required to show that it was committed to sticking by its tax and spending rules.

But he conceded that funding new announcements ahead of his first Budget, where big tax decisions are made, would require ministers to be "prepared to reprioritise" how they allocate their budgets.

This was also reflected in Burnham's first announcement on Monday, a further £340m to tackle rough sleeping over five years, which is expected to be funded within "uncommitted" spending at the housing department.

The announcement on energy bills, which will see VAT on household electricity reduced from 5% to zero in England, Wales and Scotland, is estimated to save the typical household about £45 a year.

It will not apply in Northern Ireland due to post-Brexit rules agreed by the previous Conservative government, with ministers at Stormont instead offered extra money from the Treasury to use on cost of living measures.

The Conservatives and Reform UK have both previously called for the measure, with Nigel Farage calling it a benefit of Brexit but insisting it would not "address the real issue of the cost of living" and taking aim at green levies on bills.

Meanwhile, further details have been confirmed of Burnham's plan for a new Downing Street unit in Manchester, known as No 10 North.

The government says the unit, expected to be initially set up in a building currently housing intelligence service GCHQ, will be given control of aspects of local economic growth and devolution strategy.

Alongside this, a new Office for the Prime Minister and the Cabinet will be created to ensure departments remain focused on "top strategic priorities", according to a statement announcing the changes, external.

Civil servants working in London have been offered relocation packages to encourage them to move north, it is understood, with Downing Street saying Burnham would try to work from No 10 North "at least one day a week".