New PM Andy Burnham has pledged to cut tax on household electricity bills.

It is part of plans to help with the cost of living.

VAT will be removed from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This applies to and is funded for this financial year.

The changes will funded by the cancellation of the Digital ID programme.

Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.  

Suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.

Prime Minister Andy 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."

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."