Kevin Peachey
Cost of living correspondent

Cutting VAT on household electricity is estimated to reduce the typical annual bill by £45.

The saving is ongoing, but analysts have pointed out that it is a lever that can only be pulled once.

Obviously, you can’t reduce VAT any further than 0%. In a similar way, levies that were cut from bills or shifted onto taxation in April can’t be moved again.

The Conservatives and Reform have both previously suggested VAT should be cut from energy bills. Now a new Labour prime minister has gone some of the way to doing so.

Debt charities and the regulator have called for more significant reform to bills. They want social tariffs which offer a discounted deal to the most vulnerable, paid for by higher bills for others or through taxation.

The decision to cut VAT from domestic energy bills has been praised by Matt Copeland of fuel poverty charity National Energy Action.

Speaking to BBC Radio 5 Live Breakfast, Copeland says he's "pleased" with the cut, adding it will "put money back in the pockets" of households and he hopes it is "a sign of things to come".

Copeland thinks there are two reasons Burnham has made this decision.

"Not everyone uses gas, but the vast majority of people use electricity, so it covers a greater proportion of people," he says.

"The second one is to ensure that things like moving to a heat pump is more attractive - because it will make electricity cheaper for those people who have already taken that measure."

Copeland adds while there is more for government to do on things like energy debt, this is a "superb start for the first day".

Leader of the Liberal Democrats Ed Davey says this morning's announcement to cut VAT on electricity bills doesn't go far enough to help people with the cost of living.

Speaking to BBC Breakfast, Davey says: "I don't think it's the best way to help people with energy bills and it doesn't go far enough, but at least it's something isn't it."

He adds that his party has an alternative plan which they estimate would give people double the household savings.

Davey says the Lib Dems want a Budget "as soon as possible" so that people can see "the real Mr Burnham".

Meanwhile, on Burnham's pledge to reform the social care system, Davey says he welcomes the fact this has been "put on the table".

He tells the BBC he has written to Burnham to say if he is serious about social care reform his door is open, adding that cross party talks are essential.

"Let's get round the table and sort these things out for our country," Davey adds.

Image source, Reuters

Throughout yesterday afternoon and evening, we saw a number of familiar faces walking along Downing Street to find out what their role would be in Andy Burnham's new government.

Who's in?

• Chancellor John Healey
• Chancellor of the Duchy of Lancaster Louise Haigh
• Foreign Secretary Ed Miliband
• Home Secretary Shabana Mahmood
• Defence Secretary Wes Streeting
• Health Secretary Yvette Cooper
• Housing Secretary Angela Rayner
• Justice Secretary Alex Norris

Who's out?

This means Rachel Reeves loses her job as chancellor while David Lammy returns to the back benches having previously been justice secretary.

Steve Reed had been housing secretary under Keir Starmer, while Peter Kyle has been replaced by Jonathan Reynolds as business secretary.

Our visual journalism colleagues have collated a fuller list of Burnham's cabinet here.

Image source, EPA

Today is Andy Burnham's first full day as prime minister.

Yesterday, former Prime Minister Keir Starmer officially resigned and Burnham was invited by King Charles III to form a government.

By the end of the day, the new cabinet had been appointed and announced.

John Healey is now the country's chancellor, with Ed Miliband taking on the role of foreign secretary.

Several ministers are staying put, including Heidi Alexander as transport secretary and Douglas Alexander as secretary of state for Scotland, while others are returning - most notably Angela Rayner as housing secretary.

In his first major policy decision, Burnham announced earlier that he will remove VAT from domestic electricity bills after pitting the cost of living as one of his core priorities.

Later today we're expecting to hear more on that, but first we'll catch you up on everything that happened yesterday.

Kevin Peachey
Cost of living correspondent

Cutting VAT on electricity bills will not mean an equal saving for all households.

High electricity users will see the biggest cut when the 5% levy is removed in October.

They might include larger homes, but also some vulnerable people who use a lot of electricity for medical equipment.

There were rumours that VAT could be cut from energy bills by the previous chancellor in the last Budget.

Instead, Rachel Reeves reduced household energy bills in April by removing a green levy and moving others onto general taxation.

Image source, PA

As we've been reporting, the government's decision to cut VAT from household electricity bills will be funded by the cancellation of the digital ID programme.

Plans for a digital ID scheme had initially been introduced by Keir Starmer ahead of Labour's party conference last year.

The move will "put more money in people’s pockets and bring back hope", Andy Burnham says.

At the time the scheme was announced, Starmer argued that mandatory digital ID for workers would make it easier to clamp down on immigrants working illegally and modernise the state.

As well as tackling illegal immigration, the former PM said the scheme would enable citizens to prove identity to access key services quickly instead of having to hunt for utility bills.

Image source, EPA/Shutterstock

The UK's new Chancellor John Healey says cutting VAT from domestic electricity bills will be funded from cancelling the digital ID programme.

The reduction from 5% VAT to 0% will come into effect on 1 October, saving a typical household about £45 a year.

Healey says the measure will help bring down inflation while supporting households in every postcode, adding that "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," he adds.

Henry Zeffman
Chief political correspondent

The government says the announcement was estimated to cost £850m this financial year and would be funded by savings from the cancellation of the digital ID programme, which was going to cost £1.8bn over the next three years.

John Healey, the new chancellor, says the announcement will “provide some reassurance this winter”.

Burnham said: “Westminster has not been working for people for too long, with families struggling with the cost of living. That needs to change."

• Remind me: What's the digital ID programme?

Henry Zeffman
Chief political correspondent

Andy Burnham will remove VAT from domestic electricity bills in October, in his first major policy decision as prime minister.

The rate of VAT applied to household electricity will be cut from 5% to 0%, starting on 1 October.

The new prime minister said that the measure would “give people breathing space” and “put more money in people’s pockets”.

Image source, Getty Images

Andy Burnham is the UK's new prime minister following Keir Starmer's official resignation on Monday morning.

Burnham arrived at Buckinham Palace just after midday on Monday, where he was invited by King Charles to form a government, officially making him PM.

Here are the key things that have happened since:

• Burnham arrived at Downing Street to applause after his appointment as PM, where he delivered his first speech
• Speaking without a lectern - or notes - he said he will soon lay out his 10-year-plan that will put power into "every postcode in the land"
• Here's a rundown of the key points from Burnham's first speech as PM
• Trump says that he has already spoken to Burnham following his acceptance of the premiership, writing on Truth Social that the pair had a "very good" phone call and would meet in the "not so distant future"

Later Burnham began selecting who would make up his cabinet, and who would be on their way out of government.

Notably, Rachel Reeves is out as chancellor, former Deputy Prime Minister David Lammy returns to the backbench and Darren Jones was sacked as chancellor of the Duchy of Lancaster.

Some of the key appointments include John Healey as chancellor, Ed Miliband as foreign secretary and former Deputy PM Angela Rayner returning to government as housing secretary. Wes Streeting has also made his return to cabinet, this time as defence secretary.

You can see who has - and who has not - made the cut in our full list.

We are pausing our live coverage for now, but you can read more in our full online article.

Judith Moritz
Reporting from Manchester

Specialist operations police officers have been seen guarding a building believed to be a possible base for the government’s new "No 10 North”.

Earlier, a source close to Andy Burnham told the BBC that the new Manchester branch of the prime minister’s office is up and running, although its exact location has not been made public.

A group of officers arrived at Heron House, a secure site in the city centre that already houses GCHQ offices.

It’s thought the building could serve as the temporary headquarters of No 10 North while a permanent site is identified.

The Metropolitan Police’s Specialist Operations command is responsible for protecting high-profile government buildings and officials, including at Downing Street.

No 10 has confirmed the final batch of new cabinet positions announced tonight:

• Kanishka Narayan, who was previously online safety and AI minister, has been appointed AI minister and will attend cabinet
• Ellie Reeves, former chair of the Labour Party and sister of the departing Chancellor Rachel Reeves, will become attorney general and attend cabinet
• Stephen Kinnock, ex-care minister and son of former Labour leader Neil Kinnock, will be the secretary of state for Wales
• Hamish Falconer becomes minister for intergovernmental relations and European relations and will attend cabinet

• Chris Bryant moves from minister for trade to Northern Ireland secretary
• Emma Reynolds, former environment secretary, takes on the role of chief secretary to the Treasury and will attend cabinet

Several ministers will stay in their posts:

• Heidi Alexander – transport secretary
• Douglas Alexander – secretary of state for Scotland
• Alan Campbell – leader of the House of Commons and lord president of the council
• Baroness Smith – Lord Privy Seal and leader of the House of Lords
• Matthew Pennycook – minister of state in the Ministry of Housing, Communities and Local Government

Image source, gETTY

US President Donald Trump has said he has had a "very good conversation" with new Prime Minister Andy Burnham.

He said the call "went very well" and described it as "interesting" in his latest post to Truth Social.

The president said that the call saw the two world leaders discuss North Sea oil, the military alliance, the de-mining of the Strait of Hormuz and "many other topics".

"We discussed many subjects, including the outstanding relationship we have had with the UK," wrote Trump, suggesting the pair will meet in person in the "not too distant future" about "topics of mutual interest".

The post went on: "The Prime Minister has got a big job ahead of him, but he will be able to do it and, of course, the U.S.A. will be there to help!"

Pallab Ghosh
Science correspondent

Downing Street has announced the Department for Science, Innovation and Technology (DSIT) has been merged with the Department of Business and Trade.

Responsibility for science policy has moved back to the business department.

The scientific community will be concerned that its voice at the cabinet table has been diminished. But under DSIT that voice was there only in name.

The department’s four secretaries of state since its formation three and a half years ago focused on AI and digital harms.

The reorganisation won’t change much on the ground. The same civil servants will do the same jobs, in different departments and using different email addresses.

Ultimately, Andy Burnham appears to have judged DSIT as scientific experiment that didn’t quite work.

Glenn Campbell
BBC Scotland Political Editor

Image source, Getty Images

Scotland’s First Minister John Swinney promised to work constructively with Andy Burnham where he can - especially on reducing the cost of living - and said he expected to speak to him tonight.

He said the Scottish government will be a “willing partner” in discussions about transferring more powers from Westminster to Scotland.

The SNP wants Holyrood to have a say on immigration, employment and energy. It’s not clear that any of that is on offer.

Instead, Burnham has stressed his desire to devolve power beyond the Scottish Parliament, deeper down into cities and local communities.

While that could be a source of tension, the two governments definitely disagree on another independence referendum.

Swinney wants to have one. Burnham has told Scottish Labour MPs he will maintain the UK government’s opposition.

Downing Street has also made the following cabinet appointments:

• Alex Norris, former border security and asylum minister, is named lord chancellor and justice secretary
• Angela Eagle has been promoted to cabinet from security minister to environment, food and rural affairs secretary
• Miatta Fahnbulleh, the former communities minister who quit Starmer's government after the May local elections, has been appointed energy security and net zero secretary

Wes Streeting has been named defence secretary by Andy Burnham, Downing Street has announced.

The former health secretary resigned in May after stating he had lost confidence in Keir Starmer's leadership.

Elliw Gwawr
BBC Wales political correspondent

Image source, Welsh government

Wales' first minister Rhun ap Iorwerth says he hopes having a new prime minister will be "an opportunity for a reset" in the relationship between the two governments.

He said that Keir Starmer didn't take "much interest in devolution, much interest in Wales" but that he was hopeful the relationship with Andy Burnham would be better as he has a background "of understanding and appreciating the value of devolution to Manchester".

Reflecting on the change in the Secretary of State for Wales, ap Iorwerth says it has to be "someone who respects and wants to see devolution work".

Alison Holt
Social affairs editor

Burnham’s first pledge as PM is that he will end rough sleeping.

Homelessness and housing policies are devolved, meaning this will either only apply to England, or he will have to work with the administrations in Scotland, Wales and Northern Ireland to meet his goal.

In England, the number of rough sleepers has reached record levels - the latest official figures show 4,793 people were found sleeping rough on one night in autumn of 2025.

When Burnham became Mayor of Greater Manchester in 2017, he pledged to end the need for rough sleeping in the area by 2020 - a target he failed to achieve.

Even during the pandemic, with the national policy that everyone should have somewhere to stay, some people remained on the streets across England.

A lack of affordable housing and the rise in non-EU migrants have driven the increase in street homelessness, according to the Centre for Social Justice (CSJ), but other issues such as difficulty getting mental health or addiction support can also be factors.

It is an indication of how the success of the new PM’s promise to end rough sleeping will be tied up with the decisions he makes on other policies, such as housing, immigration and health care.