Andy Burnham says he will remove VAT from electricity bills in October, saving a typical household about £45 a year - what we've heard so far
This will be funded by scrapping Keir Starmer's digital ID scheme, No 10 says, but former minister Darren Jones argues the ID scheme was "unfunded"
The new government "will have to set out how it will pay for its new policies at the Budget", Jones says
Pushed on whether savings had been found for digital IDs, Business Secretary Jonathan Reynolds tells the BBC "they would have had to have been", calling today's announcement a "legitimate decision"
Later on, the new cabinet will meet for the first time - after becoming PM on Monday, Burnham appointed John Healey as chancellor, Ed Miliband as foreign secretary and Wes Streeting as defence secretary
Meanwhile, Angela Rayner took back her old job as housing secretary and Shabana Mahmood stayed on as home secretary
Image source, PA MediaVAT cuts on household electricity bills are "a start" but more needs to be done, says Green Party leader Zack Polanski.
In a post on X, Polanski adds "it won't be nearly enough for the millions of families facing another tough winter".
He says that a "robust energy cap" is needed to protect people from the "fall out" from the war in Iran.
Image source, Getty ImagesSome more now on the policy Andy Burnham announced this morning, cutting VAT on electricity bills.
Conservative leader Kemi Badenoch says she welcomes "action to cut the cost of energy", but has questioned how Andy Burnham will fund it.
Writing on X, Badenoch says energy prices are "too high because of Ed Miliband's policies".
Miliband was energy secretary under Keir Starmer.
"The question is how will Burnham fund all his new policies without putting up taxes or borrowing even more," Badenoch says.
The government says scrapping plans for digital ID will fund the VAT cut on electricity bills.
But citing comments from ex-chief secretary Darren Jones who says the ID policy itself was not fully funded, Badenoch says "you can’t use the funding from an unfunded programme to pay for cheaper bills".
Dearbail Jordan
Senior business and economics reporter
Image source, Getty ImagesJohn Healey’s appointment as chancellor has buoyed some of Britain’s biggest defence companies.
Just weeks ago, Healey quit as defence secretary as he criticised the Treasury – then led by Rachel Reeves – over its “unwillingness” to fund a military spending plan.
Now that he oversees the public purse, investors are hoping the UK will commit to increasing defence spending to 3% of GDP by 2030.
Babcock International, which builds frigates, saw its share price rise by 7.3% on Tuesday while BAE Systems’ stock price jumped by 3.3%.
Meanwhile, the yield on 10-year government bonds - effectively the interest rate charged to the UK government for a 10-year loan – ticked a little lower this morning. On Monday, the yield hit 5.03% after Burnham said he would use “any flexibility” in the fiscal rules for funding.
The yield fell back5.01% after Healey said the government would stick to fiscal rules on borrowing and spending put in place by Reeves.
Jeremy Bowen
International editor
Image source, ReutersThe new foreign secretary Ed Miliband is seen by diplomats I've spoken to as very competent, but he doesn't have much experience in the world of international affairs.
One of the issues he will likely first need to look at is the US war with Iran, which is escalating again.
There was some limited opening up of British bases during the war. What if the Americans want to mount more bombing raids, and will they ask for more access to British bases?
There are US bases here in the UK and in Cyprus. That is something that may be framed by Trump as a test of the new government.
I think they will be very cautious about getting deeply enmeshed in a war that has proved to be pretty disastrous for the United States.
Support for Ukraine is popular here in the UK, however there is always a money issue. We are great at rhetoric and not so good at paying for defence and there will be a lot of pressure to find more money.
Andy Burnham also talked on social media before he became PM about a harder line on Israel. He has suggested they will look at the issue of banning trade with Jewish settlements. Some of them have factories and vineyards, for example, and there is trade coming from those particular enterprises.
Chris Mason
Political editor
Image source, EPA/ShutterstockThe appointment of John Healey as chancellor is fascinating. Healey was a minister in the Treasury for five years between 2002 and 2007, firstly as economic secretary and then as financial secretary.
Senior figures in government say Burnham and Healey share the same economic outlook and ambitions – built on a desire for reindustrialisation and devolution.
It is also true that just a matter of weeks ago the new chancellor was being remarkably barbed about the government department he now leads.
He talked of a "Treasury orthodoxy that's a dead hand on dynamic government," and that it saw "defence as a drain rather than a driver of growth".
He added - with sting as a resigning defence secretary - that "our adversaries do not follow timetables set by the Treasury".
As one figure in Whitehall, steeped in defence, texted to remind me, Healey wrote in his resignation letter that "I am certain that a headmark date for 3% of GDP on defence in 2030 is what Britain must set".
Now it is his job, as chancellor, to make those numbers add up.
Glenn Campbell
BBC Scotland political editor
Image source, Getty ImagesDouglas Alexander is one of the very few Scottish Labour MPs who actually knows Andy Burnham.
They go back a long way having served in the Blair and Brown governments together.
As well as his experience, Alexander is super smart and has an extensive network that spans the globe.
On the down side, he is not popular with some of his party colleagues, and was co-director of Labour’s recent Holyrood election campaign that saw the party’s MSP group shrink further.
Alexander is robust in his dealings with SNP ministers. They say his original appointment marked a significant deterioration in Scottish and UK government relations after a period of better cooperation in the early days of the Starmer government.
Henry Zeffman
Chief political correspondent
Image source, PA MediaEnvironment Secretary Angela Eagle and Energy Secretary Miatta Fahnbulleh (right) were appointed to Burnham's cabinet last night
Go through the remaining cabinet appointments, many of them announced late last night, and there’s plenty of fascinating decisions in there.
Those close to Burnham’s team say he wanted to be seen to reward ministers who have worked doggedly in difficult jobs below the cabinet.
Into that category fall Alex Norris, the former immigration minister given a huge promotion to become justice secretary; Matthew Pennycook, who continues as housing minister but now attends cabinet; and Hamish Falconer, responsible for navigating Britain’s approach to the Middle East for the last two years, who now takes over negotiations with the EU.
Burnham clearly values experience.
Angela Eagle gets her first cabinet job as environment secretary a mere 29 years after her first ministerial position. Yvette Cooper returns to the health department as secretary of state 24 years after leaving a junior position there.
Chris Bryant - who along with Burnham is among the three remaining members of Labour’s 2001 intake - becomes Northern Ireland secretary. Alan Campbell, continuously on Labour’s frontbench since 2005, remains leader of the Commons.
The flipside of this is that Miatta Fahnbulleh and Anneliese Midgley, both from the 2024 intake and major figures in Burnham’s campaign over recent weeks, enter the cabinet as energy secretary and chief whip respectively.
By Daniel Wainwright, senior data journalist
As Andy Burnham takes over in Downing Street, Labour is still behind Reform UK in the opinion polls, but the gap has narrowed.
Polls conducted in the two weeks up to last Friday put Labour on an average of 21%, roughly level with the Conservatives.
Reform UK is averaging 25%, down from a peak of 32% last October.
The party still leads in most opinion polls, although a Survation poll published last week put Labour level with it, while an Opinium poll gave Reform a lead of just one percentage point.
The Greens are averaging about 13%, down from 17% in April, while the Liberal Democrats are on about 12%.
The SNP and Plaid Cymru are averaging 3% and 2% respectively. However, those figures represent their share of the vote across Great Britain, even though the parties stand candidates only in Scotland and Wales respectively.
Cachella Smith
Live reporter
Andy Burnham's first full day as prime minister began early, when at 06:00 BST, the newly formed government dropped its first major policy aimed at cutting VAT from domestic electricity bills until the end of the financial year.
We're only a few hours into the day but already the policy, and the plans to fund it, has sparked some debate - so, let's have a recap.
First major policy decision
The government will cut VAT from domestic energy bills for six months from October resulting in an average yearly saving of £45, it has announced today.
It said the measure will be funded with money saved by scrapping the digital ID scheme and tees up the cost of living as being a core priority for Andy Burnham as he begins life in Downing Street.
First questions asked
Not long after the plan was announced, reaction started coming in. Fuel poverty charity National Energy Action praised the move, while leader of the Liberal Democrats Ed Davey said "it's something" but he doesn't think goes far enough.
Meanwhile, former Prime Minister Keir Starmer's chief secretary Darren Jones took to X to outline that the digital ID programme was unfunded - and therefore how the new government would fund this VAT cut isn't actually clear.
The Burnham government’s first media round
The money for the digital ID scheme "would have had to have been found", Business Secretary Jonathan Reynolds said in his first media round under Andy Burnham.
He told the Today programme that £1.8bn had been scored by the OBR for the scheme and maintained it's a "legitimate decision" to reallocate those funds.
Reynolds termed the policy simple, straightforward and deliverable - and one that will give people some "breathing space". But he did acknowledge the government is "not saying it's everything".
Image source, PA MediaToday is Andy Burnham's first full day in the job as prime minister.
He is due to meet his new cabinet for the first time later.
Yesterday he named his cabinet team, appointing John Healey as the new chancellor, Ed Miliband as foreign secretary and Wes Streeting as defence minister.
Shabana Mahmood remains in post as home secretary, while Angela Rayner returns as housing secretary.
Kevin Peachey
Cost of living correspondent
So, a row is already brewing about how the government will pay for its VAT cut on household electricity.
Welcome to your new jobs prime minister and chancellor!
Of course, finding the money to cover a bill is something many energy customers will recognise.
Billpayers collectively owe nearly £5bn to energy suppliers in unpaid bills and charges.
Many campaigners are saying that’s a far bigger issue to tackle, and potentially of more help to many on the cost of living, than a relatively small - already controversial - cut to bills in October.
Hugh Pym
Health editor
Image source, EPA/ShutterstockI’ve heard one commentator suggest Yvette Cooper had been demoted from the Foreign Office to the Department of Health and Social Care.
But in some ways, she will be running one of the most significant areas of policy in England for the Labour government.
Andy Burnham says reform of social care is a priority and Cooper will have to lead on that.
She will need to use all her experience in Whitehall from her time as a Treasury minister and secretary of state for work and pensions under Tony Blair and Gordon Brown.
Getting NHS waiting lists down will be another priority. The overall list, having fallen in the latter phase of Wes Streeting's tenure, has now gone up two months in a row.
Progress or not on social care and improving NHS performance are likely to be key areas on which voters assess Labour at the time of the next election.
Tackling major problems in some areas of maternity care and improving fractured relations with senior doctors will be just some of the other challenges facing the new secretary of state.
Chris Mason
Political editor
There are four references in the Office for Budget Responsibility’s Economic and Fiscal Outlook from November last year that refer to the digital ID scheme and how where the money will come from to pay for it is not clear.
Business Secretary Jonathan Reynolds is also speaking to the Today programme on BBC Radio 4 this morning, and is asked more on how the newly announced energy bill policy will be funded.
He says the allocation for digital ID was £1.8bn over three years which is "scored by the OBR".
"It's a straightforward release of one pressure in order to have this decision made," he says.
Pushed on the fact that savings had not yet been identified to pay for digital ID, Reynolds says "they would have had to have been found".
"It is a legitimate decision to remove that pressure and instead use that allocation of resources [for this decision]".
The policy will cost £850m for the rest of the financial year, Reynolds adds.
Henry Zeffman
Chief political correspondent
At the last Budget in November, the independent Office for Budget Responsibility said this: "The implementation of digital ID cards is provisionally forecast to cost £1.8bn in total over the next three years... the government has announced its intention to meet the costs of this through existing [departmental expenditure limits] budgets, however no specific savings have yet been identified".
In other words, the government hadn’t yet found the money for the programme.
This morning the government was saying that since the Budget departments had been working on finding savings, and that it was those savings which would now be reallocated to fund the VAT cut announced by Burnham earlier.
After Darren Jones’s intervention, let’s see how credible the markets find that to be.
Henry Zeffman
Chief political correspondent
Just two hours after Andy Burnham’s big announcement comes some tough criticism from Darren Jones, sacked yesterday as chief secretary to the prime minister. He wrote this on X:
“Good news that VAT will be cut on electricity bills. It’s a simple way for families to save a few quid, and to mechanically help to keep inflation that little bit lower.
“But the Digital ID program was unfunded.
“The government will have to set out how it will pay for its new policies at the budget.”
This is especially tough for the prime minister because it is targeted at the question of how Burnham will pay for the measure.
The announcement that it was funded by savings from digital ID was designed to reassure the markets.
Let’s see how those markets respond now. They have just opened.
Henry Zeffman
Chief political correspondent
Image source, EPAAndy Burnham’s cabinet appointments took several hours and finished so late that many in the Labour Party are only digesting the full team this morning.
But even before the new appointments had begun, many were struck by the brutality of the clearout of the old guard. Even those who believed it was inevitable that lots of Starmer loyalists would have to make way for newcomers admitted to feeling taken aback as the full list of departures came through.
At first glance, those in the top three jobs are familiar faces from Starmer’s team.
But there is more to it than that.
The resignation of John Healey, the new chancellor, as defence secretary a few weeks ago was probably the final blow that made Starmer’s position irrecoverable.
Ed Miliband, promoted from energy secretary to foreign secretary, was one of the first in cabinet to tell Starmer to go.
Shabana Mahmood, who remains home secretary, also told Starmer he should go.
It’s appointments like this which might explain the biting line from Steve Reed, the former housing secretary, in his letter to Burnham after being sacked yesterday: "I hope those who did not show loyalty to Keir will now show it to you."
Yet aside from those who were Starmer loyalists to the end, these top appointments - especially Healey - seem to have mostly gone down well so far.
Continuing to speak to BBC Breakfast, Reynolds underlines this is a benefit for "everyone" as he points to a desire to get back to "simple, straightforward, deliverable" policy that everyone understands.
He adds that it has been funded through a change in priorities and does not require additional taxes or borrowing.
Pushed on the cited £45 figure as an annual saving - when the policy will be in place for six months - Reynolds says people use more energy in winter and maintains people will on average feel that saving from their bills.
Asked why they have gone with electricity and not gas, Reynolds says the decision will make a "substantial difference", adding it will make the "biggest difference to people that we can make".
Asked finally on heating oil, he says the government will continue to look at things as we come into the winter.
Minister pressed on electricity bills savings figures
When asked how long the cut will last, Reynolds says it's funded until “the end of the financial year" and anything beyond that has to be part of the next Budget.
He adds the funding of it this year is because digital IDs are being scrapped.
The saving "on average" will be £45 which he says will be "additional" for households, on top of a £150 saving.
Reynolds adds he expects providers to be "very responsive" to these changes.
When asked if companies might face fines if they do not comply, he says "they will pass it on” and he does not "anticipate any problems" with the policy.
Business Secretary Jonathan Reynolds tells BBC Breakfast he is "delighted" to be back.
Asked firstly about Ed Davey's reaction to the energy bill announcement - that it doesn't go far enough - Reynolds says it's a "significant" statement of priorities from the new administration and will result in an additional £45 saving off people's bills on top of savings made in the previous Budget.
He says they are "not saying it's everything", but it will give people some "breathing space".
