Will Andy Burnham’s Latest Policy Save Your Family Money?

Will Andy Burnham’s Latest Policy Save Your Family Money?

For millions of households, the answer is: yes – but probably not by as much as you might hope.

When politicians announce a new cost-of-living policy, the question most people ask isn’t whether economists approve or whether Westminster applauds.

It’s much simpler:

“What does this actually mean for my wallet?”

Prime Minister Andy Burnham’s first major cost-of-living measure aims to do exactly that by removing VAT from household electricity bills from October. The government says the move will save the average household around £45 a year.

So How Much Could You Save?

For an average household:

• Around £45 a year
• Roughly £3.75 per month
• About 12p per day

Nobody is going to become wealthy because of this policy.

But in a period when food, mortgages, rents and council tax have all risen sharply, even relatively modest savings may be welcomed by many families.

Who Benefits Most?

The policy benefits anyone paying domestic electricity bills, including:

• Homeowners
• Private renters
• Social housing tenants
• Pensioners
• Families
• Single people

Unlike means-tested benefits, there is no application process.

If your supplier passes on the VAT reduction—as the government expects—you should simply see lower electricity charges once the change takes effect.

What It Doesn’t Do

It’s important to keep expectations realistic.

The measure:

• doesn’t reduce gas bills
• doesn’t lower mortgage payments
• doesn’t reduce rent
• doesn’t cut council tax
• doesn’t make supermarket shopping cheaper

For many households, those costs remain far larger than electricity bills.

Why Start Here?

Burnham says the aim is to give households “breathing space” while signalling that tackling living costs is the government’s immediate priority. The government says the temporary tax cut is funded by cancelling the planned Digital ID programme rather than through additional borrowing.

Could More Savings Be Coming?

Possibly.

The Prime Minister has also spoken about:

• restoring the £2 bus fare cap
• reviewing frozen income tax thresholds
• reducing business costs for smaller firms
• building more affordable housing
• wider reforms designed to ease the cost of living.

Whether these proposals become reality will depend on the government’s first Budget and how it balances additional spending with its commitment not to raise taxes on working people.

Our View

A £45 annual saving is unlikely to transform anyone’s finances.

However, governments are often judged not only on the size of individual measures but on whether they form part of a broader strategy.

If this proves to be the first in a series of policies that reduce everyday costs—from transport to housing and taxation—it could make a meaningful difference over time.

If it remains a one-off gesture, many families may conclude that it falls well short of addressing the financial pressures they continue to face.

Ultimately, the success of the policy will be measured not by the announcement, but by whether households feel noticeably better off in a year’s time.