The new British government will exempt families from electricity bill taxes during the winter

The British government announced that it will exempt households from value-added tax on domestic electricity bills during the upcoming winter, marking the first measure aimed at boosting purchasing power taken by the new Prime Minister, Andy Burnham, since assuming office on Monday.

In a statement on Tuesday, Burnham said, “I said I wanted people to have a bit of breathing room, and that is what I am announcing on my second day as Prime Minister.” The decision to cancel this tax will take effect from October 1 next year.

This measure will cost the state budget £850 million ($1.14 billion) this year, with funding to be secured from savings resulting from the cancellation of the digital identity card project.

Before taking office, Burnham announced his intention to suspend this project, which was launched last September by his predecessor, Keir Starmer, to combat illegal immigration. However, the project faced strong opposition, as the idea of identity verification raises concerns in Britain, where no national identity cards exist.

The government estimates that canceling this project will yield savings of approximately £1.8 billion ($2.4 billion).

The UK’s energy regulator sets the energy price cap every three months, taking into account developments in international markets while ensuring the most appropriate prices for both suppliers and consumers.

The tax cancellation date, October 1, coincides with the next review of this price cap. The government hopes that this measure (which will not include gas) will mitigate the impact of a potential rise in energy bills before winter.

Markets are awaiting the steps the new government will take, fearing they could lead to an increase in public debt.