Overview
- The government announced Tuesday that VAT on domestic electricity will be removed from October 1, a change the administration says will save the average household about £45 a year and cost roughly £850 million in 2026-27.
- Downing Street confirmed the proposed national digital ID scheme has been scrapped and said the programme, which media reports put at about £1.8 billion, would free funds for the VAT cut after facing sustained public opposition over privacy.
- Former minister Darren Jones publicly disputed the funding claim by saying the digital ID programme was unfunded and demanded that the Budget and the Office for Budget Responsibility show how the VAT cut will be paid for.
- A swift cabinet reshuffle installed John Healey as chancellor and Ed Miliband as foreign secretary and increased pressure on the new team to publish formal, costed plans for further cost-of-living measures such as a £2 bus fare cap, rent controls and changes to the personal allowance.
- Households will see a small immediate benefit on bills but investors, MPs and watchdogs will now watch the Budget for OBR scoring, departmental reprioritisation decisions and parliamentary scrutiny to judge the government’s broader fiscal credibility.