Six months of zero VAT on household electricity will begin in October, cutting the average annual bill by about £45 as Andy Burnham moves quickly to ease living-cost pressure.
The tax break is being funded by canceling the planned digital ID rollout, a choice meant to show bond investors the new government will not add unfunded spending.
John Healey, unexpectedly installed as Treasury chief, now has to balance that consumer relief with debt reduction as Britain’s public debt tops 95% of GDP and annual interest costs hit £111.2 billion.
Burnham’s wider problem is growth: the economy has expanded by less than 1.5% a year on average since 2009, while a pledge to lift defense spending to 3.5% of GDP by 2035 adds another fiscal strain.