Andy Burnham Prioritizes Cost of Living in First Cabinet Meeting

New Delhi, India Jul 22, 2026 ALN: Andy Burnham has promised to lead a "cost of living government," as he chaired his first cabinet meeting as prime minister.

He told his newly assembled top team that he wanted to make living expenses a key priority, and give people a "sense that help is coming" on costs.

It comes after he announced a VAT cut to household energy bills from October, in his first major announcement since taking office.

However, his plan to pay for the policy by scrapping Sir Keir Starmer's digital ID scheme led to an early row over whether the plan was properly funded.

Downing Street stated that the estimated £850 million cost of the VAT cut over the rest of the financial year could come from £1.8 billion earmarked by the previous government to roll out the digital ID scheme in the next three years.

But Darren Jones, who was among a clutch of Starmer loyalists sacked from the cabinet on Monday, argued that the ID programme was "unfunded" and Burnham would need to clarify where the money would be sourced.

Opposition parties also seized on the announcement, pointing out that the government's budget watchdog had previously indicated that the funds for the digital ID were to be sourced from existing budgets.

"We are only one day in and already Labour are playing fast and loose with the public finances," remarked Conservative shadow chancellor Sir Mel Stride.

The PM's spokesman insisted that the policy would be funded by redirecting "savings" identified by departments to cover the cost of the ID scheme.

Burnham received a round of applause from his senior ministers as he opened the first meeting of his new cabinet after appointing his top team on Monday.

Appointments below cabinet rank followed on Tuesday evening, including Dan Jarvis, who stepped in as defence secretary when John Healey resigned amid a funding row, appointed to his previous post as security minister.

James Murray, who became health secretary when Wes Streeting quit in May, has been made financial secretary to the Treasury and paymaster general.

Meanwhile, Scottish Labour leader Anas Sarwar is set to be given a seat in the House of Lords so he can join Burnham's government.

It is believed Sarwar, who called for Sir Keir's resignation in February, will become a business minister.

New rules mean he would have to resign his seat in the Scottish Parliament, although a by-election to replace him will not be required as he was elected on the regional list system.

Monday's wide-ranging reshuffle saw Starmer loyalists such as Rachel Reeves and David Lammy out of government, with Ed Miliband promoted to foreign secretary and Burnham ally Louise Haigh given a significant role running the Cabinet Office.

Miatta Fahnbulleh, a Burnham ally promoted into the cabinet as energy secretary, denied he had led a purge of Starmer supporters, stating that "no one has a right" to be in the cabinet, which contains a "diversity of views".

Speaking to staff at the Treasury, new Chancellor John Healey emphasized that discipline over tax and spending would be his "first duty," as he recommitted to the tax and spending rules set by his predecessor.

However, he added that the government would seek to make the "fullest possible use of public investment" within the framework, alongside maximizing private and international investment.

At the start of the cabinet meeting attended by broadcasters, Burnham reiterated that the cost of living would be an early priority, with further measures to be announced in the coming days.

He stated he would be asking ministers to come up with suggestions to lower costs for households, adding: "There are things that can be done, big and small."

Burnham insisted that his government would always demonstrate "how we are going to pay for" policies, emphasizing that "discipline" on spending would be required.

He acknowledged that funding new announcements ahead of his first Budget, where significant tax decisions are made, would require ministers to be "prepared to reprioritize" how they allocate their budgets.

This was also reflected in Burnham's first announcement on Monday, a further £340 million to tackle rough sleeping over five years, which is expected to be funded within "uncommitted" spending at the housing department.

In a later development on Tuesday, Burnham agreed to allow British military bases to be used for US defensive strikes against Iran - a continuation of the same policy under Sir Keir's government.

Sources emphasized that bases at Diego Garcia and RAF Fairford would only be used for what the UK deems to be defensive operations.

The announcement on energy bills, which will see VAT on household electricity reduced from 5% to zero in England, Wales, and Scotland, is estimated to save the typical household about £45 a year.

This change will not apply in Northern Ireland due to post-Brexit rules agreed by the previous Conservative government, with ministers at Stormont instead offered extra funds from the Treasury to use on cost of living measures.

Both the Conservatives and Reform UK have previously called for the measure, with Nigel Farage labeling it a benefit of Brexit but asserting it would not "address the real issue of the cost of living" while criticizing green levies on bills.

Further details have been confirmed regarding Burnham's plan for a new Downing Street unit in Manchester, known as No 10 North.

The government states that the unit, expected to be initially set up in a building currently housing intelligence service GCHQ, will control aspects of local economic growth and devolution strategy.

Alongside this, a new Office for the Prime Minister and the Cabinet will be created to ensure departments remain focused on "top strategic priorities," according to a statement announcing the changes.

Civil servants working in London have been offered relocation packages to encourage them to move north, with Downing Street indicating that Burnham would try to work from No 10 North "at least one day a week".

Additional reporting by Harry Farley.