Martin Lewis Sounds Alarm: Is Andy Burnham’s VAT Cut on Electricity Bills Too Good to Be True?
So, the new Prime Minister Andy Burnham just dropped a headline-grabbing move—slashing VAT off domestic electricity bills starting October 1st. Sounds like a breath of fresh air for wallets squeezed by the relentless cost of living, right? Well, before you start picturing a hefty savings windfall, Martin Lewis steps in with a reality check that might make you raise an eyebrow. He warns that with energy prices expected to climb thanks to sky-high wholesale rates, most households might barely feel a dent in their bills despite the VAT cut. It’s like getting a coupon for a discount that vanishes the moment you reach the checkout counter. Burnham isn’t stopping there—he’s got plans to tackle youth unemployment and homelessness too, aiming to flip the political script with some big promises. But here’s the kicker—can these early moves really light up hope, or are we just stirring the pot while the soup’s still cold? Let’s unravel what this means for your pocket and the nation’s future.
Martin Lewis has issued a warning after new Prime Minister Andy Burnham announced that VAT will be removed from domestic electricity bills from 1 October.
In his first act as leader of the government, Burnham announced that he wanted to help out those struggling with the cost of living.
“Westminster has not been working for people for too long, with families struggling with the cost of living,” the new PM said.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
The move has been projected to cut around £45 off a typical household’s annual energy bill, based on the Ofgem price cap that’s in place now.
Martin Lewis has warned people might not feel the benefit of the newly announced policy (Alan Chapman/Dave Benett/Getty Images)
However, the Money Saving Expert himself Martin Lewis has warned that while removing VAT is a good step most folks ‘won’t feel much benefit’ from it.
Lewis explained that the most up to date energy bill predictions suggest that the price cap will rise to 5.1 percent on 1 October due to ‘very high wholesale rates’.
He added that would mean an ‘annualised rise of £93 on a typical bill’ and warned: “If this happens it will wipe out any household savings from the VAT cut during that Price Cap period (those on fixes will still see a 4.8% reduction).”
Although he’s said that most people won’t feel any better off, Lewis still pointed out that the average person will be paying less than they usually would once the VAT removal comes in.
“Ultimately though it does mean people will pay less than they would’ve done without this,” he said on X.
“Yet it is going to need a lot more policy cost reductions, likely at the budget, for things to feel materially cheaper.”
What else has new PM Andy Burnham promised?
As well as introducing the cut to energy bills, Burnham has also vowed to help more young people find employment and to tackle homelessness in the UK.
Speaking outside his new home at No 10, he said: “I know people at home are fed up with politics. I hear you and I want to be honest with you – we have not been good enough, and we need to be better. We will be.
“We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years – a new political model and a new economic model.
New PM Andy Burnham has cut VAT on household electricity bills (Dan Kitwood/Getty Images)
“We will help more young people into work by changing the education system and giving them more support, more mental health support, and we will build more council homes.
“That is the fair and sustainable way to bring the welfare bill down, to meet our fiscal rules, and to honour our commitments on defence to our international partners.
“We will help people to live well, building a more preventative state, investing in people’s success rather than paying for failure. And that work starts now.
“I will soon go through that door behind me and issue my first instruction to end rough sleeping in our country.”
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