Andy Burnham talks big on bills. Now for the hard part.

LONDON — Andy Burnham entered Downing Street with a promise to give hard-pressed voters “breathing space” on the cost of living. Now he must show he can deliver. At the top of his list is finding a way to reduce stubbornly high energy bills — even as the Iran-U.S. war forces up prices and ministers are under pressure to cut their own departmental budgets. The new prime minister knows any intervention must make a real impact for voters if he is to turn Labour’s fortunes around. “You need to make an emotional connection with people,” said one senior government official, granted anonymity to talk candidly about Whitehall thinking. Britain’s new prime minister has already made one bid to show voters he is serious about tackling the problem: Removing VAT from household electricity bills, something he announced on his first day in No. 10. The move will knock less than £4 off the average monthly bill, ends after one year, and comes with a price tag of £850 million. Downing Street said it will be paid for through so-far unspecified Whitehall savings. But Burnham and his new Energy Secretary, Miatta Fahnbulleh, promised that the intervention is just a start. Cutting VAT is a “down payment” ahead of the winter, Fahnbulleh said. Energy Secretary Miatta Fahnbulleh arrives at 10 Downing Street for Prime Minister Andy Burnham’s first cabinet meeting, on July 21, 2026 in London, England. | Dan Kitwood/Getty Images That means ministers have just weeks before Burnham’s first budget this fall to figure out what, if anything, can really ease the burden — and how to pay for it. Salami slicing “The fiscal space is going to be a challenge, and that is the case for any government,” said Sam Alvis, associate director for environment, energy security, and nature at the Labour-aligned Institute for Public Policy Research think tank. That’s because any intervention to bring down energy bills will have to be funded from already under-pressure Whitehall departments. “This government is going to have a look at the budget. Whether it chooses to do some priorities differently — that is an open question,” Alvis said. One option for Burnham is to slice more charges from electricity bills, as he did with VAT. But any savings could be quickly wiped out if, as expected, the Middle East crisis pushes up wholesale gas prices. Forecasters at Cornwall Insight predict that average annual household bills will rise by two percent this fall, even after the VAT intervention. That leaves Burnham facing the same problems as the man he replaced, Keir Starmer. Starmer cut £150 off yearly bills last November by shifting some so-called green levies, used to fund a clean energy scheme, onto general taxation. By the summer, that cut had been swallowed up by higher prices driven by the Strait of Hormuz crisis. Nonetheless, Alvis said, this approach remains Burnham’s most realistic option. “We are now in a bit of a scenario of salami slicing, where you’re aggregating lots and lots of smaller bits,” he said. “There’s no one big thing that you can do that’s going to take over £100 off bills. So, it’s about accumulating all those things that you think you could possibly do in one go, so it becomes sizable and noticeable.” Decisions, decisions One of those options, proposed by the think tank Nesta and reportedly being considered by Burnham, involves shifting further green levies from electricity bills onto tax. It identified another £42 of savings from a yearly bill, costing the Treasury £1.7 billion per year for a decade. Every small cut helps consumers, insists Andrew Sissons, Nesta’s director of sustainable futures. The think tank has also proposed knocking £22 a year off bills by shifting the standing charge on gas — currently a fixed daily fee — onto the unit rate, which changes depending on how much energy a home uses. That would take a year to implement and would not cost the government a penny, Nesta says. But such moves must be accompanied by larg