Andy Burnham used his first cabinet meeting as prime minister to urge ministers to explore "all possible ways" of easing the cost of living crisis, declaring his would be a "cost of living government". The intervention matters because it sets the tone and priorities for his premiership from day one, but it has immediately raised questions about affordability, given commitments to cut VAT on electricity bills, boost defence spending, and accelerate a national care service, all while sticking to existing borrowing rules.

On Tuesday morning Burnham announced VAT would be scrapped on electricity bills from 1 October, cutting the price cap by £45 at a cost of £850m next year, a move he suggested would be partly funded by axing the government's digital ID scheme. However, Darren Jones, the minister previously responsible for that scheme, said on social media that it had been unfunded, meaning the saving does not exist, and that the budget would need to set out how new policies would be paid for. Downing Street confirmed the tax cut was funded only for the coming financial year, with future costs to be found from existing departmental budgets, implying cuts elsewhere. The announcement came alongside a Whitehall shake-up creating an Office for the Prime Minister and the Cabinet and a new "No 10 North" growth unit under Louise Haigh, amid reports of tension among Starmer loyalists over a reshuffle that removed or demoted more than half the previous cabinet.