Andy Burnham has faced criticism over how he plans to fund his first major policy as prime minister – an £850m cut to VAT on electricity bills – after allies of ousted predecessor Sir Keir Starmer questioned whether the sums add up. The row emerged just as Burnham used his first cabinet meeting to declare he wanted to run "a cost of living government", underscoring the pressure he faces to show quick results on living costs while critics accuse him of making unfunded promises.

The VAT cut, taking effect on 1 October, is expected to save households around £45 a year, with the government saying it will be funded by reprioritising savings from the scrapped digital ID scheme. Darren Jones, sacked as chancellor of the Duchy of Lancaster, said that scheme itself had been "unfunded" and that the government would need to explain its funding at the Budget; Downing Street insisted the measure was "fully funded" for this financial year. The announcement comes amid speculation Burnham may introduce a wealth tax and raise the income tax threshold from its current £12,570, with Ofgem's price cap forecast at £1,849 for a typical household and new chancellor John Healey pledging further help this winter.