Burnham tells cabinet to tackle living costs at first meeting

A significant story is unfolding on the international scene. Burnham tells cabinet to tackle living costs at first meetingImage source, ReutersByPaul SeddonPolitical reporterPublished21 July 2026, 17:50 BSTUpdated 4 minutes agoAndy 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.

But 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 said the estimated £850m cost of the VAT cut over the rest of the financial year could come from £1. 8bn earmarked by the previous government to roll out the digital ID scheme in the next three years.

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But Darren Jones, who was among a clutch of Starmer loyalists sacked from the cabinet on Monday, said the ID programme was "unfunded" and Burnham would need to set out where the money would be found. Opposition parties also seized on the announcement, pointing out the government's budget watchdog has previously said the money to fund digital ID was due to be found from within existing budgets. "We are only one day in and already Labour are playing fast and loose with the public finances," said Conservative shadow chancellor Sir Mel Stride.

The PM's spokesman insisted the policy would be funded by redirecting "savings" identified by departments to cover the cost of the ID scheme. Burnham was given a round of applause by his senior ministers earlier, as he opened the first meeting of his new cabinet after appointing his top team on Monday evening. More junior picks are expected to follow on Tuesday.

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 big job running the Cabinet Office. In a move that took Westminster by surprise, John Healey, who resigned as Starmer's defence secretary in a row over military spending, has been given the crucial role of chancellor. Speaking to staff at the Treasury, where he was a minister during the New Labour period, Healey said discipline over tax and spending would be his "first duty", as he recommitted to the tax and spending rules set by his predecessor.

But he added that government would seek to make the "fullest possible use of public investment" within the framework, alongside making the most of private and international investment. Image source, PA MediaImage caption, Healey gave an address to Treasury staff after his surprise appointment on MondaySpeaking at the start of the meeting attended by broadcasters, Burnham said the cost of living would be an early priority, with further measures to be announced in the coming days.

The story has become one of the most prominent items on the global agenda.