Britain’s new prime minister Andy Burnham has announced a VAT cut to help people with the cost-of-living crisis in advance of chairing his first cabinet meeting.The new premier promised to provide early “breathing space” for households struggling with the cost of living as he stood on the steps of No 10.And early on Tuesday he and his new chancellor John Healey announced that VAT will be removed from domestic electricity bills from October 1st.Burnham said: “Westminster has not been working for people for too long, with families struggling with the cost of living.“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.”It is estimated that the change will reduce the annual Ofgem price cap by around £45 (€53) from October, with companies expected to pass the reduction on to customers.Chancellor John Healey said: “For too long, too many people have struggled with the cost of living.[ Andy Burnham wastes no time in purging his government of Starmer alliesOpens in new window ]“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.He continued: “This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”Other measures Burnham said he was exploring to help hard-pressed households with the cost of living are rent controls and capping the cost of bus fares.In his first address to the nation as prime minister on Monday, Burnham pledged the biggest change to British politics in 40 years, and said he would deliver “a new political model and a new economic model” for Britain.While the former Greater Manchester mayor arrived on Downing Street after his appointment just before lunchtime on Monday with a message of unity, he moved swiftly to gut the cabinet of many of Keir Starmer’s closest allies while reappointing a series of those he had sacked.Burnham’s move to appoint the former defence secretary John Healey as his chancellor of the exchequer surprised Westminster observers. After quitting Starmer’s government on a point of principle after he believed defence funding was too low to keep Britain safe, Healey must now find the extra billions of pounds he argued was necessary to rebuild his country’s armed forces.Ed Miliband was made foreign secretary while Shabana Mahmood stayed on as home secretary, completing the UK government’s four great offices of state alongside Burnham. Yvette Cooper has been appointed health secretary.Earlier on Monday, Starmer gave his final speech as prime minister on the sun-drenched cobblestones of Downing Street before his car swept down the Mall towards Buckingham Palace where he formally tendered his resignation.“I go with good grace, I go with a smile,” he said.Behind him were gathered loyal staff and cabinet members, including his chancellor of the exchequer, Rachel Reeves, his deputy prime minister David Lammy, his chief secretary Darren Jones and housing secretary Steve Reed.Before the sun set in Whitehall, all had been sacked from their roles by Burnham. Lammy said afterwards that he had been prepared to stay on in cabinet but Burnham didn’t want him to. Reeves’s allies briefed that she had turned down an alternative role.Former housing secretary Steve Reed, meanwhile, took a swipe at Burnham and his allies who had levered Starmer from power after disastrous local-election results. Addressing Burnham in a public message, Reed said: “I hope those who did not show loyalty to Keir will now show it to you.”The new prime minister continued with his appointments later into Monday, appointing ​Wes Streeting as ​secretary ⁠of state ‌for ‌defenceLouise Haigh, who was forced out by Starmer as transport secretary in 2024, was the chief mastermind of Burnham’s route back to Westminster and, ultimately, Downing Street. She was rewarded with one of the most powerful roles in the UK government, as chancellor of the duchy of Lancaster and head of the cabinet office that drives Number 10’s agenda across Whitehall.There was a return to cabinet for Angela Rayner, who was previously forced from Starmer’s government in a row over her tax affairs. She has since received a clean bill of health from Britain’s tax authorities and will serve as housing minister.The new prime minister continued with his appointments later into Monday, appointing ​Wes Streeting as ​secretary ⁠of state ‌for ‌defence ​and Miatta ⁠Fahnbulleh as ​secretary ​of ‌state for ​energy security ⁠and net ⁠zero.Burnham also brought back Jonathan Reynolds as business ​minister. Reynolds was named secretary of ⁠state for business, innovation, science and ‌trade ‌in ​an expanded role after losing his position as ⁠business ​minister to Peter Kyle ​in a reshuffle under ​Starmer.Pat McFadden and Bridget Phillipson were among the few Starmer loyalists to be reappointed, while Anneliese Midgley, who helped Haigh to oust Starmer, was also set to be rewarded with a senior role in government. – Additional reporting: PA