Burnham tells Cabinet they must 'always show how they are going to pay' for policies... hours after unveiling unfunded £850m energy bills bung

- See more Daily Mail on Google - save us as a Preferred Source Andy Burnham told the Cabinet they must 'always show how they are going to pay' for policies – hours after unveiling an unfunded £850million energy bills cut. After inviting cameras in for the first meeting of his new team, the PM ordered them to focus on the cost of living. He admitted that axing 5 per cent VAT on electricity bills for six months from October – worth around £25 to households – was 'not everything'. But the premier argued that 'we will seek to do more'. Stressing his commitment to the fiscal rules, Mr Burnham said: 'Always we will show how we are going to pay for it, what we are reprioritising. That will be a theme that we will always come back to.' However, the energy bill plan was thrown into chaos as the Government has insisted it will be paid for by axing Keir Starmer's ID cards scheme. Darren Jones – who was brutally sacked from the Cabinet by phone in Mr Burnham's purge of Starmer loyalists yesterday – warned that no funding had been earmarked for that policy. As a result, new Chancellor John Healey faces having to find the cash at the Budget, heaping more pressure on the public finances. Mr Burnham told the Cabinet that Labour was now 'one team', even though he sacked 11 Starmerite ministers yesterday after orchestrating a coup against his predecessor. In other twists and turns on Mr Burnham's first full day in power: - Research by the Sutton Trust has found a quarter of the new Cabinet were privately educated, up from 8 per cent under Keir Starmer. Some 41 per cent were schooled in the North, compared to 34 per cent who were educated in London or the South East; - Eleven Cabinet ministers purged yesterday are in line for £220,000 in payoffs; - Data shows the jobs market stalling with private sector wages falling behind inflation – although public sector pay has kept surging; - Official figures for June have underlined the soaring tax burden on Brits. Andy Burnham invited cameras in for the first meeting of his Cabinet, with the PM ordering his new team to focus on the cost of living Chancellor John Healey told his new colleagues they need to have 'fiscal credibility' New Chancellor John Healey arriving for the first meeting of the new Cabinet this morning Darren Jones – who was sacked from the Cabinet in Mr Burnham's purge of Starmer loyalists – warned this morning that no funding had been earmarked for that policy Backbencher Oliver Ryan enthused about 'stellar appointments', highlighting Louise Haigh as de facto deputy PM and comebacks for Angela Rayner and Lucy Powell, as well as roles for Anneliese Midgley, Lisa Nandy and Bridget Phillipson Mr Jones posted on X: 'Good news that VAT will be cut on electricity bills. It's a simple way for families to save a few quid, and to mechanically help to keep inflation that little bit lower. 'But the Digital ID programme was unfunded. The Government will have to set out how it will pay for its new policies at the Budget.' Ministers claimed that households will benefit by £45, but that is over a whole year and there is no guarantee the policy will last more than six months. The IFS think-tank said the saving for an average household over that period would be around £25. Experts warned any gain could be swamped by surging energy prices, with the Iran war threatening to escalate once again. Currently, energy regulator Ofgem's cap is projected to rise by 1.2 per cent – around £22 per year – in October. Ironically, Mr Burnham – who until this summer advocated rejoining the EU – can only tweak VAT on energy because Britain is no longer in the bloc. The cut cannot be applied in Northern Ireland, which is subject to the rates dictated by Brussels. Former Chancellor Rachel Reeves had rejected the idea on the basis that those who live in bigger properties with higher consumption benefit most. The manoeuvring comes as Mr Burnham continues making appointments to key posts in the Government, having completed the Cabinet positions late last night. Backbencher Oliver Ryan enthused about 'stellar appointments' on social media, highlighting Louise Haigh as de facto deputy PM and comebacks for Angela Rayner and Lucy Powell, as well as roles for Anneliese Midgley, Lisa Nandy and Bridget Phillipson. 'Personally, I'm completely here for the march of the northern queens; Lou, Anneliese, Ange, Lucy, joining Lisa & Bridget – what a SQUAD,' he posted. Questions are mounting over how Mr Burnham will pay for expensive pledges in a lurch to the Left. They include a commitment to the biggest council house building programme in history, to be overseen by Angela Rayner, as well as a national social care service. Yesterday, Mr Burnham announced an extra £340million to 'end' rough sleeping over the next three years, without spelling out where the money would come from. And he is expected to trumpet a £2 cap on bus fares and 20 per cent cut in business rates for the hospitality sector within days. Markets have been jittery at the prospect of Labour overseeing yet more borrowing, with Britain's debt mountain already at eye-watering levels. Concerns were assuaged somewhat yesterday when Mr Burnham opted against installing Ed Miliband – whose views are regarded as 'Soviet' by many – in No11. But the Tories said the new administration was 'falling apart on day one'. The 5 per cent VAT rate currently applied to domestic electricity will be reduced to zero in the autumn. The Government has said the cut will lower inflation by 0.1 percentage points. Mr Healey said the announcement will 'provide some reassurance this winter'. He added: 'For too long, too many people have struggled with the cost of living. 'Today's energy tax cut will give families some breathing room on bills, and provide some reassurance this winter. 'This measure is funded this year from cancelling the digital ID program, and it will help bring down inflation while supporting households in every postcode.' The lost tax revenue is meant to be covered by cancelling the digital ID scheme, which was slated to cost £1.8billion over three years. However, last year, the Treasury's Office for Budget Responsibility (OBR) watchdog said 'no specific savings' had been found to fund the flagship Starmer programme. The Budget watchdog said: 'The implementation of digital ID cards is provisionally forecast to cost £1.8billion in total over the next three years, split across £0.5billion RDEL [Resource Departmental Expenditure Limit] and £1.3bn CDEL [Capital Departmental Expenditure Limit]. 'The Government has announced its intention to meet the costs of this through existing DEL [Departmental Expenditure Limits] budgets, however no specific savings have yet been identified.' MoneySavingExpert founder Martin Lewis welcomed the cut, but warned that 'in practice people won't feel much benefit'. He pointed out that the energy price cap is projected to rise in response to the latest Iran war flare-up. 'So the VAT cut gain over 6mths is mostly eaten up by that,' he posted on X. 'Especially as the prediction is a further rise in January (though that is far more crystal ball gazing).' Helen Miller, director of the IFS think-tank, said: 'As a result of the VAT cut announced today, households will benefit from small cuts to their electricity bills. 'But the measure is not well targeted. If the goal is to support households facing the most acute cost of living pressures, electricity is a poor target because electricity prices have changed little since the start of the war in Iran. 'If the goal is to help low income households, a VAT cut is a poor lever since the biggest cash gains will go towards richer households. 'This is also a move towards a more complex tax system when what we need is a more coherent way of taxing energy. 'We will now have VAT on domestic gas, but not domestic electricity. Meanwhile, we have other taxes on electricity, but not gas, that fund subsidies for renewables. 'Government think they have found funding for this financial year – but only by reallocating savings that have not yet been made. 'If they want to make the policy permanent – or if they find it is politically too difficult to reverse – they will have to find more funding for future years. This is adding pressure to an already very constrained fiscal picture.' Mr Burnham has been making great play of his focus on the cost of living. In his first speech as PM yesterday he 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.' Business Secretary Jonny Reynolds told Sky News: 'It's about the Government's priorities. 'It's about showing we understand people need some breathing space, the pressure we are under. And being able to make an announcement like this I think is a real statement of intent.' 'We can use the switch spend from not going ahead with digital ID to fund it, and of course the longer-term decision, like any other decision, is for the Budget.' Tory leader Kemi Badenoch said: 'It's only one day into Burnham's government and already the explanations are falling apart. 'You can't use the funding from an unfunded programme to pay for cheaper bills.' Angela Rayner, pictured today, has returned to her old brief as Housing Secretary Lucy Powell, pictured arriving for Cabinet today, has been made education secretary in the new government Official figures this morning showed borrowing slightly lower than feared - but a rising tax take Public sector borrowing is still running above the OBR's forecasts, underlining the problem for Mr Burnham's government 'As the OBR stated in November last year the annual £600million cost was unfunded as the government was relying on absorbing the provisional spend across departments without specifying where the savings would be made. 'We are only one day in and already Labour are playing fast and loose with the public finances.' Sir Mel said the Government should follow the Tories' advice and slash Net Zero subsidies to fund a VAT cut. Liberal Democrat leader Ed Davey said the cuts don't go far enough. Speaking to BBC Breakfast this morning, Sir Ed said: 'I don't think it's the best way to help people with energy bills and it doesn't go far enough, but at least it's something.' Financial expert April LaRusse, who is head of investments specialists at Insight Investments, was similarly critical of the £45 annual saving. She said the new measure was 'probably not enough by itself', though it was 'moving in the right direction'. The VAT cuts will help some more than others – high electricity users will see the biggest drop in costs when the 5 per cent reduction kicks in. This could mean larger homes see significant decreases in bills, or vulnerable people who use a lot of electricity for medical equipment. The move to cut household electricity VAT has been floated through government before by Mr Healey's predecessor Rachel Reeves, but instead she reduced energy bills by removing a green levy and moving others onto general taxation. But JPMorgan CEO Jamie Dimon warned Andy Burnham against raising taxes on banks to raise funding for spending projects. He added that it could have adverse consequences for investment and he threatened changes could potentially affect his own company's plans for a new £3billion London headquarters. Meanwhile, the UK public debt has been creeping up to £3trillion and unemployment has been stuck at 4.9 per cent ahead of Mr Burnham's arrival. Ed Miliband missed out on the No11 job but did get the Foreign Office Miatta Fahnbulleh has taken over Ed Miliband's old job as Net Zero Secretary New ministers, Defence Secretary Wes Streeting (left) and Northern Ireland Secretary Chris Bryant Mr Burnham's government shake-up has sparked much speculation as to what direction the new Labour PM is planning to take the UK. Ed Miliband, who was previously a favourite to take the Chancellor job, has now been made Foreign Secretary – a likely flashpoint with Donald Trump over net zero and migration. Former Deputy PM and Justice Secretary David Lammy has also been sent to the back benches, replaced by Alex Norris for his latter role. Wes Streeting, a previous frontrunner to be Labour leader, now takes his place as Defence Secretary, replacing Dan Jarvis, who was in the job for just five weeks. Another pretender to the Labour throne, Angela Rayner, has now re-entered government in her old role as Housing Secretary – from which she had to resign over a scandalous £40,000 underpayment of stamp duty on a property she owns. Shabana Mahmood retains her position as Home Secretary, while Louise Haigh – who was forced to resign as Transport Secretary over a historical fraud conviction – will sit as First Secretary of State and Chancellor of the Duchy of Lancaster to force through Mr Burnham's agenda. Yvette Cooper was moved from Foreign Secretary to Mr Streeting's old role as Health Secretary. Mr Burnham is scrapping the Department of Science, removing its minister Liz Kendall, and merging it with the Department of Business and Trade, now headed by Jonathan Reynolds. - Get your news delivered straight to you by 7am - sign up to our new Morning Mail newsletter for FREE