New PM Andy Burnham has pledged to cut tax on household electricity bills.
It is part of plans to help with the cost of living.
VAT will be removed from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. This applies to and is funded for this financial year.
The changes will funded by the cancellation of the Digital ID programme.
Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from bills at the last Budget.
Suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.
Prime Minister Andy 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."
Julian David, CEO of techUK said: "While the new government has scrapped its planned scheme, we must not turn away from digital verification technology given the huge benefits it offers. Well-designed digital verification services already available under the DVS Trust Framework enhance convenience, strengthen online security, protect people from fraud and support cross border trade.
"Government and industry must now come together to move faster and accelerate the adoption and use across the economy of digital verification services that industry already provides. This means pushing forward with secondary legislation to allow digital verification solutions to be used for alcohol sales, implementing information gateway powers that already exist under law and ensuring UK alignment with international schemes which could provide significant economic boost and support job creation. Structured engagement with industry is now key and should focus on developing a detailed long-term roadmap for enabling adoption of digital verification services across economy and society."
