LONDON — Andy Burnham entered Downing Street with a promise to give hard-pressed voters “breathing space” on the cost of living. Now he must show he can deliver. 

At the top of his list is finding a way to reduce stubbornly high energy bills — even as the Iran-U.S. war forces up prices and ministers are under pressure to cut their own departmental budgets. The new prime minister knows any intervention must make a real impact for voters if he is to turn Labour’s fortunes around. 

“You need to make an emotional connection with people,” said one senior government official, granted anonymity to talk candidly about Whitehall thinking. 

Britain’s new prime minister has already made one bid to show voters he is serious about tackling the problem: Removing VAT from household electricity bills, something he announced on his first day in No. 10. 

The move will knock less than £4 off the average monthly bill, ends after one year, and comes with a price tag of £850 million. Downing Street said it will be paid for through so-far unspecified Whitehall savings. 

But Burnham and his new Energy Secretary, Miatta Fahnbulleh, promised that the intervention is just a start. Cutting VAT is a “down payment” ahead of the winter, Fahnbulleh said. 

That means ministers have just weeks before Burnham’s first budget this fall to figure out what, if anything, can really ease the burden — and how to pay for it. 

Salami slicing 

“The fiscal space is going to be a challenge, and that is the case for any government,” said Sam Alvis, associate director for environment, energy security, and nature at the Labour-aligned Institute for Public Policy Research think tank. 

That’s because any intervention to bring down energy bills will have to be funded from already under-pressure Whitehall departments. 

“This government is going to have a look at the budget. Whether it chooses to do some priorities differently — that is an open question,” Alvis said. 

One option for Burnham is to slice more charges from electricity bills, as he did with VAT. But any savings could be quickly wiped out if, as expected, the Middle East crisis pushes up wholesale gas prices.

Forecasters at Cornwall Insight predict that average annual household bills will rise by two percent this fall, even after the VAT intervention. 

That leaves Burnham facing the same problems as the man he replaced, Keir Starmer. 

Starmer cut £150 off yearly bills last November by shifting some so-called green levies, used to fund a clean energy scheme, onto general taxation. By the summer, that cut had been swallowed up by higher prices driven by the Strait of Hormuz crisis. 

Nonetheless, Alvis said, this approach remains Burnham’s most realistic option. 

“We are now in a bit of a scenario of salami slicing, where you’re aggregating lots and lots of smaller bits,” he said. “There’s no one big thing that you can do that’s going to take over £100 off bills. So, it’s about accumulating all those things that you think you could possibly do in one go, so it becomes sizable and noticeable.” 

Decisions, decisions 

One of those options, proposed by the think tank Nesta and reportedly being considered by Burnham, involves shifting further green levies from electricity bills onto tax.  

It identified another £42 of savings from a yearly bill, costing the Treasury £1.7 billion per year for a decade. 

Every small cut helps consumers, insists Andrew Sissons, Nesta’s director of sustainable futures. The think tank has also proposed knocking £22 a year off bills by shifting the standing charge on gas — currently a fixed daily fee — onto the unit rate, which changes depending on how much energy a home uses. That would take a year to implement and would not cost the government a penny, Nesta says. 

But such moves must be accompanied by larger interventions if voters are to feel the benefit, he added. 

“The amount you’d need to cut people’s energy bills … for it to feel like a real difference is quite substantial,” he said. The government, he argued, should aim for a “big package.”  

If the government aims for larger changes, they would come with even greater costs.  

Nesta has suggested a one-off move to wipe out electricity debt, removing some bailout costs currently funded through bills, taking total annual bill savings to £130. But the Treasury would have to find £2.7 billion to fund that. 

“[We] shouldn’t ignore the fact that there are fiscal trade-offs. But if the government wants to prioritize energy bills, then this is the kind of step it needs to take,” Sissons added, pointing to their proposed levy change alongside the VAT cut.  

Things take time  

Net-zero policies will, ministers hope, bring down bills for good. But large-scale changes take years to implement. 

“Realistically, the only way to deeply, deeply help people is to get them solar panels, is to get them an EV [electric vehicle], potentially heat pumps in some houses as well,” said Alvis. 

This is another reason to opt for “salami slicing”, he said: To “alter the balance of electricity and gas prices, so that those clean technologies stack up and save people even more money.”  

Alex Bevan, a research fellow at the Future Governance Forum, agreed that big savings attached to the shift to green energy were still a way off.  

“There aren’t quick workarounds on whichever form of energy you choose to generate and deploy,” he said. But government must nonetheless “lock in the benefits [of clean energy],” he argued. 

The same official quoted above stressed that no decision had yet been made on how the government would intervene on bills. Asked whether the government favored a series of small policies or one big intervention, they said: “It doesn’t have to be binary. … It doesn’t have to be one or the other.”  

A Department for Energy Security and Net Zero spokesperson said: “The energy secretary’s focus is bringing bills down for good. We will tackle the cost of living to make life’s essentials affordable again and bring back hope.”

For now, Alvis insisted, Burnham has one thing going for him: He can operate in the knowledge voters accept international issues are pushing up costs. 

“The political point I would make is: By doing your best effort, you give yourself the space to have a conversation with the public,” he said. 

Many EU-funded health projects are on hold amid a dispute between the European Commission and capitals over support for NGOs.

At least seven countries, led by France, Spain and Belgium have twice blocked the Commission’s 2026 EU health budget proposal because they say it doesn’t contain sufficient funding for health NGOs. These organizations represent patients, doctors and public health workers in EU health policy debates, typically in opposition to sectors like tobacco, alcohol and, sometimes, the pharmaceutical industry.

The standoff means public tenders and grant applications for EU health projects — such as training more experts to assess medicines, beefing up health security and creating artificial intelligence platforms to monitor brain health — can’t yet go ahead.

“Various stakeholders have expressed frustration over the delay” as they are already putting together consortiums to bid for projects included in the draft budget, a spokesperson for Public Health Sweden told POLITICO.

The delay also has major implications for the EU’s health crisis response.

The Commission’s Health Emergency Preparedness and Response Authority published its work plan in June for the coming year, which includes the expansion of ‘ever-warm’ vaccine production facilities and the creation of a new European Diagnostics Hub to develop cutting-edge technologies — all of which is on hold until the money can flow, unless covered by funds under the 2025 budget.

European Commission spokesperson Eva Hrncirova declined to comment on the potential disruption to the EU’s health program, but told POLITICO the executive would “reflect” on the way forward. 

Root cause

The standoff stems from the Commission’s decision to ax operating grants for NGOs, confirmed in July 2025. These had been in place in Europe since the early 1990s to enable civil society to participate in policymaking on a more equal footing with profit-driven entities.

The Commission told POLITICO the grants were cut to reflect diminished funds for EU4Health after the budget fell from €5.8 billion to €4.6 billion in 2025 to reallocate funds for Ukraine. Health Commissioner Olivér Várhelyi also previously claimed behind closed doors that NGO operating grants were “illegal.”

When countries voted on the Commission’s second proposal last week — which offered €1.3 million in NGO operating grants, having omitted them altogether from its original plan — at least 14 countries voted in favor of the plan, citing the urgent need for a budget.

“The Public Health Agency of Sweden voted yes and we seconded the criticism that came from the other countries on funding for civil society, but saw that further delays in the work programme were not preferable,” the spokesperson for the Swedish public health authority said in a written comment.

But countries standing firm with NGOs worry that ending support for their day-to-day functions will weaken democratic policymaking and leave lobbying as a preserve of private interests. Some NGOs have already shuttered operations in Brussels over the lack of funds.

Spain and France have been the most vocal in their criticism, forming a blocking minority on the EU4Health Programme Committee that signs off on the budget, alongside Czechia, the Netherlands, Lithuania and Malta. Others, including Ireland and Luxembourg, abstained to signal their displeasure with the removal of NGO funds. 

NGOs play “a vital role in representing patients’ interests and ensuring a balanced policy debate alongside well-resourced industry stakeholders,” a spokesperson for Malta’s ministry of health told POLITICO.

A joint statement read out on behalf of Belgium, Czechia, France, Luxembourg, Spain and the Netherlands at the July 31 meeting, and seen by POLITICO, called for “more adequate level of funding for operating grants while safeguarding other low-budget but high-impact actions from further reductions.”

They argue the Commission is at fault for the impasse and ignored multiple warnings from countries that they would not accept the defunding of civil society groups. 

“Several Member States have raised the same concerns for two years, but these have not been adequately reflected. At the same time, the delay increases pressure from stakeholders to approve the programme regardless of those concerns, because important public-health actions and considerable expert work are involved,” a spokesperson for Luxembourg’s Ministry of Health and Social Security, which abstained in support of NGOs, said in a written comment.

‘Symbolic’ offering

The blocking countries didn’t put a figure on how much they wanted for NGOs, but pointed out the €1.3 million on offer was one-seventh what it was in 2023 and 2024, before the grants were scrapped.

Cyprus was among the countries ready to accept the latest proposal, with the country’s ministry of health telling POLITICO it “viewed positively the efforts made to address concerns regarding NGO funding and welcomed the allocation of dedicated funding.”

But Milka Sokolović, director general of the European Public Health Alliance, said the Commission should ensure the grants “provide meaningful support rather than a symbolic contribution.”

“Budget constraints are real, but so is the need to sustain the organizations that bring expertise, accountability and public engagement to Europe’s health ambitions,” Sokolović said.

The Commission has also angered countries with how late in the year it is seeking approval for the work program, combined with what they see as insufficient consultation in the run-up to the vote.

The Luxembourg ministry spokesperson said the Commission “traditionally” prepared the work program a year in advance. “This gave authorities and potential beneficiaries a reasonable indication of forthcoming priorities and call dates. For both the 2025 and 2026 programs, however, the first drafts reached Member States much later, reducing predictability for all concerned.”

Speaking for the Commission, Hrncirova said countries had been consulted. “In line with the EU4Health regulations and its procedures for the preparation, member states are consulted at several stages with several meetings. This has happened,” she said.

The Commission hasn’t yet scheduled another meeting to try to get a budget over the line. “We are now awaiting the invitation to the next EU4Health Programme Committee for the, hopefully, final meeting for the 2026 work programme,” the spokesperson for the Public Health Agency of Sweden said.

“At this stage, the matter is in the hands of the European Commission,” the Maltese spokesperson added.

Brussels is bracing for an unusual fight between the EU’s smallest country and a British ex-footballing legend.

Peter Shilton, the England goalkeeper who conceded the “Hand of God” goal from Diego Armando Maradona in 1986, has started a new life as an anti-gambling advocate after overcoming a decades-long addiction.

Despite being a diehard Brexit supporter, he’s become the poster boy of the European Parliament’s push to tax online betting in a bid to raise some much-needed funds to finance the bloc’s next €2 trillion budget.

But the campaign has run into strong opposition from Malta. The tiny island in the Mediterranean Sea, with a population of just over half a million people, is home to a burgeoning betting sector. It says that higher taxes will cripple its gambling industry, boost illegal operators and drive firms outside the bloc.

“[Malta] will not accept the introduction of any EU-level taxes designed to sustain the bloc’s spending,” the country’s Prime Minister, Robert Abela, told the Maltese Parliament in June.

But Shilton, who lost more than £1 million in betting on horse racing over 45 years and now runs his own gambling addiction charity, dismisses the arguments by Malta and the gambling lobbies as “window dressing.” He’s in favor of higher taxes as he wants to shrink advertising revenue that is used to lure in new gamblers.

“Deep down they’re after everybody’s money. Simple as that,” he told POLITICO during a visit to Brussels in June.

The topic has split the EU’s 27 governments, pitting gambling-heavy Southern European countries against their more supportive Western European peers, led by France. Capitals are already fighting even though the Commission hasn’t yet issued a formal proposal for the possible tax, which would ultimately need to be unanimously approved by governments.

It’s one of numerous budget battle lines being drawn, with Ireland — which is steering the talks as chair of the rotating Council presidency — set to restart negotiations to facilitate an overall deal on the EU budget before the end of the year.

That’s no mean feat given Dublin’s task to mesh competing spending priorities into a single budget — financing everything from farmers’ subsidies to foreign aid — that is acceptable for each of the EU’s 27 governments.

National capitals will have to unanimously approve new EU-wide taxes — known as own resources — to pay for soaring defense spending and post-Covid debt repayments if they want to avoid drastically increasing national contributions to Brussels.

Supporters of the gambling levy point to the fact that it would rake in over €13 billion throughout the next budget cycle and — for some, more importantly — address a serious public health issue. An estimated 80 million adults globally have experienced a gambling addiction, according to experts.

“We look on it [gambling] as an illness. It’s something that’s inborn in you and that can be ignited,” Shilton said.

Malta’s game plan

Malta has invested heavily in the gambling industry — including lotteries, betting and casinos increasingly operating online — which now accounts for around 12 percent of its gross domestic product.

These firms have relocated to Malta because of its light-touch licensing regime, business-friendly tax regime and balmy weather.

The country is “as dependent on the online gambling industry as Germany is on cars,” said an EU diplomat, granted anonymity to speak freely.

While gambling firms need local authorization to operate in most other European countries, securing the Maltese license is crucial to access banking services and gain a foothold in the EU market.

Malta-based firms dominated the German and Austrian online gambling markets before national regulators cracked down. This has prompted the Maltese government to refuse to recognize some court rulings and sanctions issued by other EU countries against its gambling firms.

Given its influence, it is hardly surprising that the gambling industry has found a friendly ear among Malta’s politicians in Brussels.

The Maltese president of the European Parliament, Roberta Metsola, last year gave the opening speech at an international gambling conference in Rome that also featured Italian Foreign Affairs Minister Antonio Tajani.

“I’m more than a little proud that it started in my island home of Malta,” she said, referring to SiGMA, a Maltese events company that focuses on online gambling founded by Eman Pulis, a university friend of Metsola.

Betting lobbies say they oppose higher gambling rates on the grounds that they will fuel appetite for the illegal market, away from the grasp of EU rules.

“A higher tax would lead to worse odds for the customers … and it is relevant because access to the illegal markets in Europe is, obviously, one click away,” said secretary general of the European Gaming and Betting Association, Maarten Haijer.

Nicola Matteucci, an economist at the Università Politecnica delle Marche in Italy who has undertaken extensive research on the gambling sector, argued there is a “point where prices exceed a certain level and the demand [for gambling] diminishes. But it’s not as immediate as suggested by the industry.”

Matteucci said that most gamblers will be undeterred by slightly higher taxes and worse odds as they are not fully rational consumers.

Anti-gambling groups reason instead that higher taxes will reduce the sector’s spending on commercials, preventing would-be punters from getting sucked in to gambling in the first place.

“Higher taxes will therefore mean less gambling advertising overall and many people would regard that as a public benefit,” said Derek Webb, the founder of the Campaign for Fairer Gambling advocacy group.

Club Med joins Malta

Malta has joined forces with fellow Mediterranean countries — Italy, Portugal and Spain — to challenge the mooted tax which was first proposed by the Parliament’s socialist lawmaker Victor Negrescu, said four diplomats with knowledge of the discussions.

According to the European Commission’s estimates, seen by POLITICO, a 3 percent tax on the net turnover of the online gambling sector would generate an estimated €1.9 billion per year.

With its big online gambling market, Spain is expected to be among the biggest financial losers, should the tax go ahead. It is estimated to be on the hook for €414 million per year, almost a quarter of the total amount. That compares to a projected bill of €165 million per year for Malta— a disproportionality high amount for such a small country.

Portugal is also reluctant to back the levy. It fears that higher taxes would eat into revenue brought in by state-run betting and lotteries that is currently channeled to the charity Santa Casa da Misericórdia de Lisboa‘s healthcare and youth support programs, said a Portuguese official.

Meanwhile, given the relatively low uptake of online gambling, Italy’s misgivings have surprised anti-betting advocates. Rome is expected to pay a mere 7 percent of the proposed new levy — a significantly lower proportion than its regular EU budget contributions.

However, Prime Minister Giorgia Meloni’s Brothers of Italy party has previously been receptive to the gambling industry. Last year its MPs passed a resolution encouraging the reversal of a ban on professional football clubs advertising gambling firms.