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. 

The European Union has collected €1.4 billion in revenue from immobilized Russian central bank assets and will channel the proceeds to Ukraine, the European Commission announced Wednesday.

In a press release, the Commission said the payment, received Monday, was the “fifth transfer of its kind.” Since the assets have been immobilized, they have generated a total of €8 billion in windfall profits.

Brussels said 95 percent of the latest tranche would go through the Ukraine Loan Cooperation Mechanism, helping Kyiv repay EU and G7 loans, while the remaining 5 percent would flow through the European Peace Facility to meet Ukraine’s “pressing military and defence needs.”

“Once again we wake up to the news of horrible atrocities by Russia through its aerial attacks on Ukraine,” Commission President Ursula von der Leyen wrote on X. “Russia must pay for the destruction it has caused. And we are using the proceeds from the immobilised Russian assets to make sure it does.” Von der Leyen said the EU was making “a further €1.4 billion” available to support Ukraine’s “continued resistance against Russia’s illegal war.”

Her comments came after one of the deadliest Russian attacks on Kyiv this year. Ballistic missiles and drones killed at least 17 people and wounded 44 overnight, striking residential buildings, warehouses and a railway station. Ukrainian President Volodymyr Zelenskyy stated Wednesday that additional missile interceptors “could have saved lives” and blamed delays in Western air-defense deliveries for the mounting casualties.

Over €210 billion in Russian central bank reserves were frozen by the EU after Moscow’s full-scale invasion in 2022. Since 2024, financial institutions holding those assets have been required to ring-fence the extraordinary profits they generate, allowing Brussels to redirect the proceeds to Ukraine while leaving the underlying reserves untouched.

Palantir is shifting profits from its European operations to the United States, allowing the Florida-based data analytics giant to pay minimal taxes in Europe, a new report finds.

The report by the U.K.-based Centre for International Corporate Tax Accountability and Research, a group partly funded by labor unions that researches corporate tax avoidance in an effort to win reform of global tax rules, found that Palantir’s European subsidiaries, which took in €440.5 million in annual revenue in 2024, report far smaller profit margins in Europe than in the U.S.

“Although a substantial part of Palantir’s revenue is realized in Europe, almost all of the pre-tax profits are funneled to the United States,” the report said.

Palantir pays no U.S. federal income tax because previous losses, tax credits, and R&D deductions offset its taxable income; and virtually no state income tax, with the exception of Maryland, which levies a digital services tax.

The profit gap between the U.S. and Europe is stark. In 2025, Palantir’s American business pocketed 47.7 cents in profit from every dollar of revenue — more than double the previous year’s 22.5 cents. Outside the U.S., the profit margin was just 6.3 percent. In some European subsidiaries, it fell to around 3 percent, according to the new report.

CICTAR argues that Palantir “intentionally and artificially” shrinks European profits — and therefore its European tax bills — to concentrate profits in the U.S. There is no claim in the report that such arrangements, often referred to as “profit shifting,” are illegal. Multinational companies often reduce reported profits by paying subsidiaries or other related entities for intellectual property, loans or expertise.

In Sweden, for example, Palantir reported €13.7 million in revenue in 2024, but only €1.1 million in profit. At Sweden’s 20 percent corporate tax rate, that left the company with a tax bill of just €424,000.

In its Q2 earnings report on Monday, Palantir made no explicit reference to earnings from its European subsidiaries. Instead, it highlighted its U.S. business, where revenue rose 115 percent year-on-year to $1.57 billion (€1.36 billion), and boasted of its 62 percent profit margin.

A U.K.-based Palantir spokesperson said that the majority of the company’s 2025 revenue and profitability was driven by its U.S. business. “Our tax position in each jurisdiction reflects the level of economic activity there, and we meet our tax obligations in every market in which we operate,” the spokesperson said.

Not alone

Palantir is not the first U.S. tech company to draw scrutiny over how it books profits in Europe.

In 2024, the European Court of Justice ordered Apple to pay Ireland €13 bn in back taxes, ending an 8-year-long fight over what Brussels said amounted to illegal state aid. Amazon also fought the European Commission over claims it had received an unlawful tax advantage worth around €250 million in Luxembourg — a case the company ultimately won. Microsoft, meanwhile, has faced scrutiny over its Irish subsidiary, Microsoft Round Island One, which avoided paying millions to the state after claiming tax residency in Bermuda. The U.S. software giant has denied that it is circumventing Ireland’s tax laws.

Jan Willem Goudriaan, General Secretary of the European Federation of Public Service Unions — a supporter of CICTAR— said that companies such as Palantir, Amazon and Microsoft focus on minimizing the taxes they pay, “thus robbing funding for public services.”

“Companies bidding for public contracts should have to demonstrate responsible tax conduct by disclosing where their revenues, workforce, profits and taxes are located,” he said.

Another reason for the low profits of Palantir’s European subsidiaries is their high personnel costs. In the U.K., where most of the company’s non-U.S. workforce is based, Palantir reported £173 million (€204.3 million) in employee costs for 749 staff in 2024 — an average of £230,974 (€272,803) per employee.

The report also points to Palantir’s use of stock-based compensation across its European subsidiaries, especially in the U.K., Spain and Norway. This means employees are paid partly in company shares or awards. Those awards are recorded as staff expenses, which can lower a subsidiary’s corporate tax bill.