Standing charges from household gas bills will be removed for around 23 million homes, the UK government announced on Wednesday, in a headline measure of Chancellor John Healey's first Budget.
Source: GOV.UK — Chancellor abolishes standing charges on gas bills
The charges are a fixed daily fee added to bills regardless of how much gas a customer uses, and cost around £108 per year for a typical household, the Treasury said in a statement carried by PA. Healey will ask energy regulator Ofgem to remove the charges “in 2027 or as soon as possible after”, the Treasury said.
Source: PA via AJ Bell
Instead, the fixed costs will be paid on the unit rate — the price for each unit of gas actually used. The government said that by the end of next year those fixed costs will be paid on the unit rate, which could save 60% of account-holding households around an average of £45 off their annual bill, according to Treasury calculations published on GOV.UK.
Source: GOV.UK
What the Chancellor and the Prime Minister said
Healey said: “Gas standing charges are unfair and outdated, so I am scrapping them to give millions of households a bit of breathing space. My Budget will draw a line in the sand on an energy policy that has failed British billpayers for years.” Prime Minister Andy Burnham said: “Abolishing gas standing charges is about basic fairness and giving people more control over their bills. I am determined to reform our broken energy market, so it better serves the public interest.” Both statements were carried by PA.
Who gains — and who could pay more
Because the fixed cost moves onto the unit rate, households that use less gas benefit most, while heavy users could pay more. Uswitch's director of regulation, Richard Neudegg, said moving the charge onto the unit rate is “a sensible idea for the longer term”, estimating that a household using 7,000 kWh of gas a year could be about £40 better off, while a home using 14,000 kWh could be about £25 worse off.
Source: Uswitch
The Treasury said it will outline targeted mitigation for a small number of households that could lose out. Simon Francis, coordinator of the End Fuel Poverty Coalition, welcomed the move, saying removing the charge “will bring real relief to many low-income households who use very little energy” and could stop debt building up for prepayment customers in the summer months.
MoneySavingExpert founder Martin Lewis, who has campaigned for years against standing charges, confirmed the change after a meeting with the Chancellor on Budget morning and said he expected it to take effect for the October 2027 or January 2028 price cap. The announcement comes as household bills remain under pressure: the Gazette reported that Ofgem's price cap rose 4% in October and forecasters at Cornwall Insight predict a further rise of about £276 to £1,999 a year on January 1 — yaani, a typical capped bill moving close to £2,000 a year.
For the large Punjabi and Indian diaspora in Britain, the practical takeaway is simple: from 2027, low gas users — including smaller homes and households that heat mainly with electricity but kept a gas connection — should see the clearest saving, while large, high-use homes should check their unit rate when the change lands.