The United Kingdom government has announced plans to abolish gas standing charges for about 23 million households from 2027, a move aimed at easing the cost of living ahead of Chancellor John Healey’s first Budget on Wednesday.
The fixed daily fees, which customers pay regardless of how much gas they consume, cost a typical household approximately £108 annually.
The Treasury said Healey would ask energy regulator Ofgem to remove the charges in 2027 or as soon as possible afterwards.
Under the proposed arrangement, the costs currently covered by standing charges will instead be incorporated into the unit price of gas.
According to the Treasury, about 60 per cent of households could save an average of £45 a year on their energy bills.
Prime Minister Andy Burnham described the planned reform as a step towards making energy bills fairer and giving consumers greater control over their spending.
“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,” Burnham said.
Healey said the move would provide financial relief to households struggling with rising expenses.
“Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.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, letting extra costs on bills pile high and leaving households even more exposed to global shocks,” he said.
Standing charges do not cover the gas consumed by customers but pay for the infrastructure and services required to supply energy, including essential maintenance and network upgrades.
Burnham told the House of Commons last week that he had asked Healey and Energy Secretary Miatta Fahnbulleh to consider scrapping the fees.
However, concerns remain that some low-income households with high energy consumption could face increased costs if the charges are transferred entirely to the unit rate.
The Treasury said the government would announce targeted support for a small number of affected households in due course.
It added that consumers who do not automatically benefit from the change would still have greater control over their bills without the pressure of paying a fixed standing charge.
Simon Francis, coordinator of the End Fuel Poverty Coalition, welcomed the announcement, saying it could provide significant relief for vulnerable households and prepayment customers.
“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,” Francis said.
He added, “It’s also welcome that the Chancellor acknowledges that wider measures are needed to bring down bills and we will wait to see if he matches these words with more action in the Budget later. Moving levies off electricity bills and into general taxation, as reported, would also be a positive step.”
