By Karim Hammam
The UK Treasury has announced that standing charges on gas bills will be scrapped from 2027 “or as soon as possible after,” a move aimed at giving millions of households “breathing space” and making the energy system fairer.
Standing charges to be removed
Standing charges are fixed daily fees applied separately to gas and electricity bills, which customers pay regardless of usage. Under the current energy price cap, the average gas standing charge is £108 a year. The Treasury said Ofgem will aim to deliver the removal of these charges in 2027 or as soon as possible thereafter, with targeted mitigation for a small number of households also to be outlined.
Potential savings for households
Fixed costs will instead be recovered through the unit rate, which the Treasury estimates could save 60% of households an average of £45 on their annual bills. Chancellor John Healey, who will deliver his first Budget on Wednesday, said the change would “draw a line in the sand on an energy policy that has failed British billpayers for years.”
Political reaction
Prime Minister Andy Burnham described the abolition as “basic fairness and giving people more control over their bills,” adding that he is determined to reform the “broken energy market.” In a pre-Budget video, Healey acknowledged global uncertainty pushing up energy prices but highlighted signs of economic resilience, including rising investment and productivity.
Further support expected
It is understood that Healey also intends to find money to help the poorest households with energy bills and to freeze fuel duty again.
