By Karim Hammam
UK Chancellor John Healey announced on Wednesday that standing charges on gas bills will be abolished for 23 million homes, a measure he described as ending an “unfair and outdated” fixed daily fee. The change, to be implemented by energy regulator Ofgem in 2027 or soon after, could save 60% of account-holding households an average of £45 per year.
Budget day announcement
Ahead of his first budget statement in the House of Commons, Healey said the Treasury would ask Ofgem to remove the standing charge, which is applied regardless of gas usage. The cost will be shifted to unit rates, meaning higher-consumption households will likely pay more overall. The Treasury said the move carries no cost to the public purse.
Impact on households
Research for Ofgem shows 61% of people view standing charges as unfair. Charity Nesta noted the reform efficiently transfers costs from poorer to wealthier households, particularly benefiting those with prepayment meters who pay the charge year-round despite seasonal gas use. Andy Burnham, the mayor of Greater Manchester, called the abolition a matter of basic fairness and a step toward reforming a broken energy market.
Reactions and analysis
The End Fuel Poverty Coalition welcomed the relief for low-income households and prepayment customers, while urging further action such as moving levies off electricity bills into general taxation. The Green Party criticized the measure as “more tinkering” from a government failing to take bold action on the cost of living crisis.
Broader energy policy context
The announcement follows a six-month suspension of VAT on electricity bills that began in October, reducing the energy price cap by £45 annually. The government also approved the Jackdaw gas field in the North Sea while launching a new energy wealth fund to support clean power investment. Healey said his budget would draw a line under an energy policy that has failed British billpayers for years.
