Chancellor abolishes standing charges on gas bills to make payments fairer

Tens of millions of households will no longer pay standing charges on their gas bills as the Government gives families more control over what they pay and some more breathing space.

A standing charge is a fixed daily fee added on top of a household gas bill, regardless of how much gas has been used. A household could use no gas at all but still must pay the standing charge.

The Chancellor will announce today an end to this unfair and outdated practice. He will ask Ofgem to deliver removal of these charges – which are £108 a year for the typical household on average – in 2027 or as soon as possible after.

Instead, these 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.

Households not seeing an automatic saving will still have better control over their bills without the worry of affording the standing charge, and the government will set out in due course targeted mitigation for a small number of households.

This comes ahead of today’s Budget that will “draw a line in the sand” on a UK energy policy that has seen wrong turns taken for over four decades. The Prime Minister has previously spoken about reforming a broken energy market, so it better serves the public interest, rather than piling costs to bills and leaving British households even more exposed in an uncertain world.

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.

Chancellor of the Exchequer John Healey said: