Chancellor John Healey has announced a new cost control framework including a £100 council tax deduction for households in bands A-D, ahead of what is expected to be the biggest rise in energy bills in four years.
The support comes as independent energy consultancy Cornwall Insight predicted the Ofgem price cap for a typical dual-fuel household will rise from £1,723 to £1,999 in January 2027. EDF Energy is forecasting a 27% jump that could push typical annual bills up to £2,192.
Gas standing charge to be scrapped
The Treasury has announced that standing charges on gas bills will be scrapped from next year for around 23 million homes. These 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.
Martin Lewis spoke with the Chancellor on Wednesday morning, confirming that the gas standing charge will be scrapped in 2027. The financial expert believes this will make 60% of Brits better off.
Electricity charge 'trickier' to remove
Lewis explained: "The Chancellor also said he will be talking to [energy regulator] Ofgem about how they get rid of the Charge on electricity as well, but that is 'trickier' apparently and will take longer."
He added: "This is primarily about the Price Cap Standing Charges. There will still be an open market, so other firms can offer other forms of prices with or without the Standing Charge. My suspicion is that once it goes on the Price Cap, it will tend to be reduced on other tariffs as well."
Impact on fixed tariffs and households
Lewis continued: "As for those on fixes: if you get a fix now, the rate of your fix is fixed, so this should not affect it. You will pay what you pay and if it has Standing Charges they will continue (some asking if they should delay fixing because of this; no, if a fix is right for you and will save you money, don't let this change that – this is about the structure of bills, as opposed to the actual costs on bills)."
He noted: "About 60% of people will pay less due to this, 40% more. My guesstimate is the dividing line will be somewhere around 12,500 kilowatt hours of gas (can't know until there is actual pricing). According to a study by Nesta, this switch would leave the majority of people in all income groups under £100,000 better off."
