Money expert Martin Lewis has confirmed that gas standing charges will be scrapped in 2027, a change he says will save households £108 a year. The announcement follows a meeting with Chancellor John Healey ahead of the Budget speech today.
Standing charge to be axed
The standing charge is a daily fee added to gas bills simply for being connected to the network. Currently set at 29.68p per day under the price cap, it is paid regardless of usage, which critics say penalises low energy users.
Writing on X, Lewis said: "CONFIRMED. Gas Standing Charges to be scrapped. I've just come out of a meeting with the Chancellor. The gas standing charge will be scrapped in 2027 (my guess, either for 1 Oct price cap or the 1 Jan 28 price cap)."
Costs shift to unit rates
Lewis explained that the £108 annual cost will be moved onto unit rates, with an estimated increase of just under 1p per kilowatt hour, though the exact figure is not yet known. He added that the Chancellor also plans to discuss removing the charge on electricity with Ofgem, describing this as "trickier" and likely to take longer.
The change applies primarily to price cap standing charges, leaving the open market free to offer tariffs with or without the charge. Lewis noted that around 60% of people will pay less as a result, while 40% will pay more, with the dividing line estimated at roughly 12,500 kilowatt hours of gas usage.
Treasury and political reaction
The Treasury confirmed that Mr Healey will ask regulator Ofgem to remove standing charges "in 2027 or as soon as possible after". It said the switch could save 60% of households an average of £45 on their annual bills.
Prime Minister Andy Burnham said: "Abolishing gas standing charges is about basic fairness and giving people more control over their bills." He added: "I am determined to reform our broken energy market, so it better serves the public interest."
Lewis also highlighted that a 27% rise in the price cap is expected in January, and he asked the Chancellor whether he would intervene. He was told to wait for the Budget, though he suggested there could be an announcement today.
