Chancellor John Healey has announced major changes to energy bills in his Autumn Budget, confirming that gas standing charges will be removed. The move, which Mr Healey said would cut energy bills "for good," was part of his first Budget since being appointed by Prime Minister Andy Burnham earlier this year.
Standing charges to be scrapped
The Chancellor will ask Ofgem to deliver the removal of these charges, which are £108 a year for the typical household on average, in 2027 or as soon as possible after. Standing charges are added to bills regardless of how much gas a customer uses.
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.
Reaction to the announcement
Announcing the changes, Mr Healey said: "Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space."
He added: "My Budget will draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks."
Mr Burnham said the change will give people "more control" over their bills. He said: "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."
MoneySavingExpert founder Martin Lewis, who was in No 11 on the morning of the Budget, said he was "pleased" with the move and that Mr Healey told him he would seek to remove standing charges on electricity bills too.
Concerns remain for some households
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said the decision to remove gas standing charges would "bring real relief to many low-income households who use very little energy and for prepayment customers it could stop debt building up in the summer months".
He said: "It's also welcome that the Chancellor acknowledges that wider measures are needed to bring down bills and we will wait to see if he matches these words with more action in the Budget later."
Mr Francis added: "Moving levies off electricity bills and into general taxation, as reported, would also be a positive step But despite the positives of the gas standing charges proposal, millions of households won't see a saving. This means Ministers have serious questions to answer about who they are and, if they are vulnerable or on low incomes but have high energy needs, how they will be protected."
