UK Chancellor to Scrap Gas Standing Charges, Saving 23 Million Homes £45 Annually

Chancellor John Healey announced that the government will remove standing charges from gas bills for approximately 23 million homes. The policy is set to take effect next year or as soon as possible thereafter. The Treasury estimates that sixty percent of account-holding households will see their costs drop. The average annual saving per home is projected to be £45.

The current standing charge is a fixed daily fee added to bills regardless of actual usage. Under the existing rules, consumers pay this amount even if they use no gas during the billing period. For a typical household, this fee totals £108 per year. Healey described the practice as unfair and outdated. He stated that the new approach aims to make energy pricing reflect actual consumption patterns more closely.

The announcement was made ahead of Healey's first budget statement in the House of Commons, scheduled for later this week. He intends to ask Ofgem, the energy regulator for Great Britain, to remove the charges. Energy Secretary Andy Burnham called the abolition a matter of basic fairness. He said the reform will give people greater control over their bills. Burnham expressed determination to fix a broken energy market so it better serves the public interest.

Prime Minister noted that he asked the Treasury to investigate the issue just one week ago. Healey said the decision gives millions of households some breathing space. He argued that the previous policy allowed extra costs to pile up, leaving families more exposed to global economic shocks. Healey claimed the budget draws a clear line in the sand regarding an energy policy that has failed British billpayers for years.

Miatta Fahnbulleh, also serving as energy secretary, said she would continue to do everything possible to protect people from unaffordable bills. Greg Jackson, founder and chief executive of Octopus Energy Group, welcomed the move as an example of joined-up thinking. Jackson noted that the change delivers what customers want, specifically lower standing charges. He suggested that most customers would see a cut in their gas bills, with even higher savings possible for those who transition to heat pumps.

The move follows a VAT cut on electricity bills implemented at the beginning of the month. As a result, the energy price cap set by Ofgem from October is £45 a year lower than it would otherwise have been. About a third of households on fixed tariffs are not directly affected by the price cap. However, their electricity prices have also fallen following the VAT reduction.

In related developments, the government recently approved the Jackdaw gasfield in the North Sea. It also announced the creation of a new energy wealth fund to support investment in cheap and clean power sources. These actions aim to balance immediate cost relief with long-term energy strategy.

The policy shift will reduce the fixed cost component of gas bills for the majority of domestic consumers. The Treasury has confirmed the financial impact and the regulatory steps required to implement the change.