Healey scraps ‘unfair’ standing charges from gas bills
John Healey has said he will scrap “outdated and unfair” standing charges from gas bills, in a move which could save households £45 per year. The Chancellor said these fees – which are charged on top of the daily rate to cover the cost of connecting to a supply – are part of “an energy [...]
Chancellor John Healey announced plans to eliminate "unfair" standing charges from gas bills, a move that could save British households an estimated £45 per year. These charges, which are added on top of the daily rate to cover the cost of connecting to a gas supply, have been deemed outdated and unnecessary by the Chancellor. Healey plans to request that energy regulator Ofgem remove these charges in 2027 or as soon as possible.
Standing charges currently add £108 per year to the gas bill of a typical household. However, the Treasury expects that 60% of households will see a reduction of about £45 annually due to this change. The government has also pledged to implement targeted measures to protect low-income households who are high users of gas, ensuring these billpayers are not negatively impacted.
Energy Secretary Miatta Fahnbulleh acknowledged concerns about the potential negative effects on low-income households, but emphasized that the Treasury will outline targeted mitigation strategies to prevent any adverse consequences. The move comes as part of Healey's broader efforts to provide "breathing space" to British families struggling with increasing energy costs.
Octopus Energy's founder, Greg Jackson, welcomed the decision, praising it as a "pragmatic" approach that represents a shift in energy policy. He noted that most customers would benefit from lower gas bills, and those who switch to heat pumps could enjoy even greater savings in the long run.
Chancellor Andy Burnham, who recently reduced VAT on electricity bills, stated that this measure is part of his administration's commitment to tackling affordability issues. Fahnbulleh, who has pledged a "pragmatic" approach to energy, reiterated that tackling affordability is her top priority and that she will continue to take steps to protect households from unaffordable bills.
The government's decision to eliminate standing charges was announced on the same day it approved oil production in the Jackdaw North Sea oil field, a move aimed at enhancing the UK's energy security. However, Labour has not yet decided on the fate of the larger Rosebank oil field.
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