Gas Standing Charges Set for Removal for 23 Million Homes in 2027

Chancellor John Healey announced Monday that gas standing charges will be removed from bills for approximately 23 million homes beginning in 2027. The Treasury confirmed that Healey will formally detail the plan during his first Budget presentation scheduled for Wednesday.

The fixed daily fee currently costs households about £108 per year regardless of energy consumption. The Treasury stated Healey will instruct the regulator Ofgem to eliminate the charge "in 2027 or as soon as possible after." Fixed infrastructure costs would instead be incorporated into the unit rate of gas. The Treasury estimates that 60% of households could save an average of £45 annually under the new structure.

Prime Minister Andy Burnham stated, "Abolishing gas standing charges is about basic fairness and giving people more control over their bills." Healey described the current fees as "unfair and outdated" and said removing them would provide "breathing space" for millions. The standing charge currently funds maintenance and infrastructure upgrades for gas and electricity delivery.

Concerns remain regarding high-energy users. Some low-income consumers with high consumption could face higher costs if fixed fees move to the unit rate. The Treasury said it will "set out in due course targeted mitigation for a small number of households" to address this issue. Simon Francis, co-ordinator of the End Fuel Poverty Coalition, noted that millions of households will not see savings from the proposal. He added that the decision would bring relief to low-income households who use little energy and could prevent debt accumulation for prepayment customers.

The Budget announcement comes as household bills face upward pressure. Ofgem raised the energy price cap by 4% in October. Forecaster Cornwall Insight predicts a further 16% increase to £1,999 annually on January 1, representing a £276 rise from current levels. The government has temporarily removed the 5% VAT from electricity bills until March 31 next year, a measure expected to save households approximately £45. Gas bills remain subject to the 5% VAT.