UK Government to Scrap Gas Bill Standing Charges for Millions of Households

The UK government has announced plans to abolish standing charges on gas bills for millions of households, with Chancellor John Healey saying the move is intended to ease the cost of living ahead of the government’s Budget. The Treasury said the change is expected to affect around 23 million homes, with the new arrangement scheduled to take effect in 2027 or as soon as possible afterwards, subject to implementation by energy regulator Ofgem.

Standing charges are fixed daily fees that households pay for their gas supply regardless of how much energy they use. The charges help cover the costs of maintaining and operating the gas network. Under the proposed changes, these fixed costs will instead be recovered through a slight increase in the price charged for each unit of gas consumed.

According to the Treasury, the reform could save approximately 60 per cent of households an average of £45 annually. However, the actual impact will depend on how much gas a household uses, meaning some customers could benefit more than others. Households that use more gas may face higher unit costs under the new system.

Healey described the existing charges as unfair and outdated, saying their removal would give households greater financial breathing space. Prime Minister Andy Burnham also backed the proposal, arguing that abolishing standing charges would make the energy market fairer and give consumers more control over their bills.

The announcement comes as the government prepares to present its Budget, with household expenses and energy affordability expected to feature prominently. Gas bills have remained a concern for consumers amid wider cost of living pressures and uncertainty in global energy markets.

Although the policy is expected to reduce the fixed charges appearing on gas bills, it does not mean that gas will become free or that every household’s overall bill will automatically fall. Customers will still pay for the gas they consume, and the revised unit rate will determine how the change affects their final costs.

The government has asked Ofgem to implement the reform in 2027 or as soon as possible afterwards. Further details are expected to clarify how energy suppliers will adjust tariffs and how the change will affect households with different levels of gas consumption.