Gas Standing Charges Scrapped: Who Gains, Who Pays More

Chancellor John Healey is set to scrap standing charges on gas bills in Wednesday's Budget, removing a fixed daily fee of 29.68p from around 23 million UK households. The charge will not disappear from bills the roughly £108 a year it collects moves into the per-unit gas rate instead, and the change is not expected before 2027.

That second sentence is the whole story, and it is the part that will get lost today.

What a standing charge actually is

If you are outside the UK, or you have simply never read the second page of your bill, the standing charge is the fee you pay for being connected at all. It is charged every day, at a flat rate, whether you use gas or not. Leave the house for a month and the meter at zero still costs you about £9.

Under the current Ofgem price cap, the average gas standing charge is 29.68p a day £108.33 a year, including 5% VAT, with regional variation.

That design has an obvious unfairness in it. A household in a small flat using very little gas pays the same connection fee as a household heating five bedrooms. The charge is also the reason energy bills feel immovable: a chunk of the total does not respond to anything you do.

Healey's line, briefed ahead of the speech, is that the charges are "unfair and outdated, so I am scrapping them." Prime Minister Andy Burnham framed it as "basic fairness and giving people more control over their bills."

Moved, not removed

Here is what the announcement does not say in its headline.

The £108 is not being written off. It is being folded into the unit rate the amount you pay per kilowatt hour of gas. The suppliers' revenue is intended to stay broadly the same; what changes is how it is collected.

The practical effect is that your gas bill becomes more responsive to your consumption. Burn less, pay noticeably less. Burn more, pay noticeably more. For most households that is an improvement, and it is why the policy is popular: in a Martin Lewis poll of 52,000 people, 95% supported cutting or scrapping the standing charge even when told the cost would move to the unit rate.

NEWS. Gas standing charges to be scrapped! Instant reaction, more analysis later (Sorry about poor sound) https://t.co/0lGP2oVbiG

— Martin Lewis (@MartinSLewis) October 28, 2026

But it is a redistribution, not a cut. Someone pays for your £45.

The numbers do not agree, and you should know that

This is worth being straight about, because the figures circulating today come from different models and do not reconcile.

• The Treasury estimates 60% of households save about £45 a year.
• Uswitch puts the unit rate rise at about 0.94p, from 7.97p to roughly 8.9p per kWh. On its figures a household using 7,000 kWh a year saves about £40; one using 14,000 kWh pays about £25 more; break-even sits around 11,500 kWh, which it describes as typical usage.
• MoneySavingExpert models a larger rise, from 7.97p to 9.11p, and works from a 9,500 kWh benchmark.
• Nesta, the innovation foundation, has said 63% of dual-fuel households would be better off without the charge, but its earlier estimate of the typical saving was £27 a year, not £45.

Two different unit rates, two different definitions of a typical household, three different savings figures. None of them is dishonest they rest on different consumption assumptions and different price-cap periods but anyone quoting a single confident number today is picking one and hiding the rest.

What is not in dispute: the saving is in the tens of pounds, not the hundreds, and it is not the same for everybody.

Who actually loses

High gas users. That is households with poor insulation, older housing stock, electric-free heating systems, and anyone who simply needs the heating on more.

The last group is the problem. Some people burn more gas not through choice but through circumstance: a chronic illness that makes cold dangerous, a disability that keeps someone at home all day, a baby in the house, a flat that cannot hold heat. Those households are the ones a consumption-weighted bill punishes, and they are the least able to respond by turning the thermostat down.

The Treasury has acknowledged this. MoneySavingExpert reports that "targeted mitigation" for a small number of high-use households will be announced "in due course."

In due course is doing a lot of work in that sentence. The mitigation is the part of this policy that determines whether it is a fairness measure or a transfer from the cold to the comfortable, and it is the part that has not been written yet. It is the thing to press ministers on this week.

Not this winter

If you are hoping for a smaller bill in January, this is not it.

The Treasury's formulation is that the change will happen "in 2027 or as soon as possible after." MoneySavingExpert expects it to be aligned with an Ofgem price cap change, which points to 1 October 2027 or 1 January 2028. Standing charges are embedded in the cap's structure and in supplier billing systems, so the mechanics take time.

Electricity standing charges are not included. They remain, and the government has said it will set out reform proposals next year. Uswitch reports the process for electricity is different and will take longer. So a dual-fuel household — paying roughly £300 a year in standing charges across both fuels is losing one of the two.

Uswitch also reports that the change covers England, Scotland and Wales. Northern Ireland runs a separate energy market and is not included on that account, which was the only one of the sources reviewed to address it.

What else happens today, and when

Healey delivers the Budget at 12:30pm GMT on Wednesday 28 October, immediately after Prime Minister's Questions, which begins at midday. That is 6:00pm in India and 8:30am on the US East Coast. Britain came off summer time on 25 October, so GMT applies. The Office for Budget Responsibility publishes its forecast the same day.

The backdrop is not comfortable. UK public debt has passed £3 trillion for the first time, and servicing it absorbs about 8% of government spending. Inflation is at a near one-year high of 3.5%. The Institute for Fiscal Studies puts the Chancellor's fiscal headroom at roughly £11bn, down from about £24bn. Healey has ruled out rises in income tax, employee National Insurance and VAT, which narrows his options considerably reported alternatives include a higher surcharge on bank profits and increased gambling duties.

He is doing this three months into the job. Healey resigned as Defence Secretary on 11 June over defence funding; Keir Starmer announced his resignation on 22 June after poor local election results and a run of ministerial departures; Andy Burnham was elected Labour leader unopposed and became Prime Minister on 20 July, appointing Healey to the Treasury the same day. This is the new government's first Budget, and the first real test of whether the markets will extend it any patience.

What to do with this

Nothing, yet and that is the honest answer.

There is no action to take, no tariff to switch to and no form to fill in. The change is a year or more away and will arrive through the price cap automatically. The one practical note is that if you are choosing a fixed tariff now, the standing charge structure you are agreeing to is the current one; the reform will not retroactively rewrite a fix you signed.

If you want to know which side of this you fall on, the figure that matters is your annual gas consumption in kWh, which is on your bill or in your supplier's app. Below roughly 11,500 kWh on Uswitch's model, you gain. Above it, you pay more. That is a cleaner answer than any average.