John Healey has announced that the gas standing charge will be removed from household bills in the UK. The Treasury says the change could reach millions of households, and he will ask Oftem to end the practice in 2027 or as soon as possible afterwards.
The standing charge is a fixed daily fee that households pay even when they use little energy. The Treasury says the typical household pays £108 a year in standing charges, while about 60% of account-holding households could save around £45 on average.
Budget 2026 and household bills
The announcement came on budget day as part of John Healey’s first budget. He said: “Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.”
He also said: “My Budget will draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks.” Miatta Fahnbulleh said the change would make it easier for people to take control of their energy bills.
Miatta Fahnbulleh on bills
Fahnbulleh said: “Too many families face unfair charges, so we’re making it easier for people to take control of their energy bills.” She also said: “By removing one of the nation’s bugbears - taking standing charges off gas bills, with extra support for those who need it - we’ll give millions of people breathing space.”
The policy removes the separate daily fee, but the Treasury plans to shift its cost into the unit rate of energy instead. That means households will still pay for the same system through the price of each unit they use, rather than through a fixed charge attached to the account.
Oftem in 2027
Healey will ask Oftem to end the practice in 2027 or as soon as possible afterwards. The practical question for households is how the new unit rate is set, because the Treasury has not put a number on how much it will rise after the standing charge is folded into it.
For families with lower energy use, the removal of the fixed daily fee should matter most because they currently pay the same charge even when they draw little power or gas. Households with heavier use may see less of the benefit once the cost is spread across units, but the government says millions of people should still gain breathing space from the change.
