John Healey used his live budget statement to announce that standing charges will be scrapped from household gas bills, with the change due next year or as soon as possible. He left 11 Downing Street carrying the red box before heading to Parliament, where he was due to deliver his first Budget at 12:30 GMT.
The Treasury said the change will save 60% of households an average of £45 per year. It will do that by moving the costs into the unit price of gas instead of charging a fixed amount on every bill.
11 Downing Street and Parliament
Healey’s walk from 11 Downing Street to Parliament gave the announcement its immediate political timing. The Budget speech followed the same route that has become familiar for Chancellors, but this one opened with a change aimed at household gas bills rather than the tax tables that usually draw the first reaction.
Paul Johnson, the economist and former head of the Institute for Fiscal Studies, said the scale of tax and spending changes in the Budget is expected to be limited. He said the policies will make “a little bit of difference over a short period of time,” and described the breathing space promised by Healey as a “very small amount.”
Treasury gas bill changes
The Treasury’s own figures show the effect will not be the same for every customer. While 60% of households are set to gain an average of £45 a year, higher gas users will pay more than they currently do because the fixed charge is being shifted into the unit price.
That leaves a simple calculation for households that use a lot of gas: if the standing charge disappears, the saving on the bill has to come from somewhere. The added cost will sit in each unit used, so the households that use less gas are more likely to benefit, while heavier users may lose out.
Paul Johnson on winners
Johnson said the change would produce “some people gaining and some people losing.” That is the central trade-off in the plan: a lower fixed charge for many households, but a higher price per unit for those whose usage is above average.
For readers who want to work out where they stand, the practical test is usage. Households that keep gas consumption low are closer to the group the Treasury says will save money; households with higher consumption are closer to the group that will pay more under the new structure.
Healey has said the change should happen next year, or sooner if possible. The speech at 12:30 GMT is the point where the government will set out how far it is willing to push the rest of the Budget after starting with energy bills.
