Healey to scrap gas standing charges, expected to save 60% of households about £45 a year

Mixed · 2Chancellor John Healey will announce in his first Budget, due at 12.30pm on 28 October, that standing charges are to be removed from gas bills. 1 2 Mixed · 2He will ask Ofgem, the energy regulator, to ensure the charges go in 2027 or as soon as possible afterwards. 2 1 Mixed · 2Gas standing charges currently add about £108 a year to a typical household's bill, regardless of how much gas is used; under the change these costs would be absorbed into the unit rate. 1 2

Mixed · 2The Treasury expects 60% of households to pay about £45 a year less. 1 2 Centre · 1The Treasury says the change covers around 23 million homes. 3 Centre · 1MoneySavingExpert founder Martin Lewis, who was in No 11 on Budget morning, said Healey told him he would also seek to remove electricity standing charges, which is "trickier" and would take longer. Lewis predicted the gas change would arrive with the 1 October 2027 or 1 January 2028 price cap change, with the cost shift adding "just under 1p per kwH" to unit rates, and said about 60% would pay less and 40% more, the dividing line being around 12,500 kilowatt hours of gas a year. 3

Left · 1On BBC Breakfast, Octopus Energy chief executive Greg Jackson said the "vast majority" of families would be better off, with "a few" very large, high-gas homes paying a bit more. Presenter Jon Kay put it to him that the government figure of three fifths means many busy households could be worse off; Jackson replied that gas use has fallen 17% in a year or two and that without standing charges households get more benefit from saving gas. He also cited a possible £195 total saving, combining the gas change with the electricity VAT cut and the removal of some taxes. 4 Mixed · 2The government said it will set out targeted measures for a small number of households that do not see an automatic saving. City A.M. reports that Energy Secretary Miatta Fahnbulleh had earlier acknowledged fears that low-income households who use a lot of gas could be hurt. 1 2 Mixed · 2Healey called the charges "unfair and outdated" and said the Budget would "draw a line in the sand" on an energy policy that has failed billpayers for years. Prime Minister Andy Burnham, who last week asked Healey and Fahnbulleh to examine removing the charges, called the move "basic fairness". 1 2

Mixed · 2Fahnbulleh said the move removes "one of the nation's bugbears" and that tackling affordability is her "number one priority". Octopus Energy founder Greg Jackson welcomed it as "real joined-up thinking" that would deliver a "more efficient energy system". 2 1 Mixed · 2Simon Francis of the End Fuel Poverty Coalition welcomed the move as real relief for low-income, low-use households and prepayment customers, but said millions will not see a saving and ministers must explain how vulnerable high-need households will be protected. The Times reported Healey will also move green levies from bills to general taxation. 4 3 Left · 1Ofgem says standing charges recover the costs of providing and maintaining the wires, pipes and cables to a customer's door, and of running energy companies. Under the current price cap, average Direct Debit standing charges are 29.68p a day for gas (about £108 a year) and 54.83p a day for electricity (about £200 a year). 1

Left · 1The Mirror notes that bills rose 4% in October, taking the average dual-fuel bill from £1,663 to £1,723, and that Cornwall Insight predicts the cap could reach £1,999 in January. The government has temporarily removed 5% VAT from electricity bills until 31 March, worth about £45 a year, while gas still carries 5% VAT. 1 Centre · 1Lewis noted that a 27% price cap rise is expected in January and said he expected an announcement of support that day, possibly via a bigger Warm Homes Discount or a payment to council tax bands A-D households; this is his reading of what Healey told him, not a confirmed policy. 3 Right · 1City A.M. places the announcement against Healey's shrinking fiscal headroom, which it says leaves him little room for manoeuvre. 2

Mixed · 2The Times reported the Budget forecasts assume the Rosebank oil field will be approved; Green Party leader Zack Polanski criticised this and called the Budget a "catastrophic let down" offering "cosmetic tweaks". City A.M. notes the government approved Jackdaw last week and Labour has yet to decide on Rosebank. 3 2