Healey scraps standing charges on household gas bills – Daily Business

More than 20 million households will no longer pay standing charges on their gas bills, as the government targets reform of the “broken energy market”.

Chancellor John Healey will also scrap green levies on bills and put them on general taxation. He will commit the government to removing the link between gas and electricity prices, which significantly inflates household bills, in the long term.

A standing charge is a fixed daily fee added to a gas bill, regardless of how much gas has been used. A household could use no gas at all but must pay the standing charge.

Mr Healey will ask Ofgem to deliver removal of these charges – £108 a year for the typical household on average – in 2027 or as soon as possible.

Instead, these fixed costs will be paid on the unit rate, which could save 60% of account-holding households around an average of £45 off their annual bill.

Mr Burnham said: “Abolishing gas standing charges is about basic fairness and giving people more control over their bills.

“I am determined to reform our broken energy market, so it better serves the public interest.”

Mr Healey added: “Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.

“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.”

Energy Secretary Miatta Fahnbulleh said: “Too many families face unfair charges, so we’re making it easier for people to take control of their energy bills.”

Greg Jackson, Founder and CEO of Octopus Energy Group, said: “This represents real joined-up thinking to make a fairer, more efficient energy system, delivering what customers want – lower standing charges and further improving the ratio of electricity to gas prices.”

The move on standing charges follows the cut in VAT on electricity bills that came into effect at the beginning of this month. However, this amounts to just £45 a year.

Energy levies axed

Mr Healey is expected to announce long-term plans to remove green levies from energy bills and put them on general taxation.

He will also commit the government to removing the link between gas and electricity prices, which significantly inflates household bills, in the long term.

The budget calculations will assume that Rosebank, an oil and gas field west of Shetland, is approved despite deepening cabinet splits on the plans.