Chancellor Healey to Remove Standing Charges and Cut Household Gas Bills by Up to £50
In the upcoming Budget, Chancellor John Healey will eliminate standing charges on gas bills and introduce measures that could lower annual household gas costs by £22-£50, while overall energy bills are expected to remain high.
Chancellor John Healey will use the Budget to eliminate the fixed daily standing charges that households currently pay on gas supplies, shifting those costs to the price per unit of energy used. Industry estimates suggest the reform could reduce typical annual gas bills by between £22 and £50, though average household energy costs are still projected to exceed £2,000 in the coming months.
The change is intended to benefit most households, but heavier energy users may face higher expenses due to a new charge linked to boiler usage. Citizens Advice warned that the reforms could disproportionately affect elderly residents in larger homes and families with young children who require more heating.
Energy regulator Ofgem and Greater Manchester Mayor Andy Burnham have supported the removal of standing charges on gas, while standing charges on electricity will remain unchanged.
The Treasury will also introduce a “levy control” framework that gives the Treasury and No 10 greater oversight of future green levies, a move described by a source as limiting the Department for Energy Security and Net Zero’s ability to add levies to bills.
Net-zero levies currently represent up to 18% of electricity bills and 7% of gas bills, with analysts estimating that electricity costs could rise by more than £260 over the next decade as these charges fund projects such as wind farms and hydrogen production.
Healey said the package will "give households breathing space from some of the everyday costs, provide targeted support for businesses and self-employed people, and start the long-term action needed to get energy costs down for good." He also pledged to balance the public finances while maintaining fiscal discipline.
The announcement comes as energy supplier EDF forecasts a 27% rise in typical household bills to nearly £2,200 in the new year, driven by higher wholesale gas prices. The price cap, currently £1,723 a year, could reach £2,389 from April.
Opposition figures, including shadow chancellor Andrew Griffith, called for broader fiscal decisions on social care, welfare and defence to be addressed in the Budget.