Fixed daily charges on household gas bills are to be abolished, with around 23 million homes affected. Chancellor John Healey is asking energy regulator Ofgem to remove the charge in 2027, or as soon as possible after that date, so households will not see the change on their next bill but should benefit within the next year or so.

What changes and who saves

A standing charge is a fixed daily fee paid regardless of how much gas a household uses, currently costing a typical household about £108 a year. Under the new approach, the fixed costs now recovered through that charge would instead be collected through the unit rate, the price paid per unit of gas used. The Treasury estimates that about six in ten households would save an average of £45 a year as a result. The benefit is expected to be greatest for lower users, because a fixed fee makes up a larger share of a small bill, while very heavy users could pay more once costs shift to the unit rate.

Why ministers say reform is needed

Ministers have presented the change as a fairness measure and part of a wider overhaul of the energy market. Prime Minister Andy Burnham has described abolishing the charge as a matter of basic fairness that gives people more control over their bills. The Chancellor has said the current system is outdated and unfair, and that scrapping the charge will give millions of households some breathing space after years in which extra costs have built up on bills and left households exposed to global price shocks.

Sources: PA via AJ Bell and MoneySavingExpert.