Gas bill standing charges to be scrapped for millions, Treasury says ahead of Budget

Standing charges on gas bills, which cover the cost of delivery to homes and businesses, will be scrapped from 2027 “or as soon as possible after”, the Treasury said.

Standing charges are fixed daily fees applied separately to gas and electricity bills, which customers pay regardless of use.

Ofgem will aim to deliver the removal of these charges "in 2027 or as soon as possible after", the Treasury says.

It also says that "targeted mitigation for a small number of households" will also be laid out.

Under the current energy price cap, the gas standing charge is £108 a year on average, which customers pay regardless of what they use.

Mr Healey will deliver his first Budget in the Commons on Wednesday afternoon and said the change will give families “breathing space” and make the energy system fairer.

Instead, fixed costs will be paid on the unit rate, which the Treasury said could save 60% of households an average of £45 on their annual bills.

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Mr Healey added: “Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.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

In his eve-of-Budget video, Mr Healey said: “Breathing space for today and fresh hope for the future. That's what today's Budget will deliver.

“The world’s a highly uncertain place. Conflicts abroad are pushing up energy prices, and the cost of living here at home – piling pressure on the families, on businesses, and on our public finances.

“But Britain's economy is showing real signs of resilience: investments up, productivity is growing, and we had the joint fastest growth in the G7 in the first half of this year.”

It is understood that Mr Healey wants to find money to help the poorest households with energy bills as well as freeze fuel duty again.