Gas Standing Charges Scrapped for 23 Million Homes From 2027

Standing charges are to be taken off household gas bills, the government announced on 28 October 2026, ahead of the Chancellor's Budget. The Treasury says the change will reach around 23 million homes, ending a fixed daily fee that households pay whether they burn any gas or not.

The Chancellor, John Healey, will ask the energy regulator Ofgem to deliver the removal in 2027 or as soon as possible after. The government has not set a firm start date.

What is a gas standing charge and why is it being scrapped?

A standing charge is a fixed daily fee added on top of a household gas bill, regardless of how much gas has been used. A household could use no gas at all and would still have to pay it. The government describes this as an unfair and outdated practice.

Ministers put the average cost at £108 a year for a typical household. That is money many customers pay before a single unit of gas has been burned, and it has long been one of the more disliked features of the energy bill.

Healey said gas standing charges are unfair and outdated, and that scrapping them would give millions of households a bit of breathing space. Energy Secretary Miatta Fahnbulleh called them one of the nation's bugbears and said affordability was her number one priority. Prime Minister Andy Burnham described the move as basic fairness and about giving people more control over their bills.

Will I save money when gas standing charges are scrapped?

The charge is not simply being deleted and the cost written off. The announcement says the fixed costs will instead be paid on the unit rate. In practice that means the price per unit of gas will carry the costs that the daily fee used to cover, so households that use more gas will carry more of them.

The Treasury says this could save 60% of account holding households an average of around £45 off their annual bill. That is less than the £108 average standing charge, which reflects the fact that the money still has to be recovered somewhere. The announcement does not break down how the gap between the two figures arises.

The government also says households who do not see an automatic saving will still have better control over their bills, without the worry of affording a standing charge. It says it will set out in due course targeted mitigation for a small number of households, though it has not yet said who that will cover or what form the help will take.

Outside analysis suggests the effect on lower income households is not uniform. A government published review of options for improving energy bill equity for fuel poor households found that standing charges are regressive, placing a disproportionate burden on low income, low usage households. Charities say some older people already cut back on heating. Independent Age polling found 57% of older people in Great Britain living on a low income were cutting back on heating costs either a great deal or a fair amount, so a lower fixed charge could ease the pressure on those who ration gas. The announcement itself does not make that claim, and there is no official forecast of how much more gas any group will use.

The same review warns of the opposite effect for some households. Moving costs from standing charges to unit rates would disadvantage vulnerable high energy users, such as people with medical conditions and some elderly residents. It cites Ofgem figures suggesting around five million low usage households would benefit from a general shift of this kind, while one million high usage vulnerable households could face higher costs. That is Ofgem's estimate for a wider rebalancing rather than for this specific policy, but it explains why the government has promised targeted mitigation.

The timing of any saving matters too. Ofgem lists the gas standing charge under the price cap at 29.68p a day from 1 October to 31 December 2026, which works out at about £108 over a year and matches the Treasury's average. The charge is flat across the year, so in summer, when many homes use little gas, it makes up a bigger share of the bill. Folding those costs into the unit rate would shift that burden towards the colder months, when households use more gas. That is an explanation of how the mechanism works rather than a government claim. The Treasury has not published a seasonal breakdown, and its £45 figure is an annual average, so how a typical household's bill changes from month to month is not yet known.

Low income also covers more than pensioners and people out of work. Many working households are on low incomes, and the jobs market offers less room to move than it once did. The Office for National Statistics estimates UK vacancies at 691,000 in July to September 2026, down 37,000 on a year earlier, and the House of Commons Library notes they have been falling steadily since mid 2022, when they hit a record 1.29 million. The ONS figures do not break down vacancies by hours or pay, so they cannot show how many of the lost roles were part time.

The Treasury's figure comes with caveats. Its methodology note says the estimate uses the Treasury's Distributional Analysis Model, built on Office for National Statistics Living Costs and Food Survey data from 2018/19, 2019/20 and 2022/23. Gas spending is adjusted to match Ofgem's average unit rates and standing charges for October to December 2026, and the analysis uses the Office for Budget Responsibility's 2026 Spring Forecast assumptions. Impacts are calculated on a static basis, meaning they do not allow for any change in how people use gas.

What the Budget has to do with the standing charge change

The government says the move comes ahead of the Budget, which it says will draw a line in the sand on a UK energy policy that has seen wrong turns taken for more than four decades. The Prime Minister has previously spoken about reforming a broken energy market so that it better serves the public interest.

Healey said the Budget would target an energy policy that had failed British billpayers for years, letting extra costs pile up on bills and leaving households more exposed to global shocks. The full Budget measures were still to be announced when this article was published.

Greg Jackson, founder and chief executive of Octopus Energy Group, welcomed the plan. He called it joined up thinking that would deliver lower standing charges and further improve the ratio of electricity to gas prices. He said most customers would see a cut in their gas bills, with larger savings for those able to move to heat pumps when it suits them.

How does the gas standing charge cut sit alongside the electricity VAT cut?

The announcement follows the government's VAT cut on electricity bills, which took effect at the start of October. The government says the Energy Price Cap from October was £45 a year lower than it would otherwise have been because of the cut.

It adds that around a third of households on fixed tariffs are not covered by the price cap, so their electricity prices should also have fallen when the VAT cut took effect.

Ministers also point to longer term action. Last week the government announced a new Energy Wealth Fund, which it says will support investment in cheap, clean power. The government frames the standing charge change as short term relief running alongside that effort to fix what it calls Britain's energy problems.

What happens next for gas standing charges?

The next step is for Ofgem to work out how to remove the charges. The announcement says the Chancellor will ask the regulator to deliver this in 2027 or as soon as possible after, which leaves the timetable open. The methodology note refers to the fixed costs being paid on the unit rate by the end of next year, so households may reasonably expect the change to arrive during 2027, but the government has not committed to an exact date.

Households do not need to do anything now. Existing bills and tariffs are unchanged until Ofgem acts. Further detail on the targeted support for those who do not benefit automatically is expected, according to the government, in due course.

The Budget announcement later today may add more on how the policy will be delivered. Until then, the confirmed position is the one set out by the Treasury, standing charges are going, costs move to the unit rate, and a majority of account holding households are expected to be better off by around £45 a year on average.