Chancellor Healey Scraps Gas Standing Charges for 23m Homes 2026

Chancellor John Healey is abolishing gas standing charges for 23 million homes, a move he says will end an “unfair and outdated” practice and save two-thirds of households an average of £45 a year. The announcement comes ahead of his first budget statement in the Commons later on Wednesday.

Healey will ask Ofgem, the energy regulator for Great Britain, to remove the charges – which currently cost the typical household £108 a year – next year or as soon as possible after. The Treasury estimates that 60% of account-holding households will benefit from the change.

What Are Gas Standing Charges?

A standing charge is a fixed daily fee added to a household gas bill, regardless of how much gas is used. Even if a household uses no gas at all, they still must pay the standing charge. These charges cover the cost of connecting a home to the gas network, maintaining pipes, and taking meter readings.

For the typical household, the gas standing charge amounts to £108 per year. This fixed fee has been criticized for penalizing low-income households and those who use little gas, as they end up paying a disproportionate share of their bill for the same service.

Why the Change Matters

The move is part of a broader effort to reform what the prime minister has called a “broken” energy market. Healey said: “Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.” He added that his budget will “draw a line in the sand on an energy policy that has failed British billpayers for years.”

Andy Burnham, who has been a vocal advocate for energy reform, 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.”

The change is expected to particularly benefit households that use little gas, such as those in well-insulated homes or those who rely on alternative heating sources. However, it remains to be seen how energy suppliers will recoup the costs of maintaining the gas network, which could lead to higher unit prices for gas consumption.

Who Is Affected?

The policy will affect 23 million households across Great Britain that have a gas connection. According to the Treasury, 60% of these households – around 13.8 million – will save an average of £45 per year. The remaining households may see smaller savings or potentially higher costs if suppliers adjust unit rates to cover network costs.

Critics argue that removing standing charges could lead to higher bills for high-usage households, as the fixed costs would be spread over unit prices. The government has not yet detailed how it will ensure that suppliers do not simply shift the costs elsewhere.

What to Watch Next

Healey’s budget statement on Wednesday will provide further details on the timeline and implementation of the policy. The government will need to work with Ofgem to formalize the change, which could take effect next year. The background to this story is set out in Chancellor Plans Major Intervention on Rising UK Energy Bills. A related thread runs through Energy Support Urged as Bills Rise 4% in Budget. Earlier coverage in John Healey Chancellor: Fiscal Hawk or Big Spender? shows how the argument developed.

Key things to watch include how Ofgem adjusts its price cap methodology, whether energy suppliers challenge the decision, and how the change interacts with other energy reforms. The prime minister has indicated that wider reform of the energy market is a priority, so this could be the first of several measures. A closer look at the same subject appears in Defence Shares Surge as John Healey Appointed Chancellor. Anyone following the wider picture can start with Defence Stocks Rise After John Healey Appointed Chancellor. The same theme surfaces in John Healey Chancellor: Fiscal Hawk or Big Spender? Analysis, which takes a different angle.

• Gas standing charges are fixed daily fees that households pay regardless of usage.
• The typical household pays £108 per year in gas standing charges.
• 60% of households will save an average of £45 per year.
• The change will be implemented via Ofgem, likely next year.
• Suppliers may adjust unit prices to recover network costs.
• The policy is part of a broader reform of the energy market.

How the Charges Compare

The table shows that gas standing charges are a fixed cost that every connected household bears, regardless of how much gas they use. Removing them will shift the cost burden, but the government argues it will make bills fairer. Context on how this played out before sits in Britain's Uninhabitable Homes: Why Cooling Strategies Are.

FAQ

As the government moves to implement this change, it will need to carefully manage the transition to avoid unintended consequences. The energy market is complex, and reforms must balance fairness with the need to maintain investment in infrastructure.

For a deeper look at how this policy fits into the broader energy landscape, see our analysis of Chancellor Healey to Scrap Gas Standing Charges on Energy Bills. This article provides additional context on the political and economic implications of the decision.

Households should stay informed about how their bills will change and what support is available. The government has promised to provide more details in the coming months, so keep an eye on official announcements.

Ultimately, the abolition of gas standing charges represents a significant shift in how energy costs are distributed. While it may bring savings for many, it also raises questions about the future of energy pricing and network maintenance.