Millions of British households could save around £108 a year under government plans to scrap gas standing charges, as Prime Minister Andy Burnham seeks to ease the pressure of rising energy costs.
Mr Burnham has asked Chancellor John Healey and Energy Secretary Miatta Fahnbulleh to examine whether the fixed fees, which households pay regardless of how much gas they use, can be removed.
Speaking during Prime Minister’s Questions, Mr Burnham told MPs: “I have asked the Chancellor and the Energy Secretary to look at whether we can remove standing charges from gas bills, and to report back to this House at the earliest opportunity.”
The announcement followed a challenge from Conservative leader Kemi Badenoch over how the government intends to help households struggling with their bills.
According to energy regulator Ofgem, the average gas standing charge for customers paying by Direct Debit is 29.68p a day, equivalent to approximately £108 annually. Charges vary depending on location and payment method, with prepayment customers and those paying on receipt of their bills facing different rates.
Standing charges cover costs including maintaining and improving the energy network. Removing them would not eliminate these expenses, however, and suppliers could seek to recover the money through higher unit rates.
The resulting savings would therefore depend on how the government structures any replacement system and how energy companies adjust their prices.
The review comes as ministers face growing pressure to demonstrate that their energy policies can deliver meaningful relief for consumers.
On Wednesday, Ms Fahnbulleh approved the Jackdaw gas field in the North Sea, approximately 150 miles east of Aberdeen. Production is expected to begin within weeks, with the project forecast to increase domestic gas production by around 6 per cent at its peak and provide an estimated £2.9bn boost to the economy.
The development is also expected to create 27 jobs and safeguard another 273.
Mr Burnham said the decision would “protect hundreds of jobs and help keep millions of homes warm this winter”.
“At a time when people are really struggling, it’s right that we look in a responsible way at maximising the existing energy reserves we have in Britain that could help,” he added.
Yet increased domestic production is not expected to bring down household bills directly. British gas prices remain heavily influenced by global markets, leaving consumers exposed to international volatility despite additional supplies from the North Sea.
Chancellor John Healey defended the project amid uncertainty linked to conflicts in Iran and Ukraine.
“Now is the time, with the conflict and the rising prices, to make the most of our own homegrown energy through production from Jackdaw,” he said at the St Fergus gas terminal in Aberdeenshire.
The government has also announced a £2bn energy wealth fund to channel additional North Sea oil and gas tax revenues into renewable and low-carbon projects.
However, energy minister Michael Shanks acknowledged that Britain would remain a net importer of fossil fuels.
Environmental campaigners and some Labour MPs have criticised the Jackdaw approval, arguing that expanding North Sea production will do little to ease household bills.
For ministers, the immediate challenge is turning promises on energy security into tangible savings. Scrapping standing charges could provide visible relief, but until the review concludes, the potential £108 reduction remains a possibility rather than a guarantee.
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