John Healey is preparing to abolish gas standing charges for millions of households, promising to end what he calls an “unfair and outdated practice” in a reform that could cut bills for some consumers but leave others paying more.
The Chancellor will ask energy regulator Ofgem to remove the fixed daily charges in 2027, or “as soon as possible after”, shifting the costs into the price households pay for each unit of gas they consume.
Standing charges currently cost a typical household about £108 a year, regardless of whether its heating is switched on. Under the proposed changes, about 60 per cent of households are expected to save an average of £45 annually.
The move offers the government a politically attractive way to demonstrate action on the cost of living without necessarily reducing the underlying cost of supplying energy. By replacing fixed charges with higher unit prices, the reform would redistribute costs between households rather than eliminate them.
Edward Gurney, founding director of Solar and Battery Company, welcomed the announcement but warned that consumers should not confuse removing a charge with a reduction in their overall bills.
“The costs currently covered by standing charges aren’t going away,” he said. “They’re being added to the price households pay for every unit of gas they use.”
That distinction could prove decisive. Households in well-insulated properties that use relatively little gas may benefit from the changes, while families heating larger or less energy-efficient homes could face higher costs as the price per unit rises.
Gurney called on the government to publish an independently verified assessment showing how the reform would affect different types of households, arguing that the relevant measure should be the total annual energy bill rather than the standing charge in isolation.
The proposal comes as ministers face pressure to make energy more affordable after years of volatility in wholesale gas markets. But restructuring bills will not insulate consumers from international price shocks or resolve the underlying cost of energy.
Gurney argued that the government should go further by making cheaper electricity tariffs more accessible, maintaining VAT relief on solar panels and battery storage, and improving access to affordable finance for households seeking to install renewable technology.
Solar panels and batteries could allow suitable properties to generate and store electricity, potentially reducing reliance on grid energy. But financial returns depend on installation costs, household consumption, and available tariffs.
For Healey, the reform presents a delicate balancing act. Scrapping standing charges could make bills fairer for some consumers and remove a visible source of frustration. Yet unless the government can demonstrate that households are paying less overall, the policy risks being seen as a change in how energy costs are presented rather than a lasting solution to Britain’s energy affordability problem.
Gurney said: “For households who’ve been frustrated at paying a daily charge before they’ve even switched the heating on, today’s announcement will be welcome news, and any proposal to bring down energy costs is a step in the right direction. But there’s an important detail people need to understand. The costs currently covered by standing charges aren’t going away. They’re being added to the price households pay for every unit of gas they use.”
“That means the savings will depend heavily on individual circumstances. Someone in a well-insulated home who uses relatively little gas could benefit, while a family heating a larger or less energy-efficient property may find themselves paying more. There’s a big difference between genuinely reducing energy costs and simply moving them from one part of a bill to another. What matters in the end is whether households are paying less overall.”
“I’d like to see the Government go further and publish a clear, independently verified assessment of how this change will affect different types of households. It should look at the total annual energy bill, not just the standing charge, so people can see who stands to benefit and who might end up paying more.”
“There’s also the bigger question of how we make energy bills more affordable in the long term. We’ve seen how quickly international events can push up wholesale gas prices, and changing the way bills are structured doesn’t tackle the underlying cost of energy. Affordable, abundant electricity is something we should all be working towards, and it’s one of the reasons we’re in the renewable energy industry in the first place.”
“One positive outcome of this reform is that it could get more people thinking about how they heat and power their homes. We should be making it easier for households to use cheaper electricity, store it for when they need it and, where their property is suitable, generate some of their own. Solar panels and battery storage can help with that, although the financial benefits depend on the property, the installation costs and how the system is used.
“The Government’s estimated £45 annual saving will make a difference to some households, but we need to look beyond individual changes to bills and ask how people can gain more control over their energy costs. Making cheaper electricity tariffs accessible to battery owners, keeping VAT relief on solar panels and batteries, and giving people a sensible, affordable way to finance the equipment would all help.”
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