Chancellor Healey scraps gas standing charges for 23 million UK homes
The move removes a fixed annual fee averaging £108, shifting costs to unit rates to save the typical household £45, while import tariffs on food and fertiliser drop to lower grocery bills.
By Samir Patterson ·
Chancellor John Healey will announce the removal of fixed standing charges from household gas bills for approximately 23 million homes during his Autumn Statement at 12.30 pm on Wednesday, October 28. The Treasury confirmed that this measure targets a fixed daily fee that households pay regardless of gas consumption, a cost that averages £108 per year for the typical home. By transferring these fixed costs to the unit rate, the government projects an average annual saving of £45 for 60 percent of account-holding households. The change is scheduled to take effect in 2027 or as soon as possible thereafter, following a directive to Ofgem.
Healey, a former defence secretary, framed the decision as a necessary correction to what he called an "unfair and outdated" energy policy. He stated that the Budget aims to provide "breathing space for today and fresh hope for the future" amid rising global energy prices and domestic cost-of-living pressures. Prime Minister Andy Burnham, who marked 100 days in office earlier this week, described the abolition of the charges as a matter of basic fairness. He expressed a determination to reform the energy market to better serve the public interest. Energy Secretary Miatta Fahnbulleh characterized the standing charge as a "nation's bugbear" and said its removal would give millions of people breathing space from unaffordable bills.
The Budget includes five other measures announced ahead of the speech, labeled as practical fixes for working families. The government will freeze the tax-free mileage rate at 55 pence per mile for the first 10,000 business miles for three million people who drive for work, such as nurses and builders. For mileage above 10,000 miles, the rate increases from 25 pence to 35 pence. Additionally, import tariffs will be scrapped for more than 100 products, including supermarket staples and fertiliser. The government estimates this will save households up to £21 on food shopping annually, or 40 pence per week, while supporting farmers facing higher input costs.
Parental support will expand to include more than 150,000 additional parents per year, covering self-employed fathers and partners who previously missed out. Eligible parents will receive two weeks of support worth up to £194 per week. The government also plans to install hundreds of additional Post Office drop boxes, bringing the total network to 1,000 locations. This aims to reduce queuing times for parcel sends and returns. The Prime Minister pledged to upgrade up to 600 Post Office branches by the end of the financial year. Finally, rules for carer's allowance will change to remove a cliff edge that currently penalises unpaid carers for earning slightly over a weekly limit. Going forward, support will taper by £1 for every additional £1 earned, rather than ending entirely.
Reaction to the gas bill changes has been mixed. The Greens criticised the move as tinkering by a government failing to take bold action against the cost-of-living crisis. A party spokesperson noted that energy bills have skyrocketed in recent years and are set to rise by hundreds of pounds this winter. Simon Francis, co-ordinator of the End Fuel Poverty Coalition, welcomed the removal of standing charges for low-income households using little energy, noting it could stop debt building up in summer months for prepayment customers. However, he warned that millions of households with high energy needs would not see a saving, leaving ministers with questions about how to protect vulnerable groups.
Greg Jackson, founder and chief executive of Octopus Energy Group, described the plan as joined-up thinking that delivers lower standing charges. He suggested that most customers would see a cut in gas bills, with further savings possible if they switch to heat pumps. The Treasury stated that households not seeing an automatic saving will retain better control over their bills. The government will set out targeted mitigation measures for a small number of households in due course. The Budget speech will follow Prime Minister's Question Time, with political editor William Telford and business editor Hannah Baker tracking the announcements for their impact on household finances.
