Treasury Moves to Cut Gas Bills by Removing Fixed Daily Fees

Chancellor John Healey announced on Tuesday that the government will remove standing charges from gas bills for roughly 23 million homes. This move is scheduled to take effect next year or as soon as possible thereafter, according to the Treasury.

The change targets a fixed daily fee that households pay regardless of how much gas they use. Currently, this charge adds £108 to a typical household’s annual bill. Under the new plan, consumers will no longer pay this fee if they use no gas during a billing period.

Healey made the announcement ahead of his first budget statement in the House of Commons, which is set for later this week. He intends to instruct Ofgem, the energy regulator for Great Britain, to strip these charges from the system. The Treasury estimates that the reform will benefit sixty percent of account-holding households.

The average annual saving for a home will be £45. Healey described the current practice as unfair and outdated. He said the decision is designed to give millions of households some breathing space after years of rising costs.

Energy Secretary Andy Burnham called the abolition a matter of basic fairness. He said the government aims to give people greater control over their bills and reform a broken energy market. Burnham noted that the prime minister asked the Treasury to investigate the issue just one week ago.

Miatta Fahnbulleh, who also holds the title of energy secretary, added that she would continue to do everything possible to protect people from unaffordable bills. She said the goal is to stabilize household energy costs and improve the efficiency of the energy system.

Greg Jackson, chief executive of Octopus Energy Group, welcomed the move. He said the change delivers what customers want, specifically lower standing charges. Jackson noted that most customers would see a cut in their gas bills, with higher savings possible for those who switch to heat pumps.

This decision follows a VAT cut on electricity bills implemented at the beginning of October. That measure lowered the Ofgem price cap by £45 per year. The government also recently approved the Jackdaw gasfield in the North Sea and created a new energy wealth fund to support investment in cheap and clean power sources.