UK gas standing charges scrapped is the headline household measure announced ahead of Chancellor John Healey’s first Budget on Wednesday 28 October 2026. The Treasury said standing charges on gas bills will be scrapped from next year for around 23 million homes, trending per news coverage, in a change the government presents as “breathing space” for households squeezed by the cost of living. The fixed daily fee, which costs a typical household around £108 a year whether any gas is used or not, will be removed after the Chancellor asks energy regulator Ofgem to act “in 2027 or as soon as possible after”. The cost will not vanish from the energy system. It will be moved into the price households pay for each unit of gas they use. The Treasury estimates that 60% of households will save an average of about £45 a year as a result, while the remaining 40% — generally higher gas users — could pay more. That split is the single most important detail in the announcement, and it is why the change has been welcomed by campaigners and questioned by charities in the same morning.
Healey was due to deliver his first Budget in the House of Commons on Wednesday afternoon, and the standing-charge announcement was made by the Treasury on the morning of the Budget. MoneySavingExpert founder Martin Lewis, who met Healey at No 11 Downing Street that morning, confirmed the change after the meeting and said he had campaigned against standing charges for about six years. Prime Minister Andy Burnham said abolishing gas standing charges was “about basic fairness and giving people more control over their bills” and that he was “determined to reform our broken energy market, so it better serves the public interest”. Healey said: “Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.”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 would “draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks.”
UK Gas Standing Charges Scrapped: What Is a Standing Charge?
A standing charge is a fixed daily fee added to an energy bill simply for being connected to the network. It does not pay for the gas or electricity a household actually uses. It covers the cost of delivering energy to homes and businesses, including essential maintenance and infrastructure upgrades to the pipes and wires. Under the energy price cap in place from 1 October 2026, the gas standing charge was about 29p to 30p a day, which adds up to around £108 over a year for a typical household. The charge is paid every day, including days when no gas is used at all, and it cannot be reduced by turning the heating down, using less hot water, or going away on holiday.
That “pay even if you use nothing” feature is exactly what critics objected to. Lewis has long called the standing charge a “moral hazard” and “a poll tax on energy”, arguing that it disincentivises people from cutting their energy use because the first £108 of the annual bill is unavoidable however careful they are. A household that cuts its gas use sharply still pays the full standing charge, so the saving from using less is smaller than it should be. Low users — including single-person households, people who are away for long periods, and homes that use gas only for cooking or hot water — pay the same fixed fee as large, high-use households. Prepayment customers face a sharper version of the same problem: the standing charge can keep building up as debt even in summer months when little gas is used. Simon Francis, coordinator of the End Fuel Poverty Coalition, said removing the gas standing charge would bring “real relief to many low-income households who use very little energy” and could stop debt building up for prepayment customers in the summer months.
Scrapping the charge does not mean the network costs disappear. Pipes still need maintenance, and the money still has to come from somewhere. The government’s plan is to recover those fixed costs through the unit rate — the price paid for each kilowatt hour (kWh) of gas. In practice, that means the price per unit rises a little, while the unavoidable daily fee falls away. Every unit a household saves will then save the full unit price, which is why supporters argue the change rewards energy saving in a way the current system does not. Octopus Energy chief executive Greg Jackson welcomed the change, saying most customers would see lower gas bills and that households could make further savings by switching to heat pumps, while also noting that turning off a radiator in an unused room would now deliver more benefit than before.
How Much Will I Save When Gas Standing Charges Are Scrapped?
The Treasury’s headline estimate is that 60% of households will save an average of about £45 a year. The other 40% will pay more, because the higher unit rate will outweigh the £108 they no longer pay as a standing charge. Where an individual household falls depends almost entirely on how much gas it uses in a year. Martin Lewis, reporting his conversation with the Chancellor, estimated that the £108 cost would be shifted onto unit rates at just under 1p per kWh, although the exact figure has not been confirmed. On that estimate, the break-even point — the annual usage at which the higher unit rate exactly cancels the £108 saving — sits at roughly 12,500 kWh of gas a year. Use less than that, and the household should pay less overall. Use more, and it should pay more.
To put that in everyday terms, a household using 8,000 kWh a year would save the £108 standing charge and pay roughly £80 more in unit-rate costs, leaving a net saving of roughly £28. A household using 12,500 kWh would come out roughly even. A household using 20,000 kWh would pay roughly £75 more in unit-rate costs than the £108 it saved, leaving a net extra cost of roughly £75. Those are illustrations based on Lewis’s estimate of just under 1p per kWh, not confirmed bills, and the final unit-rate increase will be set through the price-cap process with Ofgem. Industry figures reported in coverage of the announcement suggested the 40% who lose out could pay between £25 and £70 extra a year. That range has not been confirmed by the Treasury and should be treated as an estimate from industry sources, not an official figure. The Treasury’s own confirmed numbers are the £108 typical standing charge, the 60% share of households expected to save, and the average saving of about £45 a year for that group.
Lewis also noted that the majority of households in every income group up to £100,000 would pay less, with higher-income, higher-use households more likely to pay more. That pattern matters because it complicates a simple “winners and losers” story: the change is not mainly a transfer from rich to poor or poor to rich, but a transfer from low gas users to high gas users, whatever their income. A low-income household in a draughty, poorly insulated home that needs a lot of gas to stay warm could therefore be worse off, while a higher-income household in a small, well-insulated flat that uses little gas could be better off. That is why the Treasury’s promise of “targeted mitigation for a small number of households” matters so much, and why charities are pressing for detail on who will qualify and how the support will work before the change takes effect.
UK Gas Standing Charges Scrapped: Who Gains — and Who Could Pay More?
The clearest gainers are households that use little gas. They include people living alone, households with no gas central heating, second homes that stand empty for parts of the year, and anyone who has already cut gas use sharply through insulation, lower thermostat settings, or more efficient boilers. For those households, the standing charge is a disproportionately large share of the bill, and removing it can cut the annual total even before any further energy saving. Jackson pointed to official figures showing a 17% reduction in gas consumption over the last year or two, as households took more control of thermostats and boiler flow temperatures, and argued that standing charges had meant those households did not get the full benefit of using less. Removing the charge, in his account, finally lets energy saving show up in full on the bill.
Prepayment customers are another group campaigners expect to benefit. Because the standing charge accrues daily regardless of use, prepayment meters can build up debt during warm months when gas use is low, leaving customers to repay that debt when the heating goes back on. The End Fuel Poverty Coalition welcomed the change for that reason, while adding that it would wait to see whether Healey matched his words with more action in the Budget itself. Households that have already switched away from gas, or that use gas only sparingly, will also see a straightforward benefit, since they will no longer pay £108 a year for a connection they barely use.
The households most at risk of paying more are high gas users, and the concern is sharpest where high use is not a choice. Older people in draughty homes, families in large or poorly insulated properties, and households with medical needs that require the heating to stay on can use far more than the 12,500 kWh break-even level through necessity rather than waste. Energy charities have warned that some older people already under-heat their homes because unit rates are high, and that raising the unit rate could deepen that problem unless mitigation is in place. Lewis called for support for vulnerable higher users who will have to pay more, and the Treasury said ministers would “set out in due course targeted mitigation for a small number of households”, adding that those “not seeing an automatic saving will still have better control over their bills without the worry of affording the standing charge”. No eligibility criteria, payment levels, or start date for that mitigation had been published at the time of the announcement. Lewis’s warning was blunt: support for those affected “must be in place before this change happens, not promised in due course.”
When Do Gas Standing Charges End, and What About Electricity?
Gas standing charges will not disappear from the next bill. The Treasury said Healey will ask Ofgem to remove the charges “in 2027 or as soon as possible after”, which means the change is a 2027 measure, not an immediate one. Lewis’s guess, based on his meeting with the Chancellor, was that removal could take effect at either the 1 October 2027 price cap or the 1 January 2028 price cap. That is an estimate, not a confirmed date, and the final timing will depend on Ofgem’s work with suppliers and the price-cap timetable. Households should therefore expect no change to the standing-charge line on bills for the rest of 2026, and should not expect the saving to offset the widely reported rise in the energy price cap expected in January 2027, which is covered in Worldlession’s UK energy price cap forecast. Reports ahead of the Budget put that January rise at around 27%, or roughly £469 a year for a typical household, driven by high international energy costs linked to the Middle East conflict — figures that were reported as expectations, not confirmed price-cap decisions.
The change as announced applies to gas only. Electricity standing charges are not being scrapped in this announcement. Lewis said he asked the Chancellor about electricity, and Healey replied that the government would be working with Ofgem over the next year to try to reduce electricity standing charges too, but that electricity was “trickier” and would take longer. The reason is that electricity network costs are structured differently and a larger share of fixed system costs sits on the electricity side, so shifting them onto unit rates would have a bigger effect on electricity prices and on households that rely on electricity for heating. For now, households will continue to pay an electricity standing charge, and any future change to it will be a separate decision.
The change is also mainly about the price cap. Lewis noted that it is “mainly about the Price Cap”, so households on fixed tariffs will not automatically see the same effect: fixed deals set their own unit rates and standing charges for the fixed period, and suppliers in the open market will remain free to offer tariffs with or without a standing charge. Anyone on a fixed deal should check the terms of that deal rather than assuming the bill will fall by £108. The practical advice for most households is therefore to wait for the Ofgem detail, check annual gas usage in kWh on a recent bill or supplier app, and compare that figure with the roughly 12,500 kWh break-even estimate when the final unit-rate increase is known.
What the Change Means for the 2026 Budget as a Whole
The standing-charge announcement was the first confirmed household measure of Healey’s Budget, unveiled hours before the Chancellor’s statement to Parliament. In a video message before the Budget, Healey said: “The world’s a highly uncertain place. Conflicts abroad are pushing up energy prices and the cost of living here at home — piling pressure on families, on businesses and on our public finances. We can’t stop these shocks that hit Britain, but we can make Britain more resilient when they do. This budget is designed to give households breathing space from some of the everyday costs, provide targeted support for businesses and self-employed people, and to start the long-term action needed to get energy costs down for good.” He added that the Budget would “back British businesses and entrepreneurs”, invest in technology and housebuilding, and “shift power out of Whitehall”.
The wider Budget was expected to be far smaller than the tax-and-spend events of Healey’s predecessor Rachel Reeves, because the government’s fiscal headroom — its cushion against unexpected costs — has been sharply reduced by higher inflation and rising borrowing costs linked to the war in Iran. Reports ahead of the statement said the biggest revenue raiser would be a tax on banks, a theme already covered in Worldlession’s report on Healey weighing a bank tax rise, alongside targeted taxes on online retailers to fund a cut in business rates for high-street shops, an extension of the fuel duty freeze, and prescription charges held at £9.90 for another year. The Times also reported that Healey was expected to cut energy bills by removing green levies from bills and shifting them onto general taxation, although that measure was reported as expected rather than confirmed at the time of the standing-charge announcement. Those wider measures should be read as reported expectations until the Budget statement and the Office for Budget Responsibility forecasts are published. European leaders have also been meeting on energy prices and support for Ukraine amid competition from China, as covered in Worldlession’s report on the EU leaders’ energy talks, a reminder that the UK change sits inside a much larger European energy shock rather than a purely domestic bill dispute.
The standing-charge change also follows an earlier cost-of-living step this month: a cut in VAT on electricity bills, which the Treasury said made the energy price cap £45 a year lower than it would otherwise have been, and the announcement last week of an Energy Wealth Fund to support investment in clean power. Burnham had told the Commons the previous week that he had asked Healey and Energy Secretary Miatta Fahnbulleh to examine abolishing standing charges, so the announcement was not entirely unexpected — but its confirmation on Budget morning, with a named regulator, a named year, and a named saving, turned a campaign demand into a concrete policy. Whether it is judged a success will depend on two things the announcement did not settle: the exact unit-rate increase Ofgem eventually sets, and whether targeted mitigation genuinely protects the low-income, high-use households who stand to lose. Until both are published, the fairest summary is the one the Treasury itself gave: most households should save about £45 a year from 2027, a minority will pay more, and the households that use the least gas will finally see the full benefit of using less.
Sources: Treasury announcement on gas standing charges, as reported by Hargreaves Lansdown, LSE / Alliance News and AJ Bell on 28 October 2026; The Times Budget 2026 live coverage, 28 October 2026; MoneySavingExpert reporting on Martin Lewis’s meeting with Chancellor John Healey, 28 October 2026; Treasury and Prime Minister statements as reported by PA via Hargreaves Lansdown and LSE on 28 October 2026; End Fuel Poverty Coalition and Octopus Energy comments as reported by PA and the Grimsby Telegraph on 28 October 2026; The Sun / Scottish Sun reporting of industry estimates for households paying more, 28 October 2026. Figures for the £108 typical charge, 23 million homes, 60% saving an average of £45, and the 2027 timing are Treasury figures as reported on 28 October 2026; the 12,500 kWh break-even point and just-under-1p unit-rate estimate are Martin Lewis’s estimates, not confirmed figures.