A standing charge is a fixed daily fee added on top of a household gas bill, regardless of usage. A connected household could consume no gas at all but still must pay it.<\/p>\n
Poorer households use less gas, so the standing charge represents a bigger proportion of their bill. Under the change, the cost will be moved on to unit rates, so those using a lot of gas will most likely pay more overall.<\/p>\n
The Treasury said the change, which will not cost it anything at all, could save 60% of account-holding households an average of \u00a345 off their annual bill.<\/p>\n
Andy Burnham said: \u201cAbolishing gas standing charges is about basic fairness and giving people more control over their bills. I am determined to reform our broken energy market, so it better serves the public interest.\u201d The prime minister had told the Commons a week ago that he was asking the Treasury to look into the issue.<\/p>\n
Healey said: \u201cGas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.<\/p>\n
\u201cMy budget will 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.\u201d<\/p>\n
Recent research conducted for Ofgem<\/a> has shown that a majority of people (61%) view standing charges as unfair, while about a quarter think the same about unit rates.<\/p>\n Abolishing the gas standing charge \u201cefficiently transfers costs from poorer households to wealthier ones\u201d, the research charity Nesta said in a recent analysis<\/a>. It said there are a small but significant number of households that have a gas boiler for heating but use electricity for cooking and hot water.<\/p>\n These households only use gas over the winter but have to pay the standing charge year-round. Many also have prepayment meters.<\/p>\n The prime minister and chancellor have made helping families with the cost of living <\/a>a core focus of their first budget, and Healey is expected to use the budget to announce a targeted package for means-tested households spending more than \u00a31bn<\/a> to add about \u00a3100 to the annual \u00a3150 arm homes discount rebate.<\/p>\n This follows the government\u2019s six-month suspension of VAT on electricity bills that came into effect at the beginning of October.<\/p>\n
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