Chancellor to remove fixed daily fee from gas bills

Households with gas connections in the United Kingdom will no longer pay a fixed daily fee on their bills, according to Chancellor John Healey. The change removes a cost that is currently charged regardless of how much gas a home actually uses.

Healey announced the plan ahead of his budget statement in the House of Commons on Wednesday. He intends to instruct Ofgem, the energy regulator for Great Britain, to remove the charges next year or as soon as possible thereafter. The current standing charge amounts to £108 per year for a typical household.

The Treasury estimates that 60 percent of account-holding households will save an average of £45 annually under this new arrangement. A standing charge is a fixed daily amount added to a gas bill. Previously, a household could use no gas at all and still be required to pay this fee.

Healey described the practice as unfair and outdated. He stated that scrapping the charge provides millions of households with breathing space and marks a break from an energy policy that has left consumers exposed to global shocks. His budget aims to draw a line in the sand on previous energy strategies.

Andy Burnham supported the decision, calling it a matter of basic fairness. He said the reform gives people more control over their bills and helps serve the public interest better. The prime minister had previously described the energy market as broken and asked the Treasury to investigate the issue a week prior to this announcement.

Miatta Fahnbulleh, the energy secretary, said she would continue efforts to protect people from unaffordable bills. Greg Jackson, chief executive of Octopus Energy Group, welcomed the move as joined-up thinking. He noted that most customers would see a cut in their gas bills, with additional savings possible if they switch to heat pumps.

This change follows a recent reduction in VAT on electricity bills that took effect at the start of October. That tax cut made the energy price cap £45 per year lower than it would otherwise have been. About one-third of households on fixed tariffs are not affected by the price cap, so their electricity prices fell when the VAT cut began. The government also approved the Jackdaw gasfield in the North Sea and announced a new energy wealth fund to support investment in clean power.