BUDGET 2026: Gas standing charges to be scrapped

The Chancellor has announced plans to scrap standing charges on gas bills in a move designed to help households manage rising energy costs.

Standing charges are fixed daily fees that households pay for being connected to the gas network, regardless of how much gas they use. Under the new plans, these charges will be removed, with the costs currently covered by them instead being recovered through the price households pay for each unit of gas.

The change is expected to affect around 23 million homes. The Treasury estimates that around 60% of households with an energy account will save an average of £45 a year on their bills.

The reform is intended to make energy bills fairer, particularly for households that use relatively little gas. At present, standing charges can make up a significant proportion of the bill for people who use very little energy, including some low-income households.

However, scrapping standing charges doesn’t make the underlying costs of maintaining the gas network disappear. If these costs are added to unit rates, households that use more gas could end up paying more.

What this means for you

If you use relatively little gas, you could benefit from the change because you would no longer pay a fixed daily charge. This may be particularly helpful if you live alone, have a small property or use little gas for heating.

If you use a lot of gas, the picture could be different. If the costs are transferred to unit rates, you could pay more for each unit you use, potentially offsetting the saving from removing the standing charge.

If you’re struggling with energy bills, don’t assume this change alone will make your bills affordable. Your total costs will still depend on how much energy you use, the unit rates you pay and any other support you’re eligible for.

The change will not happen immediately. The Chancellor has asked Ofgem, the energy regulator for Great Britain, to implement the change in 2027 or as soon as possible afterwards. Electricity standing charges are not being abolished under this announcement.

The announcement follows calls for standing charges to be abolished, with critics arguing that households shouldn’t have to pay a daily fee even when they use little or no gas.