Burnham Calls for Review of Gas Standing Charges

On October 21, Prime Minister Andy Burnham told the House of Commons that he had asked Chancellor John Healey and Energy Secretary Miatta Fahnbulleh to examine whether the fixed daily standing charge on gas bills can be removed and to report back “at the earliest opportunity.” The request was made during Prime Minister’s Questions while defending the decision to approve drilling at the Jackdaw gas field.

Bradford Telegraph and Argus

Standing charges are daily fees households pay for being connected to the gas network, regardless of consumption. Ofgem caps these fees, which currently average about 30 pence per day (£108 a year for a typical household). The proposal is part of the government’s effort to blunt rising energy costs and to “delink” gas and electricity prices as it moves toward renewable energy.

iNews

• Average daily standing charge: ~30 pence (? £108 per year).

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• Nesta modelling suggests a typical dual-fuel household could save about £27 annually if the charge is abolished.

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• The median household in the lowest income bracket would save £46 per year; the next-poorest bracket would save £33.

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• Removing the charge would lower the gas-to-electricity price ratio from about 3.3 to roughly 2.97, improving the economics of heat-pump adoption.

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Burnham framed the review as a “pragmatic decision” that would allow more investment in renewables while easing bills. Energy Security Minister Michael Shanks said funding the gas network would still be required but a fairer system could encourage decarbonisation. A government spokesperson noted the work “has just begun” and did not detail how the roughly £2.4 billion of annual revenue from the charge would be replaced.

Bloomberg

EDF warned that persistently high wholesale costs could push the overall energy price cap up by about £442 a year, meaning any savings from removing the standing charge would be modest relative to broader price-cap pressures.

Bloomberg

Sources agree the standing charge generates about £2.4 billion annually, but differ on how that revenue might be recouped. Some analysts suggest it would be shifted to the unit price of gas, potentially raising per-unit costs for heavy users, while others note the government has not yet outlined any replacement mechanism. The lack of a concrete funding plan remains a key uncertainty.

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• “Removing the standing charge tends to help lower income households, because they tend to use less gas, and therefore, a bigger share of their bill is the standing charge,” — Andrew Sissons, director of sustainable futures at Nesta

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• “Taking the standing charge off gas and loading it onto the unit price makes every unit a gas boiler burns more expensive,” — James Stalker

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• “I have asked the Chancellor and the energy secretary to look at whether we can remove standing charges from gas bills, and to report back to this House at the earliest opportunity,” — Andy Burnham

Burnham asks Healey to remove standing charges on gas bills

Chancellor John Healey is scheduled to deliver his first budget next week, where the standing-charge review could be incorporated into broader fiscal measures. The Prime Minister’s request obliges the Treasury and the Department for Energy Security and Net Zero to produce a report for Parliament, though no specific timetable has been announced.

Burnham asks Healey to remove standing charges on gas bills