£108 a year for nothing: the gas charge being scrapped, and why 4 in 10 homes won't save
What happened
On 28 October 2026, the government announced it will remove standing charges from household gas bills. A standing charge is a fixed daily fee added to your gas bill no matter how much gas you use. Use none at all, and you still pay it. They average £108 a year for a typical household. The Chancellor, John Healey, will ask the energy regulator Ofgem to remove them in 2027, or as soon as possible after. The fixed costs they currently cover do not vanish. Instead they will be recovered through the unit rate, which is the price you pay for each unit of gas you actually use. The announcement was made alongside Prime Minister Andy Burnham and Energy Secretary Miatta Fahnbulleh, and published by the Prime Minister's Office, HM Treasury and the Department for Energy Security and Net Zero. In his Budget speech the same day, the Chancellor told the Commons: "Gas standing charges – these cost people over £100 a year, regardless of how much gas they use. So, from next year, through Ofgem, we will remove standing charges from household gas bills." The headline figure is around 23 million homes affected. Mr Burnham said: "Abolishing gas standing charges is about basic fairness and giving people more control over their bills." Mr Healey said: "Gas standing charges are unfair and outdated so I am scrapping them."
Why this matters
Standing charges have been a long-running grievance, and for a logical reason. Because they are fixed, they take up a much bigger share of a small bill than a large one. That means they hit hardest the people who use least gas. Someone in a small, well-insulated flat who is careful with heating pays the same £108 as someone in a large house with the heating on all winter. Campaigners have argued for years that this is backwards: the household doing most to cut its usage sees the least benefit from doing so. There is also a second effect, and it is the one the Prime Minister pointed to. When a large chunk of your bill is fixed, using less gas does not reduce it very much. Moving those costs into the unit rate means that cutting your usage cuts your bill more directly. That makes energy saving worth more than it is today. The change sits alongside other measures. A VAT cut on electricity bills took effect at the start of October, which reduced the October energy price cap by £45 a year compared with what it would otherwise have been. The Budget also announced a £100 Household Energy Payment for council tax bands A to D from January 2027, reaching up to 20 million households in England, plus £100 million for local authorities in England to help households worst affected by rising bills.
What the evidence actually says
This is where the headline and the detail part company, so read this bit carefully. Removing standing charges does not reduce the total amount of money collected from gas customers. It redistributes it. The government estimates that around 60% of account-holding households could save an average of £45 a year. Turn that around and the implication is plain: roughly 4 in 10 households are not expected to save. If you use a lot of gas, moving fixed costs into the unit rate means you pay more per unit, on more units. The government does not claim otherwise. It says households that do not see an automatic saving will still gain more control over their bills, which is true but is not the same as paying less. The government has said it will set out targeted support later for a small number of households. That support has not been published, so what it covers is not yet known. The £45 figure also comes with a stated limitation. It is a static estimate, meaning it does not account for people changing their behaviour in response to the new prices. In reality some households would use less gas once each unit costs more, which would change the outcome. On the methodology: the estimate uses HM Treasury's Distributional Analysis Model, drawing on Office for National Statistics Living Costs and Food Survey data from 2018/19, 2019/20 and 2022/23, with gas spending adjusted to Ofgem's average unit rates and standing charges for October to December 2026, and economic assumptions from the Office for Budget Responsibility's 2026 Spring Forecast. That is a reasonable approach built partly on survey data that is several years old. Two further caveats. The change is being asked of Ofgem for 2027 "or as soon as possible after", which is not a firm date. And around a third of households are on fixed tariffs and so are not covered by the price cap, which affects how and when they would see any change. Greg Jackson, founder and chief executive of Octopus Energy Group, welcomed the move and said most customers would see lower gas bills. He is the head of an energy supplier, so his view is informed and also interested.
Qurexa perspective
We deliver medicines to people at home across Lincolnshire, including to many people who are housebound, and that gives us a reason to flag who sits in the 4 in 10. If you are at home all day, every day, you use more heating than someone out at work. If you have a condition that means you cannot afford to get cold, you cannot simply turn the heating down to manage a higher unit rate. If you live in an older, harder-to-heat house, which much of rural Lincolnshire does, your gas usage is high for reasons that are not about carelessness. Those households are exactly the ones for whom a higher unit rate is likely to mean a higher bill. The government has promised targeted support for a small number of households but has not yet said what it is or who qualifies. We are not energy advisers and we are not going to pretend otherwise. But if you are managing a long-term health condition at home, the detail of this change is worth watching, and the promised support is worth asking about when it appears.
Practical advice
Nothing changes on your bill yet. The Chancellor has asked Ofgem to make the change in 2027 or as soon as possible after it, so there is time to prepare rather than react. Find out what you currently pay. Your standing charge is listed on your bill as a daily amount in pence. Multiply it by 365 to see the yearly figure for gas, and compare it with the £108 average. If yours is well above average and your usage is low, you are likely to be a winner from this change. Work out whether you are a high or low gas user. Your annual kWh usage is on your bill or in your online account. High usage plus a lower-than-average standing charge means you should plan on the basis that your bill may rise. If you are on a fixed tariff, check your end date. Around a third of households are on fixed deals outside the price cap, which affects when any change reaches you. Do not switch tariff on the strength of this announcement. The details have not been set by Ofgem, and no supplier can yet tell you exactly what your bill will look like. Check whether the £100 Household Energy Payment applies to you. It covers council tax bands A to D in England from January 2027 and is expected to reach up to 20 million households. If you are struggling now, contact your supplier rather than waiting. Suppliers have obligations to offer payment plans and can refer you to support schemes. Your local authority also has access to the £100 million fund for households worst affected. If you can cut usage, it will be worth more after this change than before it. Draught-proofing, loft insulation and turning the flow temperature down on a combi boiler are the low-cost places to start.
What to know
Gas standing charges, averaging £108 a year, are to be removed from household gas bills. The Chancellor will ask Ofgem to do it in 2027 or as soon as possible after, and the fixed costs will instead be recovered through the price per unit of gas used. Around 23 million homes are affected. Around 60% of account-holding households could save an average of £45 a year. That also means roughly 4 in 10 are not expected to save, and heavy gas users may pay more. Targeted support for a small number of households has been promised but not published. The £45 estimate is static, so it does not allow for people using less gas once each unit costs more, and it draws partly on household survey data from 2018/19 to 2022/23. The fairness argument is sound: a fixed fee takes a bigger share of a small bill, and penalises the households using least. The honest caveat is that this is a redistribution of existing costs, not a reduction in them. Sources: Prime Minister's Office, HM Treasury and Department for Energy Security and Net Zero, "Chancellor abolishes standing charges on gas bills to make payments fairer", 28 October 2026, https://www.gov.uk/government/news/chancellor-abolishes-standing-charges-on-gas-bills-to-make-payments-fairer; HM Treasury, "Budget 2026 speech" (Chancellor John Healey), 28 October 2026, https://www.gov.uk/government/speeches/budget-2026-speech; HM Treasury, "Budget 2026 Fact Sheet: Delivering for Every Region", 28 October 2026, https://www.gov.uk/government/news/budget-2026-fact-sheet-delivering-for-every-region. This article is for general information and does not replace advice from a doctor, pharmacist or other qualified healthcare professional.
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