Budget 2026: Gas Standing Charges will FINALLY be scrapped in a move MSE has campaigned on for years
Standing Charges – the daily cost you pay to your supplier for having access to energy – will be scrapped from the gas bills of 23 million households by 2027 at the earliest. The announcement has been made by the Chancellor John Healey ahead of today's (Wednesday 28 October) Budget. It's something MoneySavingExpert and its founder Martin Lewis have campaigned successive governments on for years.
Watch: Martin Lewis' instant reaction to gas Standing Charges being scrapped
Read the full video transcript
Martin Lewis: "Okay, so I've just come out of Number 11 Downing Street. I have confirmation that the Standing Charge on gas bills is to be scrapped in 2027. I've been campaigning on this for about six years, so I am very pleased to hear it. It is a moral hazard. It disincentivises people from cutting their bills. It's a poll tax on energy, if you like.
"So what does this mean in practice? Well, at some point next year, so my guess would be the 1 October Price Cap, or perhaps 1 January 2028, the £108 a year that you pay just for the facility of having gas is to disappear. It's going to be paid for by increasing the unit rate, the price per kilowatt hour.
"My guess would be just under a penny per kilowatt hour would be added on top. So in practice, what this means is lower users will pay less. Higher users will pay more. But because of the maths, there are some very high users, actually about 60% of people will pay less, 40% will pay more. And in every income distribution class, up to £100,000, the majority of people will pay less. Only above that will some pay more. "This is mainly about the Price Cap. So if you're on a fix or something like that, it doesn't really change anything.
"You'll want to know what happens to the electricity Standing Charge. I would like to know that too, I asked the Chancellor. He said they will be working with Ofgem over the next year to try and reduce the Standing Charges on electricity too.
"As for other things going on in energy? Well, obviously the big news is we're expecting to see the Price Cap going up 27% in January. That is an absolute nightmare because of the huge costs of energy on the international markets due to the Middle East conflict. I asked the Chancellor what he'd do about that, and he didn't give me a straight answer.
"But reading between the lines, I suspect in the Budget later today he will be putting a form of support in place. My guess would be it would either be an increase in the Warm Home Discount, which only affects people on benefits, or perhaps politically they have to increase, spread it higher up the net. And there are very few models for doing that because energy bills are about household income.
"The way that Rishi Sunak did that was by giving a payment to people in Council Tax bands A to D, then on my suggestion as it was, he also did a sort of a slush fund for people who needed support but were above that. It could be that system, it could be the Warm Home Discount. Other things I should tell you...
"Look, while of course I'm saying most people would benefit, there will be some losers in this, and some of the losers will be on lower incomes. So I asked again, will there be support for those people who will lose out? They're going to look at it in the round. Where if this happens next October or January, if the Middle East conflict had de-escalated, prices could have come way down at that point, which means it won't be such a problem.
"Or if we're still in the absolute mire that we're in right now on energy bills, then support will need to go in place. Sally, have I missed anything? No, that's my summary. I've just come out. It's my instant summary. Hopefully that gives you an idea of what's going on."
And you can read Martin's immediate thoughts here (as posted on social media this morning):
CONFIRMED. Gas Standing Charges to be scrapped. I've just come out of a meeting with the Chancellor. The gas Standing Charge will be scrapped in 2027 (my guess, either for 1 October Price Cap or the 1 January 2028 Price Cap).
It's currently £108 a year. That cost will be shifted onto unit rates. We don't know how much yet, but I suspect just under 1p per kwH.
The Chancellor also said he will be talking to [energy regulator] Ofgem about how they get rid of the Charge on electricity as well, but that is "trickier" apparently and will take longer.
This is primarily about the Price Cap Standing Charges. There will still be an open market, so other firms can offer other forms of prices with or without the Standing Charge. My suspicion is that once it goes on the Price Cap, it will tend to be reduced on other tariffs as well.
As for those on fixes: if you get a fix now, the rate of your fix is fixed, so this should not affect it. You will pay what you pay and if it has Standing Charges they will continue (some asking if they should delay fixing because of this; no, if a fix is right for you and will save you money, don't let this change that – this is about the structure of bills, as opposed to the actual costs on bills).
About 60% of people will pay less due to this, 40% more. My guesstimate is the dividing line will be somewhere around 12,500 kilowatt hours of gas (can't know until there is actual pricing). According to a study by Nesta, this switch would leave the majority of people in all income groups under £100,000 better off.
Of course, when this does come in, if we're still in the nightmare that we are right now, there will need to be support put in for vulnerable higher users, who will have to pay more. Though, hopefully by then, the Middle East will have calmed and energy prices lowered.
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That's all long term. The biggest issue in energy right now is that we're expecting a 27% rise in the Price Cap in January. I asked the Chancellor whether he will be intervening on that. He told me I'd have to wait for the Budget, but reading between the lines, yes, there will be an announcement today.
Whether it's an increase in the Warm Home Discount, or whether it's Council Tax banned, or whether it's done via a payout for people, in say Council Tax bands A-D as a proxy for household income, as Rishi Sunak did who knows.
Gas Standing Charges to be scrapped – what we know for now
Details remain scant, but we do know that:
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Gas Standing Charges will be scrapped "in 2027 or as soon as possible after". We would expect this to coincide with the Energy Price Cap change on either 1 October 2027 or 1 January 2028.
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The change will take place across England, Scotland, and Wales. The system works differently in Northern Ireland – we're asking about the impact there.
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In reality, you will see the cost of the Standing Charge added to the unit rate instead – the price you pay for each kilowatt hour (kWh) of gas you use.
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This could add around 1p to each kWh of gas used. The exact amount is tricky to calculate, and it depends on what happens to energy prices in general. Our estimate, based on the current Price Cap and energy regulator Ofgem's 'typical use' figure of 9,500kWh a year, is that the average gas unit rate could rise from 7.97p/kWh to 9.11p/kWh. But it could be less – for example, separate analysis by innovation charity Nesta has indicated it could be under a penny.
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Lower gas users are expected to benefit from lower bills, but those with above average consumption are likely to pay more. This is because more of your gas bill will depend on how much energy you actually use – though this in turn will give you MORE control over your bill and reducing it by lowering your usage.
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Electricity Standing Charges will remain for now. The Government plans to set out further detail on reforming this next year.
Further information, including whether the measure will apply to ALL energy tariff types – for example, Price Capped Standard Variable Tariffs (SVTs), trackers and fixes – and to all payment types – for example, prepayment meter users, is yet to be confirmed.
"Targeted mitigation for a small number of households" will be announced "in due course". This is likely due to some vulnerable energy users with high energy bills being adversely impacted by this change.
Standing Charges add around £300 a year to energy bills – and nine in 10 of you want them gone
Currently, everyone pays the same fixed amount each year for their gas and electricity supply, whether they use a little or a lot. Standing Charges are paid every day of the year, even in summer when many homes barely use gas for heating.
We’ve long called for Standing Charges to be cut, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage. Moving the cost onto the unit rate means you'll have more control over what you spend.
In a social media poll run by MoneySavingExpert.com founder Martin Lewis earlier this month, more than nine in 10 (95%) of the 52,000 people polled said they would support cutting or scrapping the Standing Charge, even if that means shifting the cost on to the unit rate.
The current average annual Direct Debit Standing Charge is around £300 for dual fuel users and £108 a year on gas alone.
The Government estimates that the saving from removing the gas Standing Charge will be around £45 a year on a typical bill, though estimates vary. Nesta, an innovation charity, has previously estimated that abolishing the gas standing charge would save the typical dual fuel household £27 a year. (Based on current energy prices.)
Nesta adds that 63% of dual fuel households would be better off without the Standing Charge.
Plans to lower Standing Charges have long been in the pipeline
Plans by the energy regulator to require suppliers to offer 'low or no Standing Charge' tariffs have been on the table for years. But progress has been slow.
Currently, only limited trials and limited tariffs have been launched by certain energy suppliers. Anything more widespread has so far failed to materialise. Our Standing Charges guide contains full info on the current available schemes.
On announcing the abolition of Standing Charges, the Prime Minister Andy Burnham said: "Abolishing gas Standing Charges is about basic fairness and giving people more control over their bills." The Chancellor John Healey added: "Gas Standing Charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space."
MSE's Budget 2026 coverage
Check out all of our other MSE News stories following the Chancellor's announcements:
Full round-up of the key measures, including MoneySavingExpert.com (MSE) founder Martin Lewis' video analysis of what they mean for you.
The planned cash ISA limit cut for under-65s WON'T go ahead. Also, plans for a 'starter investment ISA' (something Martin's argued for) have been announced. We explain what's happening.
Millions of households in Council Tax bands A-D will get a £100 payment next year to help with energy costs. Funding's also being allocated to Northern Ireland, Scotland and Wales for similar schemes.
The Lifetime ISA withdrawal fine has been axed for homes above £450,000 in a major MSE win. Plus, the launch of the First-Time Buyer ISA has now been confirmed.
State Pensioners with incomes under £13,037 a year to pay NO Income Tax as new allowance introduced.
New 'Your First Home' homebuying scheme to launch in England. It was first announced in September and now more details have been revealed – we explain how the scheme will work.
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