£27: What Burnham's Plan to Cut Gas Standing Charges Could Save

Prime Minister Andy Burnham has asked the Chancellor and the Energy Secretary to draw up a plan that would remove the standing charge from household gas bills, a fixed daily fee currently averaging 29.7p no matter how much gas a household uses, according to the BBC.

What exactly did Burnham ask for?

During Prime Minister's Questions, Burnham tied the move to his government's approval of the Jackdaw gas field in the North Sea, calling it a "pragmatic decision" that frees up room to invest in renewables and "do more to help people with bills," the BBC reported. He said he had asked Chancellor John Healey and Energy Secretary Miatta Fahnbulleh "to look at whether we can remove standing charges from gas bills and to report back to this house at the earliest opportunity." No mechanism for how the charges would actually be removed has been published.

How much could the change save a typical household?

Research firm Nesta has floated moving the removed gas standing charge onto the unit rate, so customers pay only for what they consume. Nesta's director of sustainable future, Madeleine Gabriel, told the BBC that "abolishing the gas standing charge and moving those costs onto the unit rate would help those worst hit by rising energy prices," and the foundation estimates the shift could knock £27 off a typical annual bill. Energy UK, the industry body, was more cautious, saying whether the change makes any real difference depends entirely on how and where the costs land once they are reallocated.

Why isn't electricity getting the same treatment?

Electricity standing charges average 54.8p a day, nearly double the 29.7p average for gas, per the BBC's reporting. Asked why electricity charges would not also be scrapped, the prime minister's official spokesman said VAT had already been cut on electricity bills, suggesting that route for relief has effectively already been used. Standing charges on both fuels cover costs such as transporting energy through pipes and wires, maintaining that infrastructure, and funding support schemes for low-income households — costs that, under any reform, would still need to be recovered from somewhere.

Who gains and who could lose if costs move to the unit rate?

Shifting the gas standing charge onto the unit rate would likely help light users who could previously do nothing to reduce a fixed daily fee. But the BBC noted heavy users could end up paying more under the same shift. Citizens Advice has separately warned about the risk to vulnerable customers who have low incomes but high energy usage — the group that benefits least, and could lose the most, if fixed charges are rolled into consumption-based pricing. That tension is also why Ofgem's own consultation process, running for nearly two years, has not produced firm conclusions despite what the BBC described as a massive public response, including vociferous opposition from low-usage households. The regulator is currently running a pilot scheme on low standing-charge tariffs but has not yet drawn conclusions from it.

What else did Burnham say would bring bills down?

Beyond standing charges, Burnham argued that investment in renewables would cut household bills "substantially" within this Parliament by breaking the link between gas and electricity prices, the mechanism by which UK electricity prices are largely set by the cost of gas. The announcement lands with added urgency: energy prices are forecast to rise 16% to a four-year high in January, according to the BBC, intensifying pressure on the chancellor to use next week's Budget to offer more targeted, immediate support for households this winter.

What to watch

• Whether next week's Budget includes concrete detail on how — or whether — gas standing charges are actually removed, rather than just studied.
• Ofgem's pilot scheme on low standing-charge tariffs, which has yet to produce conclusions after nearly two years of consultation.
• Whether ministers adopt Nesta's unit-rate shift model, and if so, how heavy-usage, low-income households are protected from higher bills.
• Any parallel move on the higher 54.8p electricity standing charge, which the government has so far left out of the plan.
• The scale of the January 2027 price rise, forecast at 16%, and whether any standing-charge reform takes effect before then.

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