Budget 2026: gas standing charges to be scrapped — what it means for your bill

Written by: EnergySwitch editorial team · Last reviewed: 28 October 2026

Answer: In the 28 October 2026 Budget, the government said household gas standing charges will be removed for around 23 million homes. Ofgem is asked to deliver this in 2027 or as soon as possible after. The fixed costs move onto the gas unit rate, so low users should pay less and high users more. The Treasury says about 60% of households could save an average of £45 a year. Electricity standing charges stay for now. This does not change the current £1,723 price cap or cancel forecast rises for January 2027.

Compare energy tariffs · January 2027 price cap forecast

What was announced today

Chancellor John Healey confirmed that standing charges will come off household gas bills. A standing charge is the fixed daily fee you pay for being connected, whether you use gas that day or not. Under the current Ofgem price cap (1 October – 31 December 2026), the typical gas standing charge averages about 29.68p a day — roughly £108 a year.

Instead of that fixed fee, the same network and system costs will be recovered through a higher pence-per-kWh gas unit rate. You only pay those costs when you use gas.

Key facts from the GOV.UK announcement:

Prime Minister Andy Burnham and Energy Secretary Miatta Fahnbulleh backed the change as fairness and “breathing space” ahead of higher winter bills.

Will I save money?

Likely yes if you use less gas than average — flats, smaller homes, well-insulated properties, or homes that barely heat with gas outside winter.

Likely no (or a higher bill) if you use a lot of gas — larger homes, poorly insulated properties, or households that need the heating on hard through winter. Citizens Advice and fuel-poverty groups have already flagged that high users in cold homes can lose out unless mitigation lands first.

The Treasury’s £45 figure is an average among the roughly 60% who gain. It is not a £108 cut for everyone: the old standing charge money still has to be collected, just through unit rates.

Simple way to think about it

• Today: you pay ~£108 a year for gas connection plus unit rates for what you burn.
• After the change: £0 gas standing charge, but a higher gas unit rate.
• Break-even sits around typical Ofgem gas use. Below that, you tend to win; above it, you tend to lose — until any targeted support is defined.

We will update this page when Ofgem publishes the new unit-rate methodology and when the government sets out mitigation.

What this does not change

• Today’s price cap stays at about £1,723 a year for a typical Direct Debit dual-fuel household (1 Oct – 31 Dec 2026). See the energy price cap hub.
• January 2027 is still expected to be higher. Independent forecasts (Cornwall Insight through to EDF’s £2,192 scenario) point to a sharp rise driven by wholesale gas. Ofgem sets the real Jan–Mar 2027 cap by 25 November 2026. Track every forecast on our January 2027 forecast guide and the EDF 27% long-tail.
• Electricity standing charges (about 54.83p/day on the current Direct Debit average) are unchanged by this Budget measure.
• VAT on electricity (zero-rated from 1 Oct 2026 to 31 Mar 2027) is separate and already in the October cap. That cut is worth about £45 a year for a typical household.

So: useful structural reform for many low users, but not a fix for the January wholesale spike.

Timeline: what happens next

1. 28 October 2026 — Policy announced; Budget speech may add further energy measures (we will update if Warm Home Discount or green-levy changes are confirmed).
2. By 25 November 2026 — Ofgem announces the Jan–Mar 2027 price cap (still under today’s standing-charge rules unless it accelerates the reform).
3. 2027 (or ASAP after) — Ofgem removes gas standing charges and rebuilds the unit rate. Exact start date TBD.
4. Mitigation — Government to set out support for households who would otherwise lose out. Watch this space before the switchover.

Ofgem has already been testing lower standing-charge tariff designs. The Budget instruction accelerates a full gas standing-charge removal rather than leaving it as an optional product. See our lower standing-charge tariff pilot guide.

What you should do now

1. Don’t wait for 2027 to shop around. Standing-charge reform will not land before the expected January rise. Check live deals against the capped SVT via compare gas and electricity.
2. Know your gas use. Pull last year’s kWh from your bill or smart meter app. If you sit well below ~9,500 kWh gas (Ofgem’s medium TDCV), you are more likely to benefit when standing charges go. See typical energy usage under the price cap.
3. Cut waste heat if you can. Draught-proofing and a degree off the thermostat still beat waiting for a policy date — especially if you are a high user who may pay more under unit-rate recovery.
4. Check Warm Home Discount. If you or your partner get Pension Credit, Universal Credit or other qualifying benefits, claim the £150 electricity rebate for winter 2026/27 where eligible. See our Warm Home Discount guide.
5. Watch for Budget follow-ups. If the Chancellor confirms a bigger Warm Home Discount or moves green levies onto tax, we will add a short update at the top of this page the same day.

Standing charges today (for context)

Source: Ofgem. Regional rates differ. Deeper October breakdown: standing charges October 2026. For how standing charges sit in a typical bill, see energy bill breakdown under the price cap.

FAQ

When will gas standing charges actually disappear?

Ofgem is asked to deliver removal in 2027 or as soon as possible after. There is no confirmed calendar date yet.

Do I lose the full £108?

No. That money still funds pipes, meters and system costs. It moves into the unit rate. Treasury modelling suggests about three in five households save ~£45 on average; higher users can pay more.

Will electricity standing charges go too?

Not under today’s announcement. Electricity standing charges remain, and many policy costs sit on the electricity side of the bill.

Does this stop January bills rising?

No. Forecasts still point to a higher Jan–Mar 2027 cap. This reform is structural and timed for 2027; it does not rewrite the November Ofgem announcement.

What about prepayment customers?

The announcement covers household gas accounts broadly. Prepayment customers often feel standing charges hardest when they top up. Exact treatment will depend on Ofgem’s implementation — we will update once the methodology is published.

Is Northern Ireland included?

The Ofgem domestic framework covers Great Britain (England, Scotland and Wales). Northern Ireland has separate arrangements; do not assume the same change applies there until confirmed.

Sources

• GOV.UK, Chancellor abolishes standing charges on gas bills to make payments fairer (28 October 2026)
• Ofgem, Energy price cap unit rates and standing charges (October–December 2026 cap)
• Ofgem, Changes to energy price cap between 1 October and 31 December 2026 (26 August 2026)

Figures checked against GOV.UK and Ofgem on 28 October 2026. This guide covers Great Britain. EnergySwitch is an independent comparison and guidance site. We have not claimed Warm Home Discount expansion or green-levy moves unless they are confirmed in the Budget speech.