British finance minister John Healey said he would help most households with their gas bills by enabling those who use the least to pay less as part of his first budget which is due to be announced in full later on Wednesday.
Healey – who has promised to give “breathing space” to families hit by the high cost of living – said he would abolish standing charges which are fixed daily fees that cover the costs of connecting a home to a gas supply and are charged on bills regardless of whether energy is being used.
“Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space,” Healey said in a statement issued by the Treasury.
He will ask regulators to remove the charges – which cost £108 ($143.78) a year for the typical household on average – in 2027 or as soon as possible after that, the Treasury said.
The costs will be shifted to the price of gas consumed which could save 60% of account-holding households around an average of £45 on their annual bill, the statement said.
Healey said his budget would “draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks”.
Earlier this month, the government cut value added tax on electricity bills which surged following Russia’s invasion of Ukraine and have risen again due to the Iran war.
Previous governments have imposed a price cap on energy prices and removed other levies.
Despite that, Britain’s regulated domestic price cap rose 4% in October, and some forecasts are predicting a rise of around 20% to over £2,000 pounds a year in January for an average domestic energy bill including electricity.
British households pay a standing charge on electricity bills which costs around £200 a year on the current price cap.
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