Burnham Orders Plan to Remove Standing Charges From Gas Bills
Ministers asked to report back to Parliament, while the energy industry says the effect on bills depends on where the costs are moved
By AXY Business Desk ·
Key points
- Prime Minister Andy Burnham has asked the Chancellor and the Energy Secretary to look at removing standing charges from gas bills and to report back to Parliament.
- Standing charges are fixed daily fees that households pay even when they use no energy; the averages cited are 29.7p a day for gas and 54.8p a day for electricity.
- Nesta has suggested moving standing charges into the unit rate, which would probably help customers who use little gas but could raise costs for heavy users.
- Energy UK says the effect on bills depends on how or where the charges are reallocated.
- The source gives little detail on how the plan would work, and Ofgem's pilot scheme has not yet reached firm conclusions.
Prime Minister Andy Burnham has asked ministers to develop a plan to remove standing charges from gas bills, a change that could alter how households across Britain pay for heating and cooking. He made the request during Prime Minister's Questions in the House of Commons on 21 October 2026. He asked the Chancellor, John Healey, and the Energy Secretary, Miatta Fahnbulleh, to look at whether the charges can be removed and to report back to Parliament at the earliest opportunity.
The prime minister gave little detail about how this would work, and that gap is the central reason the idea has drawn so many questions. Taking a charge off a bill does not make the cost disappear. Any money that used to be collected through the standing charge would still need to be recovered somewhere, and where it lands decides who gains and who pays more.
What a standing charge is
A standing charge is a fixed daily fee on an energy bill. According to the source material, it covers the costs of connecting a home to the energy supply. The amount varies by region, and households must pay it even on days when no energy is used at all, such as a week when the heating stays off and the cooker is never switched on.
The average standing charge is 54.8p a day for electricity and 29.7p a day for gas. Multiplied across a 365-day year, those averages come to roughly £200 for electricity and about £108 for gas. That is a simple calculation from the averages, not a figure given in the source, and real bills depend on the supplier, the tariff and the region.
The other main part of a bill is the unit rate, which is the price paid for each unit of energy actually used. Gas and electricity are both measured in units, usually kilowatt-hours. A household's bill is the standing charge plus the unit rate multiplied by the amount of energy used. Because of that split, moving money from one part of the bill to the other changes how the bill looks and, potentially, who ends up paying.
Why the idea is back on the table
Standing charges are not a new subject for the energy regulator, Ofgem. According to the source material, it has spent close to two years running a series of consultations on them. The response was large, and it included strong opposition from people who use very little energy. Those customers say they cannot cut their standing charge no matter how carefully they use power, because the fee does not depend on how much they consume.
Ofgem is also running a pilot scheme on low standing charge tariffs. It has not yet drawn any firm conclusions from the pilot, which the source material takes to mean there are no easy answers to the problem.
Burnham tied his request to a wider energy decision. He pointed to the government's approval of the Jackdaw gas field in the North Sea, which is off the coast of Britain. He called the approval a "pragmatic decision" and said it would allow the government to increase investment in renewables and "do more to help people with bills." The source material does not explain how a North Sea gas approval would affect standing charges, so readers should treat that link as the government's own argument rather than a settled fact.
Who could gain and who could lose
The most specific idea in the source material comes from research firm Nesta, which has suggested moving standing charges into the unit rate. Under that model, people would pay for the energy they use rather than a flat daily fee. The source says no details have been given on how this would work in practice, so the mechanics remain unclear.
The source says the switch would probably benefit customers who do not use much gas. For them, the fixed daily cost is a larger share of the bill, so moving it into the unit rate could reduce what they pay. Heavy users, by contrast, could end up paying more, because more of their bill would come from each unit they consume.
That trade-off is the heart of the debate. A fixed charge hits people with small homes, people who are out of the house for long periods, and people who already cut back hardest the hardest. A unit-based charge rewards restraint but can leave larger households, or those who need to keep warm for health reasons, with higher bills. Whether the balance is fair depends on the design of the plan, and that design has not been published.
The report also cites an influential research foundation that argued the change would be a progressive move, meaning it would help people on low incomes more than those on higher incomes. The foundation said the change would knock £27 off a typical annual bill. The source does not set out the assumptions behind that figure, so it should be read as one organisation's estimate rather than an established number.
The energy industry takes a more cautious line. Energy UK, the industry body, said that whether the proposed changes would make a difference to bills depends on how or where the charges were reallocated. That is the key point. If costs move from a fixed daily charge onto each unit of energy, households that use more would carry a bigger share. If the money is recovered through a different route, the outcome for households could look quite different.
The electricity question
The proposal covers gas only. Asked why electricity standing charges would not be scrapped as well, the prime minister's official spokesman said that VAT had already been cut on electricity bills. The source material does not give more detail on that answer, and it does not say whether electricity standing charges are under review.
The difference matters for homes that use both fuels. A household paying standing charges on gas and electricity would still face a fixed daily cost on the electricity side even if the gas charge were removed. Readers in those homes should not assume a gas change would cut their total bill by the full amount of the gas charge.
What happens next
The next formal step is for ministers to report back to Parliament. The source material gives no date for that report and does not say whether it would come with a decision. Until then, the plan is a request to examine an idea, not a policy with a timetable or a costed design.
Analysts are likely to focus on three questions, based on the points raised in the source. The first is whether any change would be neutral overall, so that total spending by households stays the same while the split between fixed and variable costs moves. The second is whether a shift to unit rates would encourage people to use less energy or leave their use unaffected. The third is how Ofgem's pilot results and consultation findings fit with whatever the government proposes. Each question could decide whether households see a real saving or simply a reshuffled bill.
Any change of this kind would also need to pass through regulatory and political steps before it reached a household bill. The timing is unclear, and the source does not set out an expected start date.
For most households, nothing changes yet. Standing charges remain on bills until any change is announced, approved and put into practice. People who want to understand their own position can check their supplier's tariff breakdown, which should show the standing charge and the unit rate separately. They should also watch for the minister's report to Parliament, because that is when the detail of the plan is most likely to emerge.
Questions and answers
What are standing charges on gas bills?
Standing charges are fixed daily fees that cover the cost of connecting a home to the energy supply. The average is 29.7p a day for gas, and households must pay them even when no energy is used.
What did Andy Burnham ask ministers to do?
Burnham asked the Chancellor, John Healey, and the Energy Secretary, Miatta Fahnbulleh, to look at whether standing charges can be removed from gas bills. He asked them to report back to Parliament at the earliest opportunity.
Would removing standing charges lower everyone's gas bill?
Not necessarily. Nesta has suggested moving the charges into the unit rate, which would probably benefit customers who do not use much gas, while heavy users could end up paying more. Energy UK says the effect depends on how or where the charges are reallocated.
Does the plan cover electricity bills too?
The proposal concerns gas bills. When asked about electricity standing charges, the prime minister's official spokesman said VAT had already been cut on electricity bills, and the source gives no further detail.
Topics: Andy Burnham, Standing charges, Gas bills, Ofgem, Energy UK, Nesta, Jackdaw gas field
Sources: BBC Business
https://axynewsglobal.com/article/burnham-orders-plan-to-remove-standing-charges-from-gas-bills