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 was made by the Chancellor John Healey ahead of the Budget (on Wednesday 28 October). It's something MoneySavingExpert and its founder Martin Lewis have campaigned successive governments on for years.
Watch: Martin Lewis' instant analysis on gas Standing Charges being scrapped
Martin appeared on ITV's Good Morning Britain shortly after the Government's announcement to give his instant reaction and analysis:
From Good Morning Britain on Wednesday 28 October 2026, courtesy of ITV. All rights reserved. Watch the full episode on ITVX.
Read the full video transcript
Martin Lewis: "No one is happy with the energy bill situation. I know even though I'm talking about Standing Charges, which is big picture good news for fairness, none of that is going to change the fact that energy bills are going up massively, that there are no cheap fixes available at the moment, and we're going to see really big hits coming in January.
"So we have confirmation that Standing Charges are going to end on gas next year. So this is the daily charge that you pay for having the facility for having gas and electricity. It's going on gas and that cost is going to be shifted to the unit rate.
"They haven't given me an exact amount that will go to the unit rate, because it will depend on what prices are at the time. My guess is it will be something less than one pence per kilowatt hour. So there's £108 a year coming off bills and it will be shifted onto the unit rate.
"So what that means, as I've long said, is it means lower users will pay less. Higher users will pay more. The exact gap, I think, will be somewhere around 12,500kW. Which effectively means, looking at the income distribution, I've been campaigning for this to happen for six years, so I have all the numbers. These are my numbers not coming from the Treasury.
"Pretty much every group up to £100,000 of earnings, people in that group, over 50% of people will save, above £100,000, over 50% of people will pay more. The amount you pay more may be £30 or £40. They may need to put in support to help with that, but we won't know until it comes in.
"As for when this happens. Well, they're saying in 2027. This is primarily about the Price Cap on energy bills that you're on if you haven't switched, if you haven't moved house. So my guess is it will either be 1 October, because the Price Cap moves every three months, or 1 January 2028. I don't see it being till the end of next year, but that is roughly what is going to happen.
"As someone who's been campaigning on this for a very long time, I think Standing Charges are a moral hazard. I think they disincentivise people from cutting their bills. They're a poll tax on energy use. They're terrible, especially for older people in the summer when they're not using gas, they still have to pay for the facility of having gas. So for me, this is less about the money, this is more about fairness.
"And the interesting thing. And when I went in and asked the Chancellor to do this two months ago, the stats I was posting to him about favourability. Well, I did a poll on this two weeks ago where I was very explicit: Lower users will pay less, but higher users will pay more. 50,000 people voted in those polls on social media, 95% supported this. So I think the Government's been listening on that basis."
Good Morning Britain presenter, Richard Madeley: "Well, congratulations, Martin, because this has been very much your crusade. You must feel personally extremely vindicated. Also, you must feel quite special because I can't think of any Budget day where a journalist such as yourself has been invited into No. 11 on the day of the Budget. What kind of mood was the Chancellor in?"
Martin: "He was in a pretty good mood, actually. I was obviously pushing him, as I do on other things, trying to get him to say. There was some sort of semi-coy smiles going on there. I asked him will he be doing it on electricity? He says 'yes, they're going to be looking on doing it to electricity over the next year'.
"My big question on energy is will there be a support scheme coming in January when we've got the Energy Price Cap looking to go up 27%? Reading between the lines from what he told me, 'yes, definitely'. But he wouldn't tell me what it is.
"My guess would be either they will increase the Warm Home Discount that affects people on benefits, or they'll do something, and it's one of the things I've suggested a bit like Rishi Sunak did, where they'll give help on Council Tax bands A to D and a slush fund for some other people, and he wants to restructure energy as well. So he was seen to be in a good mood, but I didn't get everything. I got Standing Charges, I didn't get everything."
Good Morning Britain presenter Ranvir Singh: "Yeah, I'm not sure that Lindsay Hoyle, the speaker of the House, would be happy if you were leaking everything this morning, but it's good to hear you talk about that."
Martin: "Just be careful Ranvir, it's not a leak because they put out an official announcement. It's not leaking. It's not leaking. I went in to coincide with the announcement."
Ms Singh: "It's an announcement. And I was just going to say that you talk there about the Warm Homes Discount. There's been a lot of criticism that £150, whilst it sounds okay, it just simply hasn't kept in line with inflation. It would have to go up to what, sort of £250, do you think, in order to actually make a difference?"
Martin: "Well, I mean, I think we're not really looking at it keeping up with inflation. If you want the horror story, having done the good news, the horror story is I'm currently expecting the Energy Price Cap to go up 27% in January. Now, if you were to do that on an annualised basis, that's about £450 on a typical bill.
"Of course, January to March, after that, it could go down if things happen in the Middle East. So what we are pretty sure, over the January to March period, is about £100 on energy bills. So that is the immediate bills shock in January alone. So, you know, if you put the Warm Home Discount up to £250, that would just cover the January bill shock.
"The problem with doing the Warm Home Discount is the people who are just above that support, the people who aren't on benefits, the people who are struggling and don't get any other help. And I think that's the political decision that they will have looked at, is do you just help those on benefits, or do you go higher up the help chain to try and look at other people?
"And the problem is because it's based on household income, it's difficult to do. That's why Rishi Sunak used a Council Tax system. That's why I think that sort of helps. My suggestion to the former prime minister when he was chancellor, Rishi Sunak, was if he's doing the Council Tax system, you then have a slush fund for the people who aren't caught by it.
"So that's probably the type of thing I'd be looking at if I want to go up the net. Or maybe they'll just do it on the Warm Home Discount. I will be listening when the Chancellor stands up to find out later. But yeah, I mean, it's a nightmare what's going on in January. It's a nightmare."
Mr Madeley: "And do we think that the Standing Charge on gas has been abolished before any such action is taken with electricity bills because basically it's cheaper to do that because the Standing Charge is higher on electricity bills and more people use electricity."
Martin: "Yeah, it's £108 a year on gas, it's £200 a year on electricity. There are a lot more technical difficulties abolishing it on electricity, because on electricity is where we put the policy costs, you know, for things like the Warm Home Discount and other policies. So I think that is a longer structural change, but I suspect they will be consulting on that over the next year trying to get rid of it.
"He's promised me he wants it to go because they think Standing Charge is unfair. I think if people see it in its entirety, you know, both Labour and Tories at the last election promised, you know, when we asked them about it, they promised they wanted to lower Standing Charges.
"If you see it in the totality of Standing Charges, the £308 a year at the moment. Well, once this goes, there'll be £200 a year. That is a lowering of all Standing Charges, and hopefully there'll be more to come on electricity. But yeah. So, so this is step one, I would see it as."
Ms Singh: "I think that's great. And know what it shows this morning doesn't it, Martin, is that, you know, we talk about the Energy Price Cap. You have talked about that for years on this programme. And it's always felt like it's something that just sort of happens out there and we have to receive it, no matter what.
"And almost that Government is sort of limp in the face of Ofgem that this is this sort of overseeing arch enemy that can just sit there and say, 'Oh, you can charge this much on your unit per household'.
"This shows that the Government can interject. It can have impact on watchdogs, on those who set standards. And I know the last time you're on this program with a breaking news story, it was something quite complicated about if people switch to a lower provider."
Martin: "The Market Stabilisation Charge. I literally just told the Chancellor about that and said he needs to look at it. I know it's complicated to explain. I think it's unfair, it’s a switching penalty. It basically means that if you switch, it disincentivises firms to offer cheaper fixed deals, I think it's an absolute nightmare. I got my chance to say it to the Chancellor while I was in with him."
Ms Singh: "Yeah, but but what it shows Martin, I think really clearly, is that the Government can impact our bills by affecting the watchdog. I mean, that's important to notice. Is it a line in the sand that it starts something now?"
Martin: "Well, I'm expecting lots of big energy announcements. They always say Ofgem is supposedly at an arm's length. But I mean, let's remember it was Government that said Ofgem had to introduce a Price Cap. It was legislated in that they had to do the Price Cap, which was meant to be a backstop tariff for people who don't switch. Ofgem put in how it does it. We've always had Standing Charges.
"I think at big-scale, public, obvious announcements, government can intervene. In a way, what you don't want government doing with an arm's length organisation is small scale backroom intervention, whereas this is a big one. Yeah, I mean, I think it is going to change things. No one is happy with the energy bill situation.
"I know even though I'm talking about Standing Charges, which is big-picture good news for fairness, none of that is going to change the fact that energy bills are going up massively, that there are no cheap fixes available at the moment, and we're going to see really big hits coming in January.
"I always talk about consumers, but you're also talking about business, the cost for business for energy in the UK, not my area, are incredibly high. And again, that feeds through to the prices that we all pay. Because if businesses have to pay more for energy, they have to charge us more for stuff. And that's why it's such... that's probably why I'm here this morning, because it's a centrepiece of everything that's going wrong and needs to be fixed."
You can also read Martin's immediate thoughts here (as posted on social media just after the announcement):
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 [Wednesday 28 October].
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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