The government have announced that the standing charge on gas bills will be abolished, reports Sky News.
Chancellor John Healey has made the announcement ahead of today’s Autumn budget.
Comparison website Uswitch say the change is expected to bring relief to those living in smaller houses.
Richard Neudegg, Director of Regulation, said: “Households that use less gas, such as those living in smaller homes, should benefit when this comes in. It will also give relief to those who have switched to electric heating but kept a gas connection and find themselves paying a standing charge for a service they don’t use for heating.”
According to the Treasury, the change is predicted to save around £45 per year on the average bill.
Standing charges currently amount to an average of £108 for a typical family, meaning there’s an estimated saving of about 60%.
However, the End Fuel Poverty Coalition are still concerned for low income households and say there is more to answer for.
Simon Francis, Coordinator of the group said: “Despite the positives of this specific proposal, millions of households won’t see a saving. This means Ministers have serious questions to answer about who they are and, if they are vulnerable or on low incomes but have high energy needs, how they will be protected.
“The Treasury’s figures also assume nobody changes how much energy they use, so they tell us nothing about people who already can’t afford to heat their homes safely.”
Mr Healey has asked Ofgem to deliver the policy change in 2027 or “as soon as possible”.
The costs will instead be covered by a slight increase in the cost of each unit of gas used, which Energy UK Chief Executive Dhara Vyas says needs to be approached with caution.
He said: “It needs to be introduced carefully. So it is critical the Government and Ofgem work closely with industry and consumer groups on implementation to avoid negative consequences.”
The move is a part of Labour’s bid to reduce energy costs for households, following the removal of VAT on electricity bills, which again is estimated to save an average home £45 a year.
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