Source: GOV.UK, “Chancellor abolishes standing charges on gas bills to make payments fairer”, published 28 October 2026. Additional detail from MoneySavingExpert, “Budget 2026: Gas Standing Charges will FINALLY be scrapped”, also 28 October 2026. Current rates from Ofgem's own price cap unit rates and standing charges page.
Our view
This is a genuinely good, overdue change — and it is also not the straightforward win the headlines make it sound like. Scrapping a flat daily charge that everyone pays regardless of usage, and moving that cost into the price per unit, rewards exactly the behaviour you'd want a bill to reward: using less. That's worth saying plainly before the "but" arrives.
The "but" is this: MoneySavingExpert's own reporting on the plan puts the split at roughly 60% of households better off and 40% worse off, because the cost has to land somewhere once it stops being flat. If you live in a small, well-insulated home and use relatively little gas, you're very likely on the winning side. If you're in a larger or harder-to-heat older property and use a lot of it, you're likely to pay more overall — and no announcement framing changes that arithmetic. The honest task this week is working out which side you're on, not assuming the "breathing space" language in the press release applies to your specific bill.
What has actually been announced
Chancellor John Healey confirmed in the 28 October 2026 Budget that gas standing charges will be removed for around 23 million homes across England, Scotland and Wales. His own quoted words: "Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space." The Treasury says Ofgem will be asked to remove the fixed daily charge "in 2027 or as soon as possible after", most likely timed to coincide with a scheduled Energy Price Cap change on either 1 October 2027 or 1 January 2028 — not immediately, and not this winter.
The mechanism is a straightforward swap, not a straightforward saving: the roughly £108 a year currently collected through the flat gas standing charge gets folded into the per-unit price instead. Martin Lewis, who has pushed for this change for years and is quoted in MoneySavingExpert's coverage, estimates the shift adds "just under a penny per kWh" to the gas unit rate. GOV.UK's own release puts the average saving for the roughly 60% of households who come out ahead at about £45 a year — which is an average across winners only, not a figure every household should expect to see on their own bill.
What it means on a real bill
Under the Ofgem price cap running from 1 October to 31 December 2026, the gas standing charge is 29.68p a day (£108.33 a year) and the unit rate is 7.97p per kWh, both direct debit, both VAT-inclusive. Using Martin Lewis's own "just under a penny" estimate, a post-change unit rate works out at roughly 8.9p per kWh with no standing charge at all. Here's what that looks like against real usage bands, as an illustration built from those confirmed current rates — your own supplier and tariff will differ in the detail, but the shape holds.
Illustrative figures only, built from Ofgem's confirmed October-December 2026 gas rates (29.68p/day standing charge, 7.97p/kWh unit rate) and Martin Lewis's "just under a penny per kWh" shift estimate — the actual 2027 rates haven't been set yet.
- Low use — 6,000 kWh a year (a small, well-insulated flat): today, £108.33 + £478.20 = £586.53. After the change, 6,000 kWh at 8.9p with no standing charge = £534.00 — a saving of about £52 a year.
- Medium use — 9,500 kWh a year (Ofgem's current typical household): today, £108.33 + £757.15 = £865.48. After the change, 9,500 kWh at 8.9p = £845.50 — a modest saving of about £20 a year.
- High use — 16,000 kWh a year (a larger or older, harder-to-heat home): today, £108.33 + £1,275.20 = £1,383.53. After the change, 16,000 kWh at 8.9p = £1,424.00 — about £40 a year more.
The break-even point sits close to Ofgem's own typical-use figure. Below it, you gain; well above it, you pay more — and the further from the middle you sit, the bigger the swing either way.
Who wins, who loses — in practice
MoneySavingExpert's reporting cites analysis from the innovation foundation Nesta finding that most households in every income band under £100,000 come out better off, which is a genuinely encouraging finding about the policy's overall fairness. But "most in a band" still leaves a meaningful minority worse off within that same band, because the deciding factor here isn't income directly — it's how much gas your specific home uses, which correlates with income but isn't the same thing. A low-income household in a large, poorly insulated older property, or a family working from home all day in winter, can sit on the losing side of a policy designed to help low-income households overall. That's exactly the gap the government's promised "targeted mitigation for a small number of households" is meant to cover — but the detail of who qualifies hasn't been published yet.
Three things to do this week
- Work out your own annual gas usage from a recent bill or your online account, and compare it to the 9,500 kWh medium-use figure above. That single number tells you more about which side of this change you'll land on than any national average does.
- If you're a high user because of the building rather than your habits, look at what you can fix now rather than wait for 2027. The Great British Insulation Scheme on GOV.UK covers free or subsidised loft and cavity wall insulation for many households, and cutting usage now saves money under both the current charging structure and the one coming in 2027.
- If you think you might qualify for the mitigation the government has promised, keep an eye on Ofgem's implementation announcements rather than your energy supplier's marketing emails — the detail will come from Ofgem and GOV.UK first, closer to the 2027 changeover, and nothing needs signing up for today.
What is still uncertain
The exact 2027 unit rate and standing-charge structure haven't been set — Martin Lewis's "just under a penny" figure is his own estimate from the information published so far, not a confirmed Ofgem rate, and the actual number will depend on wholesale gas prices and network costs at the time it's implemented. The precise date — 1 October 2027 or 1 January 2028 — hasn't been confirmed either, only that it will align with one of Ofgem's scheduled price cap changes. And the promised "targeted mitigation for a small number of households" has been announced in principle without any detail yet on eligibility, amount, or how it will be delivered. We'll cover each of those once Ofgem publishes the implementation detail.
For everything else that leaves your account each month, see our guide to budgeting. If energy costs are part of a bigger money worry right now, free, independent help is available today from MoneyHelper, StepChange and National Debtline.