Is Burnham right to look at scrapping the gas standing charge?
In 30 seconds
At Prime Minister's Questions on 21 October, Andy Burnham said he had asked the Chancellor and the Energy Secretary whether standing charges can be removed from gas bills. He gave no mechanism or date.
The gas standing charge is 29.7p a day, about £108 a year. Moving it onto unit rates would save a typical household £27 a year, Nesta estimates, while heavy users pay more.
Gas is the right place to start, but the help is small, the losers have no named protection, and the electricity standing charge is nearly twice as big.
WhyWhat happened
At Prime Minister's Questions on 21 October, Andy Burnham said he had asked the Chancellor and Energy Secretary to look at whether standing charges can be removed from gas bills. They are to report back to the Commons at the earliest opportunity. He gave no mechanism, cost or date. The next day the Energy Secretary, Miatta Fahnbulleh, said the options included moving the charge onto the unit rate. Politico reported on 23 October that the Budget on 28 October is likely to include it. The government has not confirmed this.
Under The maximum an energy supplier may charge a typical household, set every three months by the regulator Ofgem. for October to December, the gas standing charge is 29.68p a day, about £108 a year. The electricity standing charge is 54.83p a day, nearly twice as much. The typical dual-fuel bill is £1,723 a year, up 4%, and standing charges are 18% of it. There is no VAT on electricity from 1 October 2026 to 31 March 2027, worth about £45 a year. Ofgem began a one-year pilot of lower standing charge tariffs in June 2026.
What's really going on
The timing is the winter. The cap rose 4% in October despite the VAT cut, because wholesale gas prices rose with the conflict in the Middle East. Cornwall Insight forecasts a further 16% rise in January, or £276 a year for a typical household.
Removing a standing charge needs no Treasury money. Ofgem's view is that a zero standing charge moves the costs to unit prices rather than removing them. Nesta, a research and innovation foundation, estimates that doing this for gas would save a typical dual-fuel household £27 a year, with 64% of those households better off. Bills would rise for homes using more than about 12,400 kWh of gas a year.
Gas is the easier fuel to change. Its standing charge carries no network costs, which already sit on gas unit rates. Just over 60% of the electricity standing charge is network cost, and its transmission element rose 65% in the second quarter of 2026.
Distribution is the constraint. Lower energy use goes with lower income, and Nesta finds 86% of the poorest households would gain. But the Energy Secretary accepts that poorer heavy users could lose out. Charities opposed Ofgem's plan for compulsory lower standing charge tariffs, and some warned they were likely to cost high users more. The government's modelling is unpublished.
The strongest case on each side
The strongest case for removing the gas standing charge
- Fixed charges fall hardest on low users, and low use goes with low income. Nesta estimates 86% of the poorest households would gain.
- Gas is the simplest place to start. Its standing charge carries no network costs, so there is no grid investment case to unpick.
- It costs the Treasury nothing, and a dearer gas unit narrows the price gap with electricity, which Nesta says helps people switch to heat pumps.
The strongest case against
- The money moves rather than disappears. Every pound off the fixed charge goes onto unit rates, so homes that use more gas pay more.
- Heavy use also goes with household size and medical need, and charities opposed compulsory lower standing charge tariffs because they would cost high users more.
- The help is small. A typical £27 a year is about a tenth of January's predicted rise, and electricity's bigger standing charge is untouched.
My verdict: partly right
Burnham is partly right, and the right part is starting with gas. Its standing charge carries no network costs, so moving it onto unit rates redistributes money inside the bill without any Treasury money. On Nesta's figures most households, and most of the poorest, would gain.
But the government has not published who loses or said how they would be protected. The Energy Secretary accepts that poorer heavy users could pay more, and a family heating a home for someone who is ill cannot cut its use.
The help is also small. £27 a year for a typical home is about a tenth of the £276 January rise Cornwall Insight forecasts, and the electricity standing charge, nearly twice as big, is untouched.
What I'd do instead
I'd publish the government's modelling, use a rising-block gas rate with targeted help for low-income heavy users, and admit that the bigger fixed charge sits on electricity.
Publish who gains and who loses with the Commons statement
The report back to the Commons should come with the government's own modelling of the gas change by consumption, income, household size and disability.
- The problem
- The Energy Secretary says modelling suggests many low- and middle-income households would gain, and accepts that poorer heavy users could lose out. None of that modelling has been published.
- How it would work
- The Energy Secretary publishes the department's modelling alongside the Commons statement, broken down by consumption, income, household size and disability. Nesta has already published its own estimates by income and gas use.
- What it costs
- Officials' time only. The change is broadly bill-neutral in aggregate, so the figures are about who pays rather than a Treasury line.
- Who it affects
- Everyone with a gas supply. Heavy users, including people who are ill or disabled, see any loss before it reaches a winter bill.
- The risk
- The figures show losers the government would rather not name, and the idea stalls. That beats finding them in the bills.
Use a rising-block gas rate, with targeted help for heavy users on low incomes
Recover the charge through a lower rate on the first block of gas and a higher rate above it. Give low-income heavy users a larger Warm Home Discount.
- The problem
- Spreading 29.7p a day across one flat unit rate raises the price of every unit, including the first units a low user cannot avoid.
- How it would work
- Ofgem sets a gas price cap with two unit rates. The first block covers a low user's year; units above it carry the recovered fixed costs.
- What it costs
- Nothing to the Exchequer for the tariff itself. The pot is the same, about £108 per household a year, and the block boundary decides who gains.
- Who it affects
- Low users gain most. Heavy users pay more above the block, including low-income homes with medical needs, who would need a larger Warm Home Discount. Nobody has costed that.
- Tried before?
- Ofgem's 2025 zero standing charge consultation asked about rising-block, falling-block and single-rate designs, but Ofgem adopted none. Energy officials are reported to be working on rising-block tariffs for after the Budget.
- The risk
- Targeting help at low-income heavy users needs data that suppliers may not hold. Anyone the targeting misses, such as an ill or disabled household, pays more.
Take the bigger fixed charge off electricity bills through taxation
Move the electricity transmission charge, 22.3p a day of the 54.8p standing charge, onto general taxation, costed by the The independent body that produces the official forecasts for the economy and the public finances. Each Budget is judged against them., the government's independent forecaster.
- The problem
- Just over 60% of the 54.8p electricity standing charge is network cost. Its transmission element rose 65% in the second quarter of 2026.
- How it would work
- The Chancellor announces at a Budget that transmission costs will be funded from taxation, and Ofgem removes them from the electricity standing charge in the next price cap.
- What it costs
- On my arithmetic, 22.3p a day is about £81 a year per electricity customer, nearly twice the £45 the VAT cut takes off. The Treasury has not costed the total.
- Who it affects
- Every electricity customer gains about £81 a year. Taxpayers pay instead, so the cost shifts from a flat charge onto income or borrowing.
- The risk
- It needs a tax rise or borrowing the Chancellor has not named, and it hides the price of grid build-out from bill-payers.
The trade-off
The gas change costs the Treasury nothing but creates losers among heavy users, and protecting the poorest of them has no costing yet. Taking transmission costs off electricity bills saves about £81 a year per customer, paid for by tax or borrowing.
How we'd know it worked
The Commons statement on gas standing charges should come with a published table of who gains and who loses. By the April 2027 cap, standing charges should be below 18% of a typical dual-fuel bill.
What to watch
- The Budget on 28 October.
- Ofgem's price cap for January to March 2027, due by 25 November 2026.
- Ofgem's one-year pilot of lower standing charge tariffs, which began in June 2026.
Each of these is logged as an open call on my track record.
Sources
- UK Parliament (Hansard): Oral Answers to Questions, House of Commons, Wednesday 21 October 2026
- The Independent: Burnham admits 'we can't faff around' on reducing energy bills as he mulls scrapping standing charges (22 October 2026)
- Politico: 'Andy Time': Why Burnham's budget isn't going to deliver a revolution (23 October 2026)
- HM Treasury: Budget to move "power and money out of Westminster, and into every postcode around Britain"
- Ofgem: Changes to energy price cap between 1 October and 31 December 2026
- Ofgem: Energy price cap unit rates and standing charges
- House of Commons Library: Energy standing charges (CBP-10339)
- GOV.UK: New PM cuts tax on household electricity bills to give breathing space on cost of living
- Nesta: The case for abolishing the gas standing charge (updated 21 October 2026)
- Ofgem: Lower standing charge tariffs: next steps
- Ofgem: Introducing a zero standing charge energy price cap variant (consultation)
- Ofgem: Ofgem confirms plans to introduce lower standing charge tariffs
- Cornwall Insight: 16% price cap rise forecast in January (30 September 2026)
- The Guardian: Chancellor plans major intervention to help poorer UK households with rising energy bills (6 October 2026)
- Ofgem: Summary of responses: introducing a zero standing charge energy price cap variant (PDF)