Andy Burnham has issued a bombshell announcement about the future of standing charges on gas bills. The Prime Minister told the Commons that ministers will consider whether the fee can be removed from gas bills to ease cost pressures on British households. Standing charges are fixed daily fees set by the energy regulator Ofgem for energy use. Households get charged it regardless of whether they’re using energy on that day. The weighted average standing charge on gas bills across the UK is set at 29.68p until December 31, with price caps and standing charges reviewed and updated by Ofgem every three months. There is a separate cap and average standing charge for electricity rates, which the watchdog also regulates.
Mr Burnham told MPs that he had asked the Chancellor John Healey and Energy Secretary Miatta Fahnbulleh to examine getting rid of the charges and to report back to MPs as soon as possible. It came in response to a question about the Government’s decision to approve for the Jackdaw gas field in Prime Minister’s Questions.
He said he had made a decision that he claimed the previous Conservative government “messed up”. “That’s why there was the delay, because they didn’t do the process properly. And we’ve made a pragmatic decision, Mr Speaker, that will allow us to do two things,” the Labour leader said.
“Firstly, build a bridge to a renewable future because the resources that come in now from this decision will allow us to invest in renewables, bring forward clean energy and in this Parliament, substantially de-link gas and electricity prices so that we can bring bills down.
“It will also allow us, Mr Speaker, to do more to help people with bills. I can tell the House today that I have asked the Chancellor and the Energy Secretary (Miatta Fahnbulleh) to look at whether we can remove standing charges from gas bills and to report back to this House at the earliest opportunity.”
Tory leader Kemi Badenoch had accused the Labour Government of “dithering” for two-and-a-half years to approve Jackdaw, as she called for Labour to repeal its ban on all new oil and gas licences. “We have the resources, the expertise and the people,” she said. “What we have lost is the confidence to make tough decisions”.
The Ofgem’s energy price cap rose by 4% from October 1. Experts have warned it could rise considerably more January, reflecting the impact of the war in the Middle East, which has sent global energy prices skyrocketing.
Cornwall Insight’s latest forecast predicts the price cap will rise by a further 16% to £1,999 a year on January 1, up by £276 on the level between October and December. It would represent the biggest rise since January 2023.
In a bid to help households with costs, the Government has temporarily removed the 5% VAT from electricity bills until March 31 2027 to cut around £45 a year. However, households are still paying 5% VAT for gas.
Last week, Ofgem’s new CEO Tim Jarvis warned of a “difficult” winter ahead as he raised concerns that “people are going to struggle” without help.
Speaking at the Energy UK conference in London, he said: “We can all see what’s happening to wholesale prices as a result of what’s going on in the Middle East, and we’ve seen the predictions for January. It’s going to be a difficult winter.”
Campaigners have called on the Government to make plans now to support all households with energy costs this winter due to the severity of forecast bill hikes.
The End Fuel Poverty Coalition has called on ministers to prepare an “emergency heat tariff” to cap the cost of heating this winter, with gas prices already rising 27% year-on-year.
A poll for Uswitch suggests some 1.7 million households won’t turn on their heating this winter amid fears of soaring bills and efforts to reduce their spending.
The Department for Energy Security & Net Zero (DESNZ) has been approached for comment.
