Standing charges on household gas bills will be scrapped for millions of homes under measures to be announced by Chancellor John Healey in the Budget, with the change expected to begin next year or as soon as possible afterwards.
The Treasury said the fixed daily fees, which are paid regardless of how much gas a household uses, would instead be built into the unit rate. The Government estimates that about 60 per cent of households will save an average of £45 a year.
Standing charges cover the cost of delivering energy to homes and businesses and are applied separately to gas and electricity bills. The gas charge is understood to cost a typical household about £108 a year.
Mr Healey is due to deliver his Budget statement to the House of Commons at about 12.30pm, under pressure to ease household costs while addressing weak economic growth and a multibillion-pound gap in the public finances.
The Chancellor is also expected to set out measures on fuel duty, support for poorer households, first-time buyers and smaller businesses. A rise in the minimum wage for younger workers is expected next year, although it is not expected to match increases announced in recent Budgets.
The changes to gas bills may not benefit every household. Raegan Furness, a single mother from Macclesfield who cares for two disabled children, said her family used more gas than average because her youngest daughter struggles to regulate her body temperature.
She warned that households with high consumption could end up paying more once the fixed costs were added to the unit rate. “We’re being penalised for having to cater to Kacie’s medical conditions, and making sure she’s warm and safe,” she said.
Mr Healey is expected to announce an additional £4.7 billion for the armed forces to address a funding shortfall in the Defence Investment Plan. However, he could face opposition criticism if he does not commit to raising defence spending to three per cent of gross domestic product by 2030.
Former chancellor Jeremy Hunt accused the Government of favouring short-term popularity over measures to address the problems holding back the economy. He warned that the Budget could be dominated by “smaller, populist measures designed to play well on social media” rather than long-term decisions to promote growth.
The pressure comes as HSBC cuts its forecast for UK growth in 2027 from 1.4 per cent to 1.1 per cent, citing higher inflation and interest rates as a drag on consumer spending and the housing market.
The Budget is also expected to include a fresh crackdown on online retailers and a possible tax raid on banks. Reform UK leader Nigel Farage has criticised plans to give HM Revenue and Customs greater powers to recover unpaid tax directly from people’s bank accounts.
Opposition parties have accused Mr Healey of lacking ambition. Shadow chancellor Andrew Griffith said the Chancellor needed to take “tough decisions” rather than “continuing to kick the can down the road”, while the Liberal Democrats warned that a “steady as she goes” Budget would not be enough.
