Prime Minister Andy Burnham has asked ministers to examine scrapping standing charges on gas bills.
Mr Burnham told MPs he had asked Chancellor John Healey and Energy Secretary Miatta Fahnbulleh to look at whether the fixed daily charges could be removed from gas bills.
He said he wanted the pair to report back to the House of Commons “at the earliest opportunity”, raising the prospect of a change to how households pay for their gas.
What are standing charges?
Standing charges are a fixed daily fee households pay for being connected to the gas network, regardless of how much energy they use. They can make up a significant part of bills, particularly for people who use very little gas.
Removing them could help some households, although the impact would depend on how the costs currently covered by standing charges were dealt with under any new arrangements.
The announcement came during Prime Minister’s Questions, when Mr Burnham was challenged over the Government’s decision to approve the Jackdaw gas field.
Andy Burnham orders review of gas standing charges
Explaining the Government’s decision on Jackdaw, Mr Burnham said the previous Conservative government had “messed up” the process.
He told MPs: “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 Prime Minister said the decision would help fund the transition to renewable energy while also creating opportunities to reduce household energy costs.
He continued: “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.”
He then announced the review of standing charges, adding: “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.”
The proposal is still under consideration, and no final decision or timetable for removing the charges has been announced.
Who would benefit from scrapping standing charges on energy bills?
Standing charges apply even when a household uses no gas, meaning people who are away from home or deliberately cut their consumption can still face these fixed costs.
Scrapping the gas standing charge could therefore benefit some low-use households, but the overall effect would depend on how suppliers recovered the costs currently covered by the fee.
If some of those costs were instead added to unit rates, households using more gas could see less benefit or potentially pay more.
The Government has not yet set out how a proposed change would work in practice, or whether any replacement charging arrangements would be introduced.
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Kemi Badenoch attacks Government over Jackdaw gas field
The announcement came amid a row over the Government’s decision to approve the Jackdaw gas field.
Conservative leader Kemi Badenoch accused Labour of “dithering” for two-and-a-half years before approving the project and called for the Government to repeal its ban on all new oil and gas licences.
She said: “We have the resources, the expertise and the people. What we have lost is the confidence to make tough decisions”.
The Government has argued that the Jackdaw decision will help support investment in renewable energy and efforts to bring down bills.
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