Money Saving Expert Martin Lewis is celebrating the demise of gas standing charges, calling the extra costs on energy bills a ‘moral hazard’.
Chancellor John Healey announced this morning that he would be scrapping the extra charges, which are automatically put on bills, as part of today’s Budget.
That means even people who use no gas at all still must pay them – a situation the chancellor described as ‘unfair and outdated’.
The fixed costs will – when the changes come into effect next year or ‘as soon as possible after’ – instead be moved into the unit rate.
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According to the Treasury, this will mean 60% of households with an account will save an average of £45 each year.
The savings will be concentrated for homes that use less gas, while those that use the most gas may see their bills increase further than they otherwise would have.
Speaking to the Today programme this morning, Martin Lewis said he had been campaigning for this change ‘for many years’.
He said: ‘They’re a moral hazard, they’re a disincentive for many users to cut their bills.
‘So many people get in touch with me saying, “Half my bill is standing charges, nothing I can do about it, it doesn’t make any difference.” They’re a poll tax on energy, if you like.’
Mr Lewis said he met with John Healey this morning – just hours before he is due to deliver his Budget around lunchtime.
He recalled asking the chancellor in that meeting if similar changes could be applied to standing charges on electricity bills, with Healey telling him he will be ‘working on that over the next year’.
However, Mr Lewis also emphasised that the end of gas standing charges ‘isn’t going to bring the materiality of people’s energy bills down’.
Forecasters predict an increase of as much as 27% in the average household energy bill when the next price cap comes into effect at the start of next year, as the war in Iran continues to force up costs.
Mr Lewis said there is ‘going to have to be a support package put in place for January’, and that the chancellor this morning gave him a ‘read-between-the-lines answer that yes, he will be doing it’.
The plan to end standing charges also prompted concern from Dame Clare Moriarty, the chief executive of the charity Citizens Advice.
She told the Today programme: ‘Quite a lot of people who are on low incomes will be lower gas users and they will benefit from that.
‘But if you’re disabled or people who are living in poorly insulated homes where they’re losing heat all the time, they’ll have higher usage and they can actually end up paying more when this measure goes through.’
Andy Burnham first hinted at changes to gas standing charges at last week’s PMQs, when he said he had asked the chancellor and Energy Secretary Miatta Fahnbulleh to look into removing them.
This morning, the PM said: ‘Abolishing gas standing charges is about basic fairness and giving people more control over their bills.
‘I am determined to reform our broken energy market, so it better serves the public interest.’
According to the Observer, Healey will use the Budget to kick off a series of ‘deep reforms’ to the UK’s energy system aimed at bringing costs down and reducing household bills.
That could include measures to ‘decouple’ gas from electricity prices, as the cost of the fossil fuel often sets the cost of power even if it is generated by renewables.
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