Andy Burnham proposes plan to cut standing charges from gas bills

Prime Minister Andy Burnham has asked ministers to develop a plan to remove standing charges from gas bills.

These are fixed daily fees that cover the costs of connecting to a supply. They vary by region and households must still pay them even when energy is not being used.

Industry body Energy UK said whether the proposed changes would make a difference to bills would depend on how or where the charges were reallocated on the bill.

But an influential research foundation argued it would be a progressive move that would help those on low-incomes and knock £27 off a typical annual bill.

During Prime Minister’s Questions, Burnham said the “pragmatic decision” on giving the green light to the Jackdaw gas field in the North Sea would allow the government to increase investment in renewables and “do more to help people with bills”.

He said he had asked the Chancellor John Healey and 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”.

No details have been given on how removing standing charges would work in practice. But the suggestion has been made by research firm Nesta that they could be moved to the unit rate, external, so people pay for what they use.

This would probably benefit customers who don’t use much gas, but heavy users could end up paying more.

For nearly two years, regulator Ofgem has run a series of consultations on standing charges, with a massive public response including vociferous opposition from low-energy users who can do nothing to cut standing charges.

Ofgem is running a pilot scheme on low standing charge tariffs, but is yet to draw any firm conclusions, suggesting there are no easy answers.