UK's Healey says he will help households by scrapping fixed gas charges

UK Plans to Remove Fixed Gas Charges to Ease Household Energy Bills

Government Measures to Address Rising Energy Costs

Finance Minister's Announcement

LONDON, Oct 28 (Reuters) - British finance minister John Healey said he would help most households with their gas bills by enabling those who use the least to pay less as part of his first budget which is due to be announced in full later on Wednesday.

Healey - who has promised to give "breathing space" to families hit by the high cost of living - said he would abolish standing charges which are fixed daily fees that cover the costs of connecting a home to a gas supply and are charged on bills regardless of whether energy is being used.

Statement from the Treasury

"Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space," Healey said in a statement issued by the Treasury.

He will ask regulators to remove the charges – which cost £108 ($143.78) a year for the typical household on average – in 2027 or as soon as possible after that, the Treasury said.

Impact on Household Bills

Changes to Gas Pricing Structure

The costs will be shifted to the price of gas consumed which could save 60% of account-holding households around an average of £45 on their annual bill, the statement said.

Critique of Previous Energy Policies

Healey said his budget would "draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks".

Recent and Historical Energy Policy Actions

Recent VAT Cut and Price Cap Changes

Earlier this month, the government cut value added tax on electricity bills which surged following Russia's invasion of Ukraine and have risen again due to the Iran war.

Previous Government Interventions

Previous governments have imposed a price cap on energy prices and removed other levies.

Despite that, Britain's regulated domestic price cap rose 4% in October, and some forecasts are predicting a rise of around 20% to over £2,000 pounds a year in January for an average domestic energy bill including electricity.

British households pay a standing charge on electricity bills which costs around £200 a year on the current price cap.

Additional Information

($1 = 0.7511 pounds)

(Writing by William Schomberg; additional reporting by Susanna Twidale; Editing by Kate Holton)