Standing Charges to fall from April as Warm Home Discount cost shift confirmed – Martin Lewis says it's 'a step in the right direction'
Standing Charges in England, Scotland and Wales will be cut by a typical £39 a year (roughly split between gas and electricity) from 1 April 2026. It comes as the Government has confirmed it's removing the cost of funding the Warm Home Discount scheme from Standing Charges. MoneySavingExpert.com founder Martin Lewis has welcomed the news, but warned that more needs to be done.
Up until now, the cost of the Warm Home Discount scheme has been passed on to consumers through their gas and electricity Standing Charges. But the Government has today (12 February) confirmed that following a consultation last year, from 1 April it will move these costs to energy unit rates instead – this is the amount you pay for each kilowatt hour (kWh) of energy used.
Standing Charges – which you pay just for the facility of having gas and electricity, even if you don't use any – currently make up around £330 of the average annual energy bill. We've long called for these charges to be lowered, as they penalise lower-use households and those looking to cut their usage.
Martin Lewis: 'It's a step in the right direction'
News. Energy Standing Charges finally to fall a little bit. I'm pleased the Government has listened and after consulting, is shifting Warm Home Discount costs off the Standing Charge and onto the unit rate. This is moving in the right direction.
It should take roughly £40 a year from the Standing Charge, roughly split between gas and electricity, starting this coming April (2026). This aligns with the planned unit rate reduction (from cancelling the ECO scheme and moving some other costs into general taxation).
Overall, assuming all else stays equal (which it won't, as I've written before), this means the Standing Charge should fall, and the unit rate should still fall too, because the added cost from this shift is smaller than the reduction from removing the policy costs.
It's only a baby step, but it's a step in the right direction. I now hope Ofgem follows this route in its long-term consultation on the future structure of energy bills.
The current Standing Charge is a moral hazard that disincentivises lower usage and keeps bills high for people who use very little energy. It's the biggest single cause of complaint I get about energy bills, by a mile.
Paying £300+ a year simply for the facility of having energy is too much. It also penalises older people who don't use gas in the summer yet still pay for it every day.
I've pushed on this for years, and it's good to finally see some (albeit small) movement.
While Standing Charges will fall – the cost is being added to unit rates
In theory, the more energy used (and therefore the more unit rates), the bigger the impact the shifting of this charge will have.
However, the Government has said that for a typical dual-fuel household, there will be no obvious change to the amount you pay for your energy as a result of this move, because the £39 a year cost will simply be shifted out of your Standing Charges and on to the amount you pay for your energy use instead.
Plus, while this change will take force for Price Capped standard variable tariffs (SVTs) and for new tariffs (both SVTs and fixes) launched from 1 April, it's unlikely to apply to existing fixed rates locked in prior to 1 April.
In addition, from 1 April the Government's '£150 off energy bills' scheme announced at the Budget last November will also take effect, negating some of the impact of the Standing Charges change. This reduction will take place due to various green levies paid by consumers being removed from bills.
What else is happening with Standing Charges?
Last year, industry regulator Ofgem separately announced new plans to require all energy suppliers to offer at least one low Standing Charge tariff to all customers by early 2026. But this has disappointingly yet to materialise by this January as promised.
Martin has also previously shared serious concerns over the plans, which may not help those who need it most – for more on this, see 'Why can't you just cut Standing Charges?', Martin asks regulator boss.
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