Martin Lewis reacts to Government plans to shift Warm Home Discount costs off the standing charge

Today, the Government have launched a consultation on Warm Home Discount Cost Recovery, seeking views on recovering Warm Home Discounts costs via the unit rate instead of the standing charge.

Reacting to the announcement on X, Martin Lewis, founder of MoneySavingExpert.com, said: "News. Energy standing charges finally to fall? Delighted the Government has listened and is consulting on shifting the Warm Home Discount costs off the standing charge and onto the unit rate. This is exactly the right direction. You can respond to the consultation here.

"If implemented, it would remove a typical £39 a year from the standing charge (roughly split between gas and electricity), starting next April. That timing aligns with the planned reduction in unit rates announced in the Budget (via moving some other policy 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. So do feed in to the consultation to ensure it happens."