Insurance Edge

CONFIRMED. Gas Standing Charges to be scrapped. I've just come out of a meeting with the Chancellor. The gas standing charge will be scrapped in 2027 (my guess, either for 1 Oct price cap or the 1 Jan 28 price cap). Having campaigned against the moral hazard of standing charges for years, I'm pleased. It's currently £108 a year. That cost will be shifted onto unit rates. We don't know how much yet, but I suspect just under 1p per kwH. The Chancellor also said he will be talking to Ofgem about how they get rid of the charge on electricity as well, but that is 'trickier' apparently and will take longer. This is primarily about the price cap standing charges. There will still be an open market, so other firms can offer other forms of prices with or without the standing charge. My suspicion is that once it goes on the price cap, it will tend to be reduced on other tariffs as well. As for those on fixes: if you get a fix now, the rate of your fix is fixed, so this should not affect it. You will pay what you pay and if it has standing charges they will continue (some asking if they should delay fixing because of this, no if a fix is right for you and will save you money, don't let this change that - this is about the structure of bills, as opposed to the actual costs on bills). About 60% of people will pay less due to this, 40% more. My guesstimate is the dividing line will be somewhere around 12,500 kilowatt hours of gas (can't know until there is actual pricing). According to a study by Nesta, this switch would leave the majority of people in all income groups under £100,000 better off. Of course, when this does come in, if we're still in the nightmare that we are right now, there will need to be support put in for vulnerable higher users, who will have to pay more. Though hopefully by then the mid-east will have calmed and energy prices lower. --------------- That's all long term. The biggest issue in energy right now is that we're expecting a 27% rise in the price cap in January. I asked the Chancellor whether he will be intervening on that. He told me I'd have to wait for the budget, but reading between the lines, yes, there will be an announcement today. Whether it's an increase in the Warm Home Discount, or whether it's council tax banned, or whether it's done via a payout for people in say council tax bands A-D as a proxy for household income as Rishi Sunak did who knows.