John Healey to scrap gas standing charges in his first Budget as chancellor

John Healey will deliver his first Budget as chancellor at 12.30pm on 28 October, the first fiscal statement of the Burnham government. The package is expected to be low-key, with short-term help for households and businesses facing a hard winter, longer-term plans on energy prices, and a commitment to tight fiscal rules.

Gas bills take centre stage

Early on 28 October the Treasury announced that gas standing charges will be removed from household bills. These fixed daily fees, which the Treasury puts at £108 a year for the typical household on average, cover the cost of connecting to a supply and are paid even by households that use very little energy. Healey will ask the regulator Ofgem to deliver the removal in 2027 or as soon as possible afterwards, with the costs moved into the unit rate. The Treasury estimates that this could save around 60% of account-holding households an average of £45 off their annual bill.

Healey framed the change in a statement issued that morning.

“Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.”

Prime Minister Andy Burnham said the measure showed he was determined to reform the energy market, which he described as broken. Healey has presented it as a start rather than an end point, arguing the Budget would draw a clear line under an energy policy that has failed households for years.

Fiscal room is narrowing

The buffer against the government's fiscal rules stood at £23.6bn in March. Economists predict it will have fallen to between £15bn and £20bn as UK borrowing costs rose this year. A poll of market participants last month suggested it could shrink to about £15bn without sparking a sell-off in government bonds. The 10-year gilt yield stood at 5.3%, close to its highest level since 2007, while the IMF said this month that the UK stands out for its plans to cut the deficit.

In comments released ahead of the Budget, Healey said the government would act within its limits.

“We'll do all this responsibly, sticking within tight fiscal rules.”

Support, tax and savings

Healey will confirm £20.4bn of additional support for the state's business lender and infrastructure bank, which will back renewable energy, defence, AI and other projects. Tax rises are expected to be modest compared with the £66bn raised by Rachel Reeves in her two Budgets, with banks and the gambling sector expected to be targeted. It was first reported on Tuesday, 27 October, that a bank tax rise would come alongside a decision to scrap the planned cut to the Cash ISA annual allowance from £20,000 to £12,000 from April 2027. A freeze in fuel duty is also expected, and Healey has said his focus is on making Britain more resilient to global shocks after the Iran war.

Reaction and market expectations

Scotland's First Minister John Swinney said the chancellor must deliver substantial support on energy bills, noting that bills are higher than when Labour came to office and are projected to rise further in January.

“The Chancellor, at the very least, has got to fulfil Labour's election commitment to deliver energy bills that are £300 lower than when Labour came to office.”

City investors had expected a cautious Budget that prioritises stability in the bond market while borrowing costs sit close to their highest level in around two decades. Healey has warned in a pre-Budget video that the world is a highly uncertain place, pointing to conflicts abroad pushing up energy prices and pressure on families, businesses and public finances.