personal finance

Energy bills standing charge savaged by Martin Lewis sparks Government response

The Government has issued a response to calls for a fixed national standing charge on .

Conservative MP Alexander Stafford asked a question in Parliament to energy minister Claire Coutinho as to whether “she will make an assessment of potential merits of introducing a fixed national standing charge for consumers”.

Treasury minister Amanda Solloway said in response: “Ofgem launched a call for input on standing charges, which closed on Friday 19 January 2024, looking at how it is applied to energy bills and what alternatives could be considered.

“Ofgem is currently analysing the responses and will publish its response in due course.

“On 30 March, my right honourable friend the Secretary of State and I wrote to the chief executive of Ofgem, highlighting the importance of keeping standing charges as low as possible.”

The update comes after standing charges increased under the rates set out in the new Ofgem price cap, from April 1.

Average standing charges for electricity increased from 53.35p a day to 60.01p a day while the charge for gas went up from 29.6p per day to 31.43 per day.

This is despite the overall price cap decreasing as the price cap per unit dropped for electricity and gas, with bills for a typical household dropping from £1,928 a year to £1,690 a year.

has the high standing charges as a “moral hazard”, as they previously went up in October despite the overall drop in the price cap.

He said: “The people who will save most from this change are the ones who use most, the people who save least are the ones who use less.

“That seems a complete moral hazard to me when we’re trying to talk about getting people to use less energy for the right reasons – not because they can’t afford it – that what we’re doing is effectively rewarding the highest users by the structure of energy bills.”

The savings expert said one argument for keeping the standing charges high rather than increasing unit rates is that by hiking unit rates instead, people who use a lot of energy for medical reasons would see their bills shoot up.

Mr Lewis said this could be fixed if there was a scheme to give payments to low-income households in this situation, but as energy policy is unfortunately not “joined up” in this way, the system remains “fundamentally broken”.

The financial journalist said: “It is absolutely ridiculous we are putting the standing charge up. It is effectively an energy poll tax that every household has to pay”.

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