Older people and those with disabled children ‘worst hit’ says BBC expert
Chancellor John Healey is looking at axing standing charges for gas (Image: Getty)
An energy expert has given a hammer blow to the UK’s pensioners, saying Chancellor John Healey’s flagship energy gas standing charge cut will disproportionately hit them. Appearing on BBC Radio 4’s Moneybox show, Ellen Fraser, an energy expert and partner at Baringa Consultants, said the change will ‘ unfortunately disadvantage those folks who just have no choice but to keep their homes warm for health reasons.’
One worried pensioner told the show: “those people who are in the house more they’re going to actually be paying proportionally more than those who are out at work.” The exact details of how the scheme will work have not been published by the Treasury or regulator Ofgem yet.
Mr Healey said the energy changes were intended to ‘create immediate breathing space for families with the rising cost of living, while helping households to control costs in the longer term by committing to take standing charges off gas bills and supporting households struggling with energy debt.”
As part of the Budget, some homes will be given a £100 Household Energy Payment to help with their energy costs. Mr Healet has asked the energy regulator Ofgem to remove standing charges on households’ gas bills as early as 2027.
Standing charges are fixed costs in energy bills that don’t change no matter how much energy you use. Ms Fraser explained the £!00 payment: “Effectively, anybody who is in council tax bands A-D will receive a payment directly into their bank account.
“It’s £100 payment, it won’t necessarily go against your energy bill in that householders can receive that money and spend it on what they need to spend it on, but the government’s intention is obviously that it pays down some of the electricity bills and the gas bills.” She said it looks like Wales and Scotland will follow England in implementing this – with Northern Ireland still working out how to pay for it.
On the issue of if it’s being paid to a number of people who are quite well off, Ms Fraser said: “To some extent it’s a bit of a lazy giveaway unfortunately in that some of the people who will receive that just don’t need it. Clearly everybody will welcome it, but not everybody needs it.”
On the standing charge for gas, Elaine from Dingle in Liverpool said: “I’m 69. What I was a little bit concerned about was the standing charges which they’ve said they’re going to get rid of. Which is good but because I’m retired it seems a little bit unbalanced because those people who are in the house more they’re going to actually be paying proportionally more than those who are out at work.”
Ms Fraser said: “The detail is still to be worked out by Ofgem so it won’t be until we get into next year that we really understand. The hypothesis will be that if you were roughly on the average amount of gas and electricity per year, then you’ll see very little difference it’ll be net neutral.
“But if you use significantly less gas than the average household, you’ll probably see a financial gain. If you use more gas, and you’re in the house more often, if you have disabled children or retired then you are likely, unfortunately, to see a bit of an increase in your overall gas bill.
Host Mr Lewis asked how much gas is likely to go up per unit and added: “Will this be unfair?” She said: “It depends on the tariff a little bit somewhere between 10 and 12% per unit, per KWH of gas. So it’s not an immaterial jump and it will unfortunately disadvantage those folks who just have no choice but to keep their homes warm for the reasons of health.”
She called for more targeted help for people who need assistance with heating costs.
An HM Treasury spokesperson said: “Removing gas standing charges will give millions of households greater control over their energy bills, saving them an average of £45.
“We will make sure the change is implemented fairly, including targeted support for the most vulnerable households. This comes alongside wider action to ease cost-of-living pressures, including a £100 Household Energy Payment, cutting VAT on electricity bills, and freezing fuel duty.”