Budget scraps gas standing charges, cuts food import taxes, and extends parental pay

Chancellor John Healey opened his first Budget on Wednesday by removing a fixed daily fee from gas bills for approximately 23 million households. The move eliminates a charge that currently costs the average household £108 per year, regardless of how much gas is consumed.

The government will instruct Ofgem to remove these standing charges in 2027 or as soon as possible thereafter. Instead of a flat daily fee, these fixed costs will be incorporated into the unit rate for gas. The Treasury estimates that this shift will save 60 percent of account-holding households an average of £45 annually.

Healey described the standing charge as an unfair and outdated practice. He stated that the measure provides breathing space for millions of families while the government works to lower energy costs long term. Energy Secretary Miatta Fahnbulleh called the charge a national bugbear and said removing it gives people better control over their bills.

The statement includes five other measures announced ahead of the speech. The government is removing import tariffs on more than 100 products, including supermarket staples and fertilizer. This suspension aims to support farmers facing higher input costs and households using kerosene heating oil. The Treasury said these changes could reduce food costs by up to £21 per year, or 40p per week, for households.

Parental support is expanding to cover more than 150,000 additional parents annually, including self-employed fathers and partners who previously missed out. Eligible parents will receive two weeks of support worth up to £194 per week. The measure allows these individuals more time with their newborns.

For the three million people who drive for work, such as nurses and self-employed builders, the tax-free mileage rate is changing. The rate for the first 10,000 business miles remains frozen at 55p. For miles above 10,000, the rate increases from 25p to 35p per mile.

The carer's allowance rules are being adjusted to remove a penalty for earning slightly more. Currently, unpaid carers lose their entire allowance if they earn a penny over the weekly limit, which is equivalent to 16 hours of the National Living Wage. Under the new rules, only £1 of support will reduce for every additional £1 earned.

The Post Office is adding hundreds of drop boxes, bringing the total to 1,000. The Prime Minister also pledged to upgrade up to 600 Post Office branches by the end of the financial year. These changes aim to make sending and returning parcels easier without waiting in line.

Alcohol duty is expected to rise by 2p per pint. This increase was anticipated despite warnings from hospitality industry leaders. The cost of a pint will therefore go up as part of the broader tax adjustments in the statement.

The Green Party criticized the removal of standing charges as tinkering. A spokesperson said energy bills have skyrocketed and are set to rise again this winter. Simon Francis of the End Fuel Poverty Coalition said the change helps low-income households with low energy use but noted that millions of households will not see a saving.