Money Saving Expert founder Martin Lewis has called for changes – and told MPs the issue ‘drives people mad the most’
Martin Lewis has called for reform in the UK over an issue he says ‘drives people mad’ more than anything else. The money-saving expert raised the matter while addressing MPs, telling politicians that the existing rule accounts for ‘two thirds of my mailbag’ in relation to energy complaints.
He likened it to a bookshop charging customers simply for stepping through the door, rather than only when they make a purchase. Mr Lewis’ criticism was directed at the standing charge – a daily fee that energy customers must pay regardless of whether they actually use any energy.
During an appearance before the public accounts committee last week, Mr Lewis said: “The moral hazard is that you have to pay £315 a year just to have the facility of having gas and electricity, that we have older people who do not use gas for two thirds of the year still have to pay a daily charge for it, and that if people who are lower users reduce their usage, it does not make any difference, because they are still paying the standing charge. That is, by far and away, the thing that drives people mad the most.”
The founder of MoneySavingExpert.com then broke down the charge by drawing a comparison with a bookshop customer being penalised merely for entering the premises. He told MPs: “I always use this analogy: if I go to buy a book from a bookshop, they do not say, ‘sorry, but you have to be a member of the club and pay us each month in order to buy a book, because we have fixed costs.’
“I do not have to pay for that, because the fixed costs are factored into the price of the book. Why do we have to have fixed costs factored into a daily charge and variable costs factored into a unit rate?”
Ofgem, the energy regulator, says: “The standing charge is used to recover the costs required to provide energy company services, including providing and maintaining the wires, pipes and cables that deliver power to a customer’s door, through to the staff and buildings required for the energy business to function.”
According to the House of Commons Library, the average standing charges under the April to June 2026 direct debit energy price cap stand at 57.2p per day for electricity, 29.1p per day for gas, and 86.2p per day for dual fuel customers, reports the Mirror. Firms such as British Gas and OVO Energy are among the companies in the UK that use standing charges.
Standing charge needs to change, says Martin Lewis
The money expert has called for an overhaul of the current system in the UK, arguing it is essential to support those most in need. He has long campaigned for a specific solution to ease the burden on vulnerable households.
However, a new system set to be introduced falls short of what he believes is required — and he warns that even this more limited proposal has yet to get off the ground.
He told the hearing: “The shift could be done. I was very hopeful with Ofgem. We had long conversations about it bringing in a dual price cap, with a low standing charge and higher unit rate and the normal standing charge and lower unit rate.
“In my view, people who are on the price cap should be automatically shifted to whichever one was beneficial for them based on their prior year’s usage, with an opt-out basis if they chose not to. That was stopped and then it was moved to this system of, ‘we’re going to mandate switchers’ tariffs, which have a lower standing charge’.
“My big problem is that that does not help anybody who is vulnerable, because they are the people who do not switch, whom the price cap was set up to protect in the first place, so switchers’ tariffs do not help. And then we heard, ‘we’re going to trial switchers’ tariffs, and they will be coming in spring’. We have not seen any yet.”
Standing charges differ depending on where you live
According to the Ofgem website, standing charges vary based on your location, and are calculated using the following criteria:
- the amount of energy the supplier needs to buy
- how many people live in your region
- the cost of building and improving the energy network
- how much energy is used in your region on average
Further details regarding standing charges and energy price cap unit rates in your area can be found on the Ofgem website. The full exchanges from the select committee hearing can be read here.
