The money expert says it is time for a ‘shift’ over what he says is ‘by far and away the thing that drives people mad the most’
Martin Lewis has called for changes in the UK over an issue that he says ‘drives people mad’ more than anything else. The money-saving expert highlighted the issue as he spoke to MPs. He told UK politicians that the issue makes up ‘two thirds of my mailbag’ when it comes to energy complaints.
And he compared it to a book shop charging people each time they entered – rather than just for when they actually buy something. Mr Lewis’ criticisms were over the standing charge. This is a daily charge that energy customers are required to pay even if they use no energy.
In 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.”
He then dissected the charge by comparing it to a customer using a book shop – and being charged just for walking in. 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 are 57.2p a day for electricity. It is 29.1p a day for gas and 86.2p a day for dual fuel customers.
Standing charge needs to change, says Martin Lewis
The money expert said that a change to the existing system UK is needed to help vulnerable people. He has campaigned for a specific route to make such people’s lives easier.
Instead, a new system is due to be introduced that he says will not be as effective. And he says even this plan has not started yet.
He said at 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 charge different based on where you live
The Ofgem website says that standing charges vary depending on your location. Their website says it is calculated based on:
- the cost of building and improving the energy network
- the amount of energy the supplier needs to buy
- how much energy is used in your region on average
- how many people live in your region
You can find out more about standing charges and energy price cap unit rates where you live on the Ofgem website. You can read the full exchanges at the select committee hearing here.
