Money Saving Expert founder Martin Lewis has issued a stern warning to UK households today, after energy regulator Ofgem announced that it's price cap will fall as of April.
Taking to Twitter, Martin discussed what it means for energy bills as the regulatory body's official cap is set to drop to £3,280 a year from the current £4,279.
But because household energy bills aren't at present strictly dictated by the price cap, Martin explained that today's announcement 'doesn't change what we pay mainly'.
The Mirror reports that this is because the Government introduced its Energy Price Guarantee at the end of last year, which is set at £2,500 a year but will rise to £3,000 from April. This means despite the Ofgem price cap falling, household bills will still rise by around 20 per cent.
The MoneySavingExpert said he was still going to campaign against the Government's planned energy rise in April and believed there was a 'good chance of succeeding'. In his tweet, he said: "As it's still above govt subsidised Energy Price Guarantee (currently £2,500 rising 20% to £3k in Apr) it doesn't change what we pay mainly.
"I'm campaigning against the 20% Energy Price Guarantee rise, and reading the runes, think there's a good chance of succeeding."
The MoneySavingExpert founder wrote to the Government this month and said the increase could wait until July as they had "significant headroom" in regard to Government spending. This is because the lower Ofgem Price Cap means the Government is spending much less the support its Price Guarantee.
Ofgem's announcement today solidifies this claim by Martin Lewis. In his letter, Martin wrote: "This means the provisioned government expenditure on the energy subsidy will be billions less than expected when the plans were made, giving significant headroom to enable a postponement."
He also added that maintaining a lower Energy Price Guarantee will also help reduce inflation. The Money Saving Expert said the Energy Price Guarantee may only be needed until July, as Ofgem's Price Cap is currently expected to drop to £2,160 from then.
Martin Lewis told Chancellor Jeremy Hunt that this move could not wait until the Budget to be announced. He said: “This cannot wait until the budget – in practice, energy firms will need to know much sooner if the planned rise isn’t happening on April 1, or they are bound to have to communicate to customers that it is coming.”
Hunt has so far rejected calls to extend the support, instead stressing support for the most vulnerable households is to increase instead.
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