Financial expert Martin Lewis is calling on the UK Government to postpone the 20% increase on the energy price guarantee scheduled for April. He urged chancellor Jeremy Hunt to consider the "disproportionate" damage it will have on "people's pockets and mental health".
In an open letter to Mr Hunt the MoneySavingExpert founder said he was asking him to "urgently consider postponing that increase" which is also set to affect households at the same time that the £400 energy support scheme comes to an end. Currently energy customers are protected from soaring energy costs by the UK Government's energy price guarantee, which caps the typical bill at £2,500 a year. However this cap is set to rise by 20% on April 1 this year, which means that people face paying more for their energy bills.
At the same time the last monthly payment of the government's energy support scheme will be paid in March. The combination of both could see millions more households considered "fuel poor" according to Lewis.
Last year the UK Government announced the energy bills support scheme offering customers £400 off their gas and electric bills in a bid to offset soaring costs which saw energy bills almost double within a year. At the same time that this support is to end under the new energy price guarantee increase the average bill is expected to rise from £2,500 to £3,000. Lewis said such a rise was no longer necessary because wholesale prices have “come down very substantially”.
Addressing the chancellor he said: "I would ask you urgently consider postponing that increase. 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.”
In his letter Lewis said the decision to increase prices was made at a time when wholesale rates were looking to be far higher than they are now. He said the current EPG subsidy may only be needed from April to July because the underlying price cap currently looks like it may be cheaper than even the current EPG rate of £2,500 a year for a typical household.
“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. Plus, maintaining a lower EPG will also help reduce inflation,” he said.
“Postponing the increase is a practical and fair decision, with household energy bills already double what they were the prior winter. Crucially, the damage to people’s pockets and mental health of another round of energy price rise is disproportionate." The spring budget will take place on March 15.
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