Consumer champion Martin Lewis has written to the Chancellor to call for April’s planned rise in the energy price guarantee to be scrapped.
The average bill is expected to rise from £2,500 to £3,000 but Mr Lewis, who founded the website MoneySavingExpert.com, has said it is no longer necessary because wholesale prices have “come down very substantially”.
He said: “It just seems to me there is no need to do this. If we postpone this rise it is likely from July, wholesale prices will have gotten to the price cap and if the energy price cap which is set by the regulator and is dictated by wholesale prices, is lower than the energy price guarantee we pay the lower amount, and that is likely to happen from July.
“To put this national act of harm of increasing the price guarantee for just three months, to throw another 1.7million people into fuel poverty taking it to 8.4 million, it seems unnecessary.”
He said any cancellation would have to happen before the March Budget because by then people will have had letters telling them their bills are going up.
The letter, which was sent on Thursday morning, is supported by charities including Citizens Advice, National Energy Action and StepChange.
An HM Treasury spokesperson said: “Wholesale prices falling is good news, but as we have all seen, prices are volatile and can increase as fast as they fall. If prices return to their late August level, the government would need to borrow an extra £42 billion and potentially increase taxes to continue funding the Energy Price Guarantee at current levels.
“The way the Energy Price Guarantee operates means households will still see lower bills if gas prices continue to fall. To support families in the meantime, we are providing millions of vulnerable households with £900 in direct cash payments this year, plus a record increase in the National Minimum Wage, and a 10% uplift in working-age benefits and the state pension.”
