Martin Lewis has explained what the government's U-turn means for homeowners' energy bills and what they can expect to pay next April. Appearing on today's (Oct 18) instalment of Good Morning Britain, the Money Saving Expert founder also mentioned what help might be coming to those struggling.
Speaking to presenters Susanna Reid and Richard Madeley, the financial guru explained how the country is currently under a energy price guarantee, which is "effectively a cap on the standard charge that people can pay on energy". But under new plans revealed by Chancellor Jeremy Hunt yesterday (Oct 17), this will be axed in April, despite being due to last for two years.
Outlining what may happen as a result of this, Martin said: "We haven't had confirmation on this yet, but we assume in April we will go back to the old price cap methodology set by Ofgem, based on wholesale prices."
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He added: "It is important to state that the April price cap is based on prices between the 17th November and the 17th February. So we are not in that period yet, which means any forecasts are very, very loose."
He then went on to reveal the current prediction from Cornwall Insight - an independent energy research company - is that in April energy bills will rise 73 per cent on average. He added: "Remember we've already had a 27 per cent rise that was on top of a 54 per cent rise."
Martin says if this prediction turns out to be right, then for typical energy use it will cost homeowners from £2,500 to £4,350 a year, and according to data by Cornwall Insight, the price will then drop slightly in July, "although it would still be up by nearly 60 per cent overall." Meaning the cap will then be down 15 per cent in July to £3,700 a year for typical use.
When asked by Richard Madeley about what advice he could give people watching from home in horror at the amount of money they may need to pay, Martin said: "I wouldn't give them advice, but I would say is the one mitigating factor is we've been told there will be targeted support.
"The big question here is how will this targeted help work and how far up the net will it stretch. Now I'd be looking at going back to something Rishi Sunak did in last May, I suspect that's the template. That's when we got the £400 winter electricity payment, we got the £150 for people with disabilities, that was a £650 payment for those on benefits and Universal Credit and there was a payment for State Pensioners too.
"I suspect we will see something similar, the real big question is though is how high they'll stretch the net... It won't work for people's pockets if they're only helping people on benefits, and that's what we're waiting to hear. There's very little anybody can do at personally now apart from cutting their own usage."
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