Martin Lewis has provided the public with 15 need-to-know points about Liz Truss' new energy price guarantee.
Lewis reiterated that the new cap was the limit that energy companies could charge for a unit of energy, not a cap on how high households' bills are. He advised that members of the public should multiply their current costs by 6.5% to estimate what their new bill would be under the guarantee.
He also pointed out that there has been no confirmation from the government on whether the payments made this year to those receiving benefits, with disabilities, and pensioners. The guarantee will be in place for two years, but vulnerable groups who received extra support this winter will likely still need that support in winter 2023.
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Martin Lewis said: "VAT is not being reduced in this announcement, but there is a chance (50 - 50 I'd say) that may happen in the Chancellor's fiscal statement next week.
"Those on fixes, can either stay on them, or can leave and switch to the new state subsidised tariffs with no exit penalties.
"This has not been said in parliament, but I've been told this directly by the Secretary of State for Business as its what I was arguing for."
Martin Lewis' need-to-know points:
1. The new price guarantee starts 1 Oct, and for someone on typical use will be £2,500/yr and it will last for two years.
2 The current price cap is £1.971/yr rate at typical use, and was due to rise to £3,549 (and likely £5,400 in January). It was £1,277 last winter.
3. This will be a cap in standing charges & unit rates, so use less you pay less, use more you pay more (I'll publish the rates when I have them). There is not a total cap on what you pay, they typical rate is just a figure for illustration.
4. The new lower price cap includes getting rid of the green levies.
5. The £400 payment to all homes (paid as £66 a month over winter) will continue.
6. That will take the average payment to £2,100/yr.
7. To estimate what you'll pay, over a year, multiply current costs by 6.5% (each £100 becomes £106.50) this includes the £400 payments (but not other payments).
8. For those with lower than typical bills, the % increase will be lower, for higher users higher (as the £400 payment is flat regardless of use, so has a bigger proportionate reductions on lower useage).
9. The £650 payments to those on many benefits will continue (half's already been paid).
10. As will the £150 to those with disabilities and £300 to pensioners.
11. There's no announcement on whether these payments will be in place next winter, I suspect the political reality is at least for benefits recipients, similar will be paid next year.
12. VAT is not being reduced in this announcement, but there is a chance (50 - 50 I'd say) that may happen in the Chancellor's fiscal statement next week.
13. For those on LPG and heating oil there I'm told will be discretionary payments to help them too (awaiting details).
14. For those in park homes and who pay landlords directly, I'm told they should benefit from the new business help (awaiting business details).
15. Those on fixes, can either stay on them, or can leave and switch to the new state subsidised tariffs with no exit penalties.
Note: Point 15 has not been announced in the House of Commons
New energy price guarantee - 15 quick need to knows for CONSUMERS. Please feel free to share...#energybills #priceguarantee pic.twitter.com/IbQkJqXJoq
— Martin Lewis (@MartinSLewis)
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