MARTIN Lewis has said "people will die" without “desperately needed” help from government after Ofgem announced an 80.06 per cent rise to the energy price cap.
On Friday, the energy regulator confirmed that the average household’s yearly bill would rise from £1971 to £3549 from October.
The cap will come into effect for around 24 million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.
The 4.5 million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3608.
Lewis explained that the price cap rise will vary slightly for people depending on how they pay their energy bills. He wrote: “New Price Cap rates for main payment types. (The brackets is impact on someone with 'typical use').
- Direct Debit: Up 80% (up from £1971 to £3549/yr)
- Prepayment: Up 79% (up from £2017 to £3608)
- On receipt of bill: Up 79% (up from £2100 to £3764)”
He commented: “I've been accused of catastrophising about the energy hikes that have now come true.
“Yet let me be plain, 'doom-mongering' or not.
“More help is desperately needed for poorest or people will die this winter due to unaffordability of an 80% SO FAR energy price cap hike.”
I've been accused of catastrophising about the energy hikes that have now come true. Yet let me be plain, 'doom-mongering' or not. More help is desperately needed for poorest or people will die this winter due to unaffordability of an 80% SO FAR energy price cap hike.
— Martin Lewis (@MartinSLewis) August 26, 2022
Lewis also tweeted: “IMPORTANT: Many reporting the new price cap is £3,549/yr. That is not correct.
- 1. There is no actual cap on the max you can pay.
- 2. What's capped is standing charges and unit rates (i'll publish em shortly)
- 3. £3,549 is the cap for those on average use, Direct Debit, dual fuel.”
The money saving expert, who predicted Friday’s energy price cap rise almost exactly ahead of the announcement, further said that bills will rise again come January.
Lewis said he expected Ofgem to put up the price cap by 51% at the start of 2023 to £5386 for the average customer paying by direct debit.
“This is strong prediction as we're 7mths thru the 10mth assessment. Tough to predict after,” he added.
Lewis told the BBC that money would have to be redistributed from the top to help the most vulnerable. He said he was "relatively agnostic" about how exactly that happened, but said that it must.
The expert further told the BBC that freezing the price cap might not be the best course of action, as that would help the highest earners unnecessarily without giving maximum relief to the lowest earners.
Asked what people could do without Government help, an emotional Lewis said: "I've been a money saving expert for 20 years and I don't have an answer. I don't have an answer because there isn't one."
Lewis said there was a second "catastrophe", the effect on people's mental health given that the price cap had been announced without any firm help from government in place.
With the UK Government in limbo and Boris Johnson yet to vacate No 10, the opposition parties have all called for action, as has Ofgem.
Scotland’s Energy Secretary, Michael Matheson, said the Edinburgh government was treating the energy situation as an “emergency”.
He added that the 80% price cap increase “imposes a burden that customers simply cannot be expected to carry”.
“The only acceptable course of action now is for the UK Government, who have the necessary policy levers and borrowing powers at their disposal, to take immediate steps to cancel the increase for all households.”
Labour shadow chancellor Rachel Reeves (below) accused Tory ministers of being nowhere to be seen on the morning of the Ofgem announcement.
Appearing on BBC Breakfast, the Labour MP said people are “worried sick” about what is happening and is “striking fear in the hearts of families right across the country”.
She called on the Government to freeze energy fills and follow Labour’s own proposals.
“The fact that no Government minister is available to come on your programme today is just appalling.
“They are not here to give assurances, they are not here to set out what they are going to do.
“That is a dereliction of duty,” Reeves said.
Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming prime minister and new Cabinet “to provide an additional and urgent response to continued surging energy prices”.
Brearley (below) said the gas price this winter was 15 times more than the cost two years ago.
He told BBC Breakfast: “When I look at what … gas now costs this winter, it is 15 times the normal price that we were expected to pay two years ago.
“Now if that were happening in petrol, it would cost us £400 to £500 just to fill up our car. So because those costs are changing, the price needs to change and that’s why the price cap is now changing to £3549."
When asked why Ofgem was not protecting the consumer by having a lower price cap, he said: “The reason we don’t have a lower price cap is because if the companies cannot recover the amount of money it costs for them to buy the energy, then ultimately, they will be unable to function.”
“They would have been unable to give us the energy that we need.
“So what the price cap does, and this is really important, it stops those companies charging excess profits over and above the cost of energy.
“But what it can not do is set a price that is less than the cost of the energy that we buy, and that’s why we have to make the change that we are making today.”
