A new Prime Minister is in place and after promising action on energy bills in her first week in office, hopes are high that PM Liz Truss will deliver. Consumer champion Martin Lewis has spoken out on the rumours of an energy price freeze and what that would mean for the consumer.
The MoneySavingExpert founder said he "would welcome" Government plans to freeze energy bills. However, he has called for more help for fixed-rate customers.
The Government has not yet confirmed any specifics on how help could be delivered to Brits on the energy crisis, but Liz Truss is reportedly considering a freeze on energy bill prices, according to The Times, which reported Truss could freeze energy bills at around £2,500 per household. According to the Mirror, which quoted experts, the freeze would cost between £90billion and £130billion.
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Martin Lewis took to Twitter to give what he called "my rough provisional analysis of what may be coming". While he said any freezing of energy bills would be a big help he admitted more targeted help might be needed.
"Freezing the price cap now would help substantially," he said. Freezing the price cap at its current level would be a "sigh of relief for many".
With a word of warning though, he said the cost of this scheme would need to be paid back, and may not give enough help for those really struggling. Adding: "The big benefit, and problem, of this is (almost) everyone gets it.
"And those who gain the most from it in cash terms will be those with the highest bills (many, though not all, will be at higher income levels), so clearly it isn't targeted at helping those who need it most."
Martin also pointed out that many energy users may have locked in to fixed rate deals - and may not benefit from the price cap freezing. This price cap is due to rise to £3,549 in October. Because of this, up to 15% of households have taken out fixed rate deals higher than the current price cap, thinking it would save them money in the long run.
Martin said: "So what happens? Will they automatically be put on the price freeze? If they are not automatically moved, will they be allowed to switch to the price freeze?"
He later added on Twitter: "Have you applied to fix your energy bills in the last 14 days? If so you're within the cooling off period. As there are rumoured big changes coming [on Thursday], be prepared to cancel if you still can."
While freezing the cap would offer some assistance, the MoneySavingExpert boss noted that even freezing at the current price cap still means really high bills. He said: "We're freezing at the current level, but that is already high. If we freeze now, we have already seen the price cap rise 50%, so we're freezing at a high level (and higher than some other countries have)."
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