Martin Lewis has warned that new data published by energy analysts suggests that Ofgem’s price cap is set to rise by 64 per cent from October 1, taking the annual cost for a typical user on a standard tariff to £3,245. Cornwall Insight also said the price cap could go up by a further £360 in January to £3,364.
Households across the country are already trying to cope with the current price cap of £1,971, whose impact may not be fully felt at the moment as most of the country enjoys hotter than average temperatures. But come the colder months, the founder of MonyeSavingExpert.com told BBC Radio 4’s PM programme that it is going to be a “very bleak winter” and described the energy crisis as a “cataclysmic issue” for the UK Government.
The financial guru highlighted that the current £15 billion package of support does not cover the new increased predictions and warned that people receiving State Pension will be forced to use one-third of their annual payment to pay for energy bills.
Martin explained: “The rise in prediction from the May period alone when the Chancellor at the time, Rishi Sunak, set the help package, is £450 which is bigger than every household was going to be given then.
“And just to give you one more statistic that really nails this, somebody on a typical State Pension gets around £9,500 a year, £3,245 is a third of that.
“This isn’t the mortgage, this isn’t the rent, this is the energy bill alone is likely to be bigger than a third of the State Pension, which means the help packages that were in place are not longer fit for purpose and we need a government, active, educated with ministers who have had time to get hold of their brief as soon as possible.”
Martin added that the only way we will see lower bills than the predicted £3,245 and prevent people from having to choose between “starving and eating this winter” is by governmental action.
He said: “This is a genuine, urgent emergency. Millions of households will be forced into poverty unless we act more, it will be devastating for people.”
Martin also took to social media to share what the new predictions will mean for households each month.
Posting on Twitter, he said: “Rough Ready Reckoner based on predicted future price cap...
- If you pay £100/mth now, from Oct £165, Jan £170
- If you pay £150/mth now, from Oct £250, Jan £255
- If you pay £200/mth now, from Oct £330, Jan £340
- If you pay £300/mth now, from Oct £495, Jan £510
"I'm sorry.”
Last week, Martin, MoneySavingExpert and representatives from leading charities Citizens Advice, National Energy Action and StepChange met with the CEO’s of OVO, British Gas, Octopus, E.ON, EDF and Shell to discuss the crisis facing many families this winter.
The group of leading charities and energy companies assembled to find ways to support struggling customers this winter.
With all attendees aligned on the unprecedented challenges ahead, the group agreed to work together on changes that can be implemented before the winter.
These included:
- To improve the understanding of how direct debits levels are set, energy suppliers agreed to make their calculations available so the rationale for increases or decreases can be better understood
- Energy suppliers will explore setting up a priority call line for National Energy Action and StepChange advisors so that consumers who need energy supplier specific support the most can receive it as quickly as possible
- To investigate working together to ask the regulator to shift the burden in the price cap away from the standing charge - though ensuring protections are in place for vulnerable customers with high usage, such as some disabled people
- To ensure that those who simply cannot pay are treated fairly, energy suppliers agreed to work together with debt charities on a collective set of debt collection principles for unpaid energy bills
- Energy suppliers agreed to explore publishing full tariff information for deals that are only available to their existing customers to allow everyone to make an informed choice on the best value tariff available to them and to enable third parties such as MoneySavingExpert to be able to help with this decision
- A co-branded universal tool will be created in partnership with energy providers and advice charities that can go across multiple sites and touch points to help consumers understand the support they could be due based on their circumstances
- To work together to provide clear information for the next Meter Reading Day, so consumers know who should and who shouldn’t be providing readings
- To support better implementation of the UK Government's £400 Energy Bill Support Scheme grant, energy suppliers agreed to sign up to a set of clear guidance, made publicly available so that everyone can rest assured that they are getting the support the Government intended them to
- To support more families struggling with their finances this winter, energy suppliers agreed to explore giving additional financial support to the NEA, Citizens Advice and StepChange over and above existing schemes funded by individual suppliers
Commenting after the meeting, Stephen Fitzpatrick, Founder of OVO, said: “In the energy crisis, energy companies need to be fighting for lower costs and finding new ways to help customers. This is going to be a very difficult winter for millions of customers. The problem is so big that we really need more support for vulnerable customers from the Government, but we also need to do everything we can to help as much as possible.
“Getting everyone around the table to find ways to help customers through this was a crucial first step. There is a lot of work to do but this meeting was a good start.”
In its previous forecast, on June 22, Cornwall Insight predicted bills rising to £2,981 in October, and £3,003 in January.
Dr Craig Lowrey, from Cornwall Insight, said: "There is always some hope that the market will stabilise and retreat in time for the setting of the January cap.
"However, with the announcement of the October cap only a month away, the high wholesale prices are already being 'baked in' to the figure, with little hope of relief from the predicted high energy bills."
Before he left office, former chancellor Rishi Sunak announced a £15 billion package to help with the rising cost of living.
It promised up to £1,200 for the most vulnerable households. But the price cap was at £1,277 last winter, so if Cornwall's January predictions are correct, households will be left nearly £900 worse off than they were before the crisis, even with the maximum help from the UK Government.
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