Martin Lewis says raising the electricity price guarantee would ‘throw another 1.7 million people into fuel poverty’
(Picture: Noah Vickers/Local Democracy Reporting Service)Martin Lewis has urged the UK government not to increase the energy price guarantee (EPG) on people’s bills.
The personal finance expert, who created the website MoneySavingExpert.com, has sent a letter to the Chancellor, Jeremy Hunt, asking him to cancel the upcoming increase to the EPG, which limits the amount of money energy companies can charge per unit, arguing that it is not required because wholesale energy prices have “come down very substantially”.
From April the EPG – the discounted cost of gas and electricity to consumers – is going to increase from £2,500 to £3,000 a year for the average household, adding to the cost of living crisis, which has forced millions to cut spending as gas, electricity and food bills rocket.
Mr Lewis added going ahead with the EPG increase as expected would be a “national act of self harm” by the government as wholesale prices are expected to fall.
“It just seems to me there is no need to do this,” he said to the Today programme on BBC Radio 4.
"If we postpone this rise it is likely from July, wholesale prices will have got to the price cap and if the energy price cap, which is set by the regulator and is dictated by wholesale prices, is lower than the energy price guarantee we pay the lower amount, and that is likely to happen from July.
“To put this national act of harm of increasing the price guarantee for just three months to throw another 1.7 million people into fuel poverty, taking it to 8.4 million, it seems unnecessary.”
Previously, it has been reported that the Treasury is hesitant to scrap the increase as there are concerns the unpredictability in the energy market could lead to unstable prices. It also highlighted that tax revenues from oil and gas companies have been lower than had been expected owing to the fall in wholesale energy prices.
However, Mr Lewis refuted these fears as the government was not going to spend more than it had forecasted because of the dip in “wholesale rates” and stressed how the country “was teetering” due to widespread industrial action and the poor economic outlook.
“And let’s just remember, we have a nation that is teetering. We have strikes across the place with people not being able to afford the cost of living rises.
“We’ve just heard water bills going up by seven per cent . We’ve got broadband bills going up by 14 per cent. We have effectively nationalised energy prices.
“This is the one price mechanism that is fully in the government’s control and it is choosing to put it up on the 1st of April. I think it would be a good idea for everybody if it postponed that and we crossed our fingers that wholesale rates stay low.”
Mr Lewis’s plea comes as energy companies like Shell and BP reported record-breaking profits: £32 billion and £23 billion respectively.
