Money Saving Expert's Martin Lewis has urged the Chancellor to "urgently rethink" the £200 energy rebate scheme which is set to become compulsory.
The fresh calls for its scrapping comes as research by MoneySavingExpert.com (MSE) - fronted by Martin himself - has shown that if given the option, the majority of adults in the UK would opt of the scheme.
According to a YouGov poll, which spoke to 1,665 adults, they found that 57% of those responsible for energy bills - including those on benefits - would decline the cash rebate which Martin himself has refered to as a "loan-not-loan" scheme.
This compares to just 26% of bill payers who said that they would actively opt into the scheme if they had the choice.
It comes as the UK faces an energy crisis amid the price increase of gas which has rocketed in recent weeks and because of this, many energy suppliers have gone bust with supermarkets warning of food shortages and price hikes as a result.
It also follows after last week when Chancellor Rishi Sunak announced that all electricity bills - including those on a prepayment plan - across the UK would be reduced by a flat £200 in October.
Then from the following April, all electricity bills will be increased by a flat £40 per year for five years to pay the 'loan' back impacting every bill payer.
Martin Lewis, founder of MoneySavingExpert.com, said: "I would ask the Chancellor to urgently rethink his energy bills £200 discount and clawback scheme.
"Bills are already sky-high, and on April 1 we now know most will rise by a previously unthinkable, and for many unaffordable, 54 per cent. And sadly, when that ends in October, it currently looks possible the price cap will rise by another 20 per cent. That will leave most people paying double what they were a year ago.
"With this scheme, the Chancellor is effectively taking a worrying gamble with people’s finances.
"He is following the market’s view that rates will finally start falling later this year, meaning the price cap will fall in April 2023.
"Therefore, he hopes the impact of this scheme will mean lower bills now and in the future as the extra costs then will be covered by the drop in bills."
He added: "That is far from certain, especially with the escalating conflict between Russia and Ukraine. And crucially, if rates don’t drop – or don’t drop a lot – people will be left in a lose-lose situation, with far higher bills than now and an additional levy on top.
"Our poll plainly shows most people aren’t willing to take this gamble. They don’t want to be a part of it – yet it is unavoidable. The state forcing people to do something against their will that is potentially damaging to their finances isn’t a good outcome.
"So, as I doubt it is technically possible to set up an opt-out scheme by October, in truth the best route for most is likely to scrap this scheme and come up with an alternative solution."
How does the £200 scheme work?
According to Martin Lewis, there are two elements involved:
- Around October 2022: Every electricity bill will be reduced by a flat £200 and bill payers cannot opt out. Prepay users will get the money via their smart meter, voucher, cheque or similar. For those with small bills, the flat £200 will have a big impact; for those with big bills, a little one.
- From April 2023: Every electricity bill will have a £40 per year levy added to it every five years in order to pay back the initial £200 discount. And in a reverse to October, for those with small bills, the flat £40 will have a bigger impact than for those with big bills.
The money expert explained: "While many are calling this a loan, it isn't. It's automatic, not optional. It isn't linked to individuals or households or buildings, it's about bills. You have to take it if you pay for electricity this year.
"You have to pay extra for it if you pay for electricity in future. It's not regulated via the Financial Conduct Authority. It doesn't go on your credit file.
"It's an energy levy (like the green infrastructure levy added to bills). First there's a negative levy reducing bills, then a levy added to them. People whose home-situation doesn't change it will feel like a £200 loan repaid at £40 per year, for others there are bizarre outcomes."
Martin Lewis gave these examples:
- Five people share a house in October then separate. They get a single £200 discount off their bill. They then all move out and live alone. From the following April all five of them will have bills £40 per year higher. Similar for those moving out of parents' houses in the five years.
- Two singles live alone in October, then meet. They each get a £200 per year discount, then they move in together, so they've only one bill, and it'll just have one £40 per year added.
