Financial guru said people need to take action now to save a chunk of cash before the power rates rise in October
Martin Lewis has sounded the alarm for immediate action following Ofgem’s decision to hike the energy price cap from October 1 this year, which will see an increase from £1,568 a year to £1,717 for households with typical power usage.
With the £200 Winter Fuel Payment ending for those not on Pensions Credit, concerns are mounting over the ability of many to cover their energy bills this winter. Martin Lewis, the founder and chair of MoneySavingExpert.com, highlighted that prices are now roughly double what they were before the energy crisis began, a situation started by Russia’s invasion of Ukraine.
Mr. Lewis warned: “From 1 October, the vast majority of homes in England, Scotland & Wales will see costs jump 10% so for every £100 you pay today, you’ll typically pay £110. To be more accurate, as most of the rise is on the unit rate not the standing charge, higher users, especially those with gas, will overall see their costs rise by more than 10%, lower users less.”
“The Government must rethink Winter Fuel Payments or almost ALL pensioners will need to find £100s more than last winter: While energy will cost less than during last winter’s crisis time, the reduction in rates compared with last year only equates to a drop of roughly £100 over the six winter months for a household with typical usage. Yet specific pensioner energy support has dropped by far more.”
Mr Lewis was unequivocal about what consumers should do in response – switch. He highlighted that some deals still on offer were 7 per cent cheaper than the new October cap, translating to potential savings of around £120.
He elaborated: “People can and should save by switching: The cheapest year-long fixes on the market right now are about 7% LESS than the new October Price Cap, but they mightn’t be around long. That looks a good deal, as it’s currently predicted once rates go up they won’t come down.”
“Don’t just jump on any fix though if you’re going to lock in you want to grab the cheapest for your use and location, so use a whole-of-market comparison, like MSE’s Cheap Energy Club, and find out who will let you fix for less. Alternatively, deals like E.on Next’s Pledge, or EDF Ensure are effectively discounted trackers, where they move with the Price Cap, but the unit rates or standing charges are guaranteed to be lower.”
“And for more sophisticated energy users, the Octopus Agile and Tracker tariffs, where prices move rapidly, can be far cheaper.”
Last year, pensioner homes received up to £300 extra per household for cost of living support and Mr Lewis explained: “Its loss alone is far bigger than the saving made by slightly lower rates. Piling on top of that is the Government’s new decision to means-test Winter Fuel Payments, that will leave all except usually those who claim Pension Credit missing out on a further £200 to £300.”
“While there’s a strong argument for ending the universality of Winter Fuel Payments, eligibility is being squeezed to too narrow a group. Those just above the thresholds will be hardest hit.”
