Martin Lewis: Postpone the planned cuts to Government energy support
More than 110 organisations have so far joined Martin Lewis and MoneySavingExpert.com (MSE) in calling on the Chancellor to keep The Energy Price Guarantee (EPG) at a typical £2,500 a year, rather than hiking it to £3,000 a year from 1 April 2023 as planned. MSE founder Martin Lewis set out the campaign call in a letter to Jeremy Hunt earlier this month.
Update: 15 March 2023: In a campaign win for Martin Lewis and MoneySavingExpert.com, the Government has today confirmed that it will keep the Energy Price Guarantee at £2,500 a year for three months from 1 April. This, in effect, cancels the planned 20% hike, which would have seen typical bills rise to £3,000 a year - though prices will still rise from April as the £66/£67 a month Energy Bill Support Scheme ends. See Energy Price Guarantee update for the latest.
110+ organisations are supporting this call so far
Since the letter was sent on Thursday 9 February, more organisations have come out in support of Martin's call to postpone the hike:
The full list is as follows:
1. MoneySavingExpert
2. Action for Children
3. Action for M.E.
4. Advice for Renters
5. Advice UK
6. Age UK
7. Alex The Leukodystrophy Charity
8. Alexandra Rose Charity
9. Alzheimer's Society
10. Anthony Nolan
11. Arthritis Action
12. Asthma + Lung UK
13. Barnardo’s
14. Big Issue Foundation
15. Cancer Support UK
16. Centre For Ageing Better
17. Centre for Sustainable Energy
18. Charities Aid Foundation
19. Chartered Institute of Housing
20. Child Poverty Action Group
21. Christians Against Poverty
22. Citizens Advice
23. Citizens Advice Scotland
24. Community Integrated Care
25. Crohn's & Colitis UK
26. Cystic Fibrosis Trust
27. Debt Free Advice
28. Diabetes UK
29. Disability Benefits Consortium
30. Disability Rights UK
31. End Child Poverty
32. End Fuel Poverty Coalition
33. Energy Action Scotland
34. Environment Centre Swansea
35. Epilepsy Action
36. Fair By Design
37. Fairer Housing
38. Family Fund
39. FareShare
40. Feeding Britain
41. FND Hope UK
42. Food Train Scotland
43. Forget Me Not Children's Hospice
44. Fuel Bank Foundation
45. Gingerbread
46. Greater Manchester Poverty Action
47. Green Alliance
48. Guide Dogs for the Blind Association
49. Headway
50. Huntington’s Disease Association
51. Inclusion Barnet
52. Independent Age
53. Independent Food Aid Network
54. Joseph Rowntree Foundation
55. Kidney Care UK
56. Leonard Cheshire
57. Leukaemia Care
58. Mencap
59. MND Association
60. Money Advice Scotland
61. Money Advice Trust
62. The Money Charity
63. Money and Mental Health Policy Institute
64. MS Society
65. MS Trust
66. Multiple System Atrophy Trust
67. National Autistic Society
68. National Energy Action
69. National Energy Foundation
70. The National Kidney Federation
71. National Pensioners Convention
72. National Zakat Foundation
73. Nesta
74. The Neurological Alliance
75. North East Child Poverty Commission
76. OCD UK
77. Parkinson’s UK
78. Polio Survivor’s Network
79. The Poverty Alliance
80. PSP Association
81. Refuge
82. Retail Trust
83. Rethink Mental Illness
84. RNIB
85. Rural Coffee Caravan
86. Samaritans
87. Scope
88. Sense
89. Shine Charity
90. South West London Law Centres
91. Spinal Injuries Scotland
92. StepChange
93. Stroke Association
94. Students Organising for Sustainability
95. Thomas Pocklington Trust
96. Together for Short Lives
97. Tourettes Action
98. Trussell Trust
99. UK Men’s Sheds Association
100. UK Youth
101. Warm This Winter
102. Warm Wales
103. WellChild
104. Welsh Local Government Association
105. Which?
106. Women's Budget Group
107. Yorkshire Energy Doctor CIC
108. Young Lives vs Cancer
109. Your Own Place
110. Your Pay Your Way
111. Z2K (Zacchaeus 2000 Trust)
112. 38 Degrees
Energy UK, the trade association for the energy industry, has also come out in support of the call.
See the full letter below
Below is a copy of the original letter sent on 9 February:
The Rt Hon Jeremy Hunt MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London SW1A 2HQ
CC: The Rt Hon Grant Shapps MP
Thursday 9 February 2023
Dear Chancellor,
In your November Autumn Statement you announced a 20% increase of the energy price guarantee (EPG) – the state-subsidised energy rate – from April. This will increase energy bills yet again for almost every home across England, Scotland and Wales. This comes at the same time that the £400 energy bills support scheme comes to an end.
Yet things have changed since then, and I would ask you to urgently consider postponing that increase. This cannot wait until the Budget – in practice, energy firms will need to know much sooner if the planned rise isn't happening on 1 April, or they are bound to have to communicate to customers that it is coming.
This decision to increase prices was made at a time when wholesale rates were looking to be far higher than they are now. In fact, on current predictions the EPG subsidy may well only be needed from April to July. After that, the underlying price cap currently looks like it may be cheaper than even the current EPG rate of £2,500 a year for a typical household.
This means the provisioned Government expenditure on the energy subsidy will be billions less than expected when the plans were made, giving significant headroom to enable a postponement. Plus, maintaining a lower EPG will also help reduce inflation.
While the EPG isn't perfect, as it's not targeted, it is the method the Government currently uses to support people. Postponing the increase is a practical and fair decision, with household energy bills already double what they were the prior winter. Crucially, the damage to people's pockets and mental health of another round of energy price rise letters is disproportionate.
Without intervention, and soon, the charity National Energy Action predicts that the number of fuel poor households will rise drastically from an already shocking 6.7 million to 8.4 million from April – approaching double the 4.5 million households in this position in October 2021. [i] That is a frightening statistic.
There is widespread support for this move, which the likes of Citizens Advice, Fair By Design, National Energy Action, and StepChange agree with. I trust you'll consider this change and I look forward to receiving your response.
Yours faithfully,
Martin Lewis
Founder and Chair, MoneySavingExpert.com
[i] National Energy Action, UK Fuel Poverty Monitor 2021-2022, 17 January 2023. https://www.nea.org.uk/publications/uk-fuel-poverty-monitor-2021-22/
How the Price Cap and EPG is expected to change
Importantly, if Ofgem's regulated Energy Price Cap falls below The Energy Price Guarantee (EPG), consumers will pay the lower of the two. If this is the Energy Price Cap, then the Government support will no longer be needed on top. With current forecasts (see below), the EPG should likely be replaced by the Price Cap by July.
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The Government's EPG is effectively a subsidy, and it currently brings a typical household's combined gas and electricity bill down to £2,500 a year.
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The EPG was introduced from 1 October 2022 at a typical £2,500 a year, and was due to run for two years.
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In the Chancellor's Autumn Statement (published on 17 November 2022), it was announced that from 1 April 2023, the EPG would rise to a typical £3,000 a year until 31 March 2024.
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This increase in the EPG coincides with the end of the Energy Bills Support Scheme (EBSS), which saw millions of households receive £400 in energy credit over six months in winter. The two changes combined will see many facing an effective annual price hike of 40%.
Energy Price Cap predictions (credited to Cornwall Insight)
These are the latest predictions [i] for Ofgem's energy price cap from Cornwall Insight (CI).
QUARTERLY | Q2 2023 (Apr to Jun) CI forecast | Q3 2023 (Jul to Sept) CI forecast | Q4 2023 (Oct to Dec) CI forecast |
|---|---|---|---|
Electricity | £1,708.44 | £1,088.81 | £1,096.68 |
Gas | £1,586.48 | £1,064.53 | £1,064.37 |
TOTAL | £3,294.92 | £2,153.34 | £2,161.05 |
Under these current predictions, the Government would only be providing the EPG until July, when this would be superseded by the lower Energy Price Cap.
For reference, at the time of Autumn Statement, the predictions [ii] for Q3 and Q4 2023 were around £1,000 higher than they are now.
QUARTERLY | Q1 2023 (Jan to Mar) CI forecast | Q2 2023 (Apr to Jun) CI forecast | Q3 2023 (Jul to Sept) CI forecast | Q4 2023 (Oct to Dec) CI forecast |
|---|---|---|---|---|
Electricity | £2,093.71 | £1,826.56 | £1,432.72 | £1,477.11 |
Gas | £2,151.38 | £1,912.54 | £1,762.57 | £1,736.35 |
TOTAL | £4,245.09 | £3,739.10 | £3,195.29 | £3,213.46 |
[i] Cornwall Insight, "Cornwall Insight release latest price cap predictions", 20 February 2023. https://www.cornwall-insight.com/our-final-forecast-for-the-april-price-cap
[ii] Cornwall Insight, "Cornwall Insight responds to the Autumn Statement", 17 November 2022. https://www.cornwall-insight.com/press/cornwall-insight-responds-to-the-autumn-statement/
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