More energy deals with NO standing charges finally on the cards following Martin Lewis' calls for action – here's what's happening

Martin Lewis: "This isn't the perfect solution that I would have liked to happen, but I think it's the best solution that Ofgem can do unilaterally without Government intervention.

"So, you're quite right. I tend to call standing charges a poll tax on energy – £338 a year is the average standing charge on Direct Debit. You pay that whether you use anything or nothing.

"It's a disincentive for those who have lower bills to cut their use any more. It's terrible for people who only use their gas central heating in the winter, which is many elderly people, because it means they're paying all the way through the summer, for gas central heating. They're paying every day, even though they don't use it.

"It's awful for people on pre-payment tariffs. It means when they've got no money and they're not using any energy, the meter is still ticking. So when they want to use energy again, they have to put in money to cover the standing charges even though they don't have the money. So, I've long campaigned for change.

"Here's the problem. And here's why what I would really like to see – which is lower standing charges on the Energy Price Cap that dictates the price 80% of homes in England, Scotland and Wales pay – hasn't happened...

"Many charities who represent people with disabilities and illnesses, which have to have high energy usage, didn't want the standing charge to be lowered, understandably (I'm not having a go at them). Because if you've got an electric wheelchair for your child or a dialysis machine or something, that means you have very high energy usage, if you lower the standing charge, where does the cost go to?

"It goes onto the unit rate, the amount that you pay for each unit of gas and electricity. So vulnerable higher users would suffer from this.

"The regulator to be fair to it, you know, and I've kicked Ofgem many times in the past when I think it needs it, but I'm not doing it this time. The regulator felt, and I thought that was what was going to happen, that it couldn't lower the main standing charge because of the impact on those vulnerable people.

"What we needed is the Government to work in concert with the regulator for that to happen. And the Government hasn't announced support for those vulnerable high users. I think there's a chance it may do next year, and this could change again, but it hasn't happened yet.

"So, Ofgem said 'what can we do within our own power?'. Well, in the energy submission that my team and I put to Ofgem on this, our solution was to have two Price Caps. You have one that has a higher standing charge and a lower unit rate. That's the one we've got at the moment. And then you have one that has no standing charge but a higher unit rate. So this one's good for lower users. This one's good for higher users. You now have two Price Caps.

"The key is, and this is the difficult bit, who chooses. Because the Price Cap was set up as a safety net tariff, if you like, for people who don't switch. It isn't doing that at the moment. It's almost a regulated price for everyone, but at some point it will go back to being that safety net. So the problem with two Price Caps is if it's a safety net for those who don't switch, then the people who don't switch, because they can't or won't switch because they don't understand it, won't choose.

"So what I will be lobbying by the time that this comes in at the end of next year, is that firms must default people, if they're on the Price Cap, to the cheapest tariff, or at the very least, firms must default the most vulnerable, those on the priority services register, to the cheapest tariff, so low users will automatically be put on the new, no standing charge tariff.

"Sorry, that was a long, long opening answer, but I hope it makes sense."

Good Morning Britain presenter Kate Garraway: "It was fascinating. Can I just, I'm sadly now not Martin, as you know, but I was one of those who was a very high user because of running an oxygen tent 24 hours a day, but I don't understand – for Derek [Kate's husband] and other electrical facilities that we had to use – but I still had to pay the standing charge.

"So why did those charities think that that was better? Because if you're not going to get rid of the standing charge, you're still paying the high bills and you've got the standing charge."

Martin: "So, within a zero sum game, which is what Ofgem has to work on. Again, this is what people have to understand. Ofgem has certain rules and then there's the Government. This is an Ofgem unilateral action, acting by itself. It's a zero sum game. If you say we won't, people don't have to pay the £338 a year. Where does that money come from? They increase the cost of each unit of gas and electricity you use.

"So in your case, because you were a high user, by increasing the cost of each unit in gas, electricity, your bill would have gone up and many lower users' bills would have gone down if we drop the standing charge. That's why I'm saying that most people want the standing charge down. So within, unless the Government said we will cover that extra for vulnerable high users, like you would have been in the past. That’s why you can't do it and that's why you have those two options."

Kate: "There should be some kind of subsidy for those who need it. And that's a different argument you're saying, isn't it, yeah?"

Martin: "And we would also love a social. We'd also love a social tariff to be brought in, which would help vulnerable users as well. Long campaigned on that. But the big point for people to understand, people say, 'well, how do I know which is best?'. It's actually going to be very simple. We don't have the plans available yet, but when we do have the plans, the maths of this is pretty simple. I will work it out for people.

"It will depend on exactly what the provider offers. There'll be a point where you say if somebody has total usage over, say, £1,700 a year, they’re better off on the old Price Cap. And if someone has usage that of total cost under £1,700 a year, you're better off on the new Price Cap. It will be that simple.

"Lower users are better with no or low standing charges. Higher users are better off with lower unit rates. So you [Kate] would have been a higher user. Therefore you [Kate] would have been better off with a lower unit rate and a higher standing charge."

Kate: "Okay. Got it."

Good Morning Britain presenter Richard Madeley: "Now then. We know this winter we are looking at no relief for pensioners on their bills. Why do we have to wait until the end of next winter for this to come into place? Couldn't that have been brought forward sooner?"

Martin: "Again, and I don't want to be an apologist for the regulator, but this is really complicated and they're mandating forms to come up with a whole new pricing regime. And there are lots of issues, such as my point going out and saying you have to default people, you have to make sure vulnerable people are put on the cheapest tariff. That does take time to work through.

"I go back again. The perfect solution would have been just cut the standing charge and the subsidy for those vulnerable high users. We haven't got that, so it has to work within the consultation regime.

"Worth saying, Richard, you're saying no support for certainly for pensioners, the Winter Fuel Payment, it's being means tested this year. People will know I don't like the method of means test and I think the means test is too low.

"But it's worth saying, the cut off date for applying for Pension Credit, which is how you get Winter Fuel Payment, is also worth £4,000 a year for low income pensioners. It's 21 December. It's not long away. If you do apply by 21 December, they can backdate the payment to when the eligibility criteria was three months ago.

"So let's just make this plain. If you're a lower income pensioner, you're earning less than around £235 a week total income as a single pensioner. £350 a week total income as a state pensioner [couple]. Then call up the Pension Credit hotline or go onto Gov.uk and check if you're eligible. I'm not saying you will be eligible. I'm saying on those amounts of income, that's when you should check.

"700,000 of the poorest pensioners who should be getting Winter Fuel Payment because they're eligible for Pension Credit that aren't claiming aren't. I don't like the mechanism, but let's get the word out. Lower income pensioners, please check if you're eligible for Pension Credit. Then you may get that Winter Fuel Payment as well. Spread the word people, please."