Martin Lewis says energy prepayment cap is a "welcome sticking plaster"

MONEYSAVINGEXPERT.COM

Cutting your costs, fighting your corner

Forimmediaterelease Tuesday 7 February 2017

Martin Lewis, founder ofMoneySavingExpert.com, says: “For years energy firms have used spiel, spin and misdirection to try to pretend that those on prepayment tariffs are getting the same rates as those on a normal billed meter. They get away with this by comparing prepayment costs to the cost of their expensive standard tariffs using the most expensive payment method.

“Yet the real problem with prepay is that there’s no real competition.All the cheap deals offered are for direct debit, and they can be £300-£400 a year cheaper than prepay prices for someone on typical use. That is a national disgrace, because most of the poorest people in our society have prepayment meters – the most potent poverty premium possible.Simply regulating that all tariffs should be available to all customers (with a small surcharge allowed for prepayment) would fix this. In the meantime the Government’s cap does put a welcome sticking plaster over the problem and will bring bills down.

“More subtly though it is also an admittance that competition isn’t working. Politicians have to make a decision. If you want a competitive switching market, you must accept big price differentials – with some paying a lot more than others; if not there’s no incentive to switch. Alternatively, accept competition isn’t the solution and regulate prices – which would mean those who don’t switch would see prices drop, and those who do would see them rise. These two stark solutions have benefits. The problem is politicians of all parties have tried to do something in the middle and that’s what fails.”

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About MoneySavingExpert.com: MoneySavingExpert.com is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. Set up in 2003 for just £100, its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site Alexa.com, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly Martin’s Money Tips email, and more than 14 million unique monthly site users who visit more than 24 million times a month. In September 2012, it joined the MoneySupermarket.com Group PLC.

About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created MoneySavingExpert.com, the UK’s biggest money website. He’s the UK’s most internet-searched man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over six million template letters downloaded) and PPI reclaiming (over five million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as regular slots as resident expert on Good Morning Britain, This Morning and Radio 5 Live, among others.He was appointed OBE in the Queen’s Birthday Honours in June 2014.