Responding to the Prime Minister’s announcement of a draft bill which would give Ofgem full power to impose a widespread energy price cap, Martin Lewis, founder of MoneySavingExpert.com and cheapenergyclub.com, which now has over 3 million members, said:
“It’s a national disgrace that a struggling 90 year-old granny pays substantially more to boil a kettle than an affluent web-savvy man like me.
“However a price cap done wrong can do more harm than good. Some in the Tories have called for a ‘relative’ price cap – which means a firm's most expensive price can only be a set percentage more than the cheapest. That’s self-defeating – it means they’ll just withdraw cheap deals.
“Politicians have to decide, do they see competition and switching as the solution, or do they want to regulate prices? For switching to work you need big price differentials – so some will have to pay more than others.
“As the Tories want switching, what they need to do is decide who should be in a competitive market and who not; and protect those who can't rather than won't engage. As that's difficult, any cap should simply be a set ceiling on rates, much like has been implemented in the prepayment market.
“Yet imposing a cap will take at least a year to come in, and to channel Game of Thrones, winter is coming. Right now someone on a big 6 standard tariff with typical usage pays £1,130/yr on average, the cheapest tariffs are £820/yr – same gas, same electricity, same safety.
“So no-one should wait for the cap. Everyone should check if they're on the best deal now; including our current Secretary of State for Energy, who ludicrously last year said switching was ‘too complicated’. If he still hasn’t worked out how it’s done, perhaps he shouldn't be in charge of encouraging the rest of the nation to do it. Too many already choose between heating and eating.”
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About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created MoneySavingExpert.com and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.
He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six 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 a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.
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. It was set up in 2003 for just £100, and 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 MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the MoneySupermarket.com Group PLC.