Martin Lewis issues ‘monumental’ warning on Ofgem energy bill prices forecast and cost of living
Martin Lewis has issued a ‘monumental’ warning about energy prices as costs continue to rise but government support for millions of households falls away.
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Martin Lewis has issued an important warning about energy prices. The consumer champion claims despite record-high energy costs being forecast to fall this summer, households aren’t set to feel “any real benefit”.
The last two years have seen the price cap set by regulator Ofgem rocket from £1,162 a year for a typical household in August 2021 to its current level of £3,280, having briefly reached £4,279. The pandemic along with Russia’s war in Ukraine have both pushed up wholesale prices, leaving many households struggling to make ends meet.
The government’s Energy Price Guarantee has partly shielded bill payers from the latest increase, as it limits annual energy costs to £2,500 for the average household. But that is set to finish at the end of June, with a government minister appearing to rule out further support on Sunday (May 21).
Last week, Cornwall Insight predicted Ofgem’s cap would fall dramatically to £2,054 in July, saving households an average of £446 a year. But it added that higher prices “may become the new normal” as it predicted the cap would remain at similar levels until at least January 2024.
And despite the predicted fall, Mr Lewis warned there are “monumental questions” hanging over the system governing “consumer energy bills” in the UK - accusing those in charge in recent years of having “been asleep at the wheel”.
Speaking on the BBC’s Sunday with Laura Kuenssberg show, the Money Saving Expert founder said: “In practical terms what you pay from July will drop by somewhere between 15 and 20 per cent, we’re pretty sure it’s in that ballpark. Then the next price cap comes in October.
“The current prediction, and the further out you go, the more crystal ball gazing it is, is that it will drop a little bit more and then go up a little bit in January, but still be roughly the same amount it is now. Pointing out the £400 of government support towards energy bills during winter ended in April, he added: “It is an improvement, [but] it’s not the biggest improvement.”
“In practical terms, people aren’t going to be feeling any real benefit. They’re going to be paying the same that they were over winter, and next winter will be as expensive as the winter just gone, which is over double what we always thought.”
Mr Lewis said that the standing charge, roughly £300 paid each year by households for merely accessing gas and electricity, is unlikely to fall. We have monumental questions about consumer energy bills coming forward.
“They’re too expensive, they’re badly structured, there’s no competition in the marketplace. Clearly, the people who have been in charge have been asleep at the wheel for the last few years, and things need to change.”
What help is available with energy bills?
Environment secretary Therese Coffey said she expected the government “will continue to look at the different ways that those charges are put through to bill payers”, claiming that there is “considerable support” being given to households struggling with soaring bills.
Currently, only people in receipt of means-tested benefits, pensioners and those with disabilities are set to receive further support with their energy bills - amounting to £900, £300 and £150 respectively. Responding that the £2,000 price cap is “unaffordable” for households living “just above the threshold” to qualify for the existing support, Mr Lewis asked Ms Coffey whether there would be any help for those people.
The minister said: “The chancellor set out our plans several months ago on what was happening there and I am conscious there is only a limited amount going to every bill payer. But I think that the critical thing that people will be expecting from the government is getting that electricity pipeline flowing within our own country rather than constantly being reliant on aspects of the link to the gas prices in the world.”
Arguing that the government’s Energy Price Guarantee is set to end nine months earlier than predicted, having cost “tens of billions of pounds less” than expected, Mr Lewis said on the show: “There is money [available to the government] to help those on lower and middle incomes.”