The government’s energy price guarantee is due to be scaled back but with the cost of energy falling it is under pressure to maintain it for a little longer, so will bills rise at the end of March?
“Europe is facing an energy crisis.”BBC News
“Wholesale gas prices in the UK hit a record high.”BBC News
Beth Rigby: “Can you guarantee the lights will stay on, people won’t have fuel shortages?”
Boris Johnson: “Yes, yes I can.”Sky News
With rising energy prices threatening to push lots more people into fuel poverty, the government came under pressure to offer some sort of support to households.
And this man was at the forefront of that campaign.
“Hello, I’m Martin Lewis from Moneysavingexpert.com. The Prime Minister has just sat down in Parliament after announcing what is called the New Energy Price Guarantee…”Martin Lewis on TikTok
Martin Lewis is a financial journalist and TV personality, with millions of social media followers.
He was a big proponent of the Energy Price Guarantee, a scheme introduced by the government which limits a typical British household’s energy bill to £2,500.
It does this by paying the difference between that and the actual cost of energy.
But that initiative is due to be scaled back at the end of March and the limit raised to £3,000, which is why there are concerns about people’s bills rising dramatically.
‘Now what have we got for you today… Well The Mirror has splashed on a 20 per cent rise in energy bills expected to come in this April when government support is due to end…”The Mirror
The regulator Ofgem sets the price of a unit of energy with its price cap, which is different to the price guarantee.
“Okay breaking news, Ofgem have announced they are lowering the energy price cap from £4,279 to £3,280 for the average household.”GB News
The price cap is a limit, decided every three months, on how much energy suppliers can charge… and even though it’s coming down… it’s not coming down fast enough to stop household bills spiking when the price guarantee changes at the end of March.
So what’s going to happen?
“The government has intervened over the past few months and set a cap of its own, so that households don’t have to pay any more at the moment than £2,500. That’s rising to £3,000 from April, so it means all of our bills will be going up ”Sky News
In April the government will raise the limit on the typical household bill and its separate 400 pound winter discount scheme will also come to an end.
“That’s what everyone should think of. You’re gonna pay 20 per cent more in England, Scotland, and Wales by 20 per cent.”Martin Lewis on Good Morning Britain
Energy usage is likely to decrease as temperatures rise because people no longer have to rely on gas and electricity to heat their homes.
That will eventually bring bills down and it’s hoped that by the time it starts to get colder again we’ll be over the worst of the energy crisis.
But in the meantime, prices will remain high… and without the current level of government support, consumers will shoulder the cost.
That’s why Martin Lewis is calling for the government to step in to bridge the gap.
“I wrote to the Chancellor two weeks ago saying, ‘please do not do the price increase in April, it will only likely be in effect for three months’. It seems to be an act of national mental health harm to send millions – almost everybody – a letter saying ‘your energy bills are gonna go up by 20 per cent again, while they’ve already more than doubled, again.’”Martin Lewis on Good Morning Britain
So is the government likely to listen?
Chancellor Jeremy Hunt has previously said that the government can’t afford to keep the energy price guarantee at £2,500 pounds but that was when the cost of energy was much higher than it is now.
Because the wholesale cost of energy is falling and Ofgem’s price cap is coming down experts estimate that the cost of extending any help until July will be limited to about £3 billion pounds.
And recently the government found out it had more money than it thought.
“This might only be one month’s figures, but they are at least positive. Essentially, the government made more in tax than it spent in January, leaving it unexpectedly in the black.”ITV News
Given that, it would be politically difficult for the chancellor to resist extending the support for a little longer.
Earlier this week the energy secretary Grant Shapps hinted that the price guarantee might remain at £2,500 pounds, telling the Times newspaper that he’s “very sympathetic”, and the government is “looking at this very, very carefully”.
It’s predicted that the number of people who will not be able to afford their bills will double without the government maintaining its support. Those people will be eagerly awaiting a decision.
This episode was written and mixed by Patricia Clarke.