Martin Lewis backs cheaper energy tariff that could save households up to £1,500
Martin Lewis has backed calls for a social energy tariff, which new research suggests could save millions of households up to £1,500 a year.
Energy prices have been exacerbated by the war in Ukraine and Citizens Advice warns prices may not lower to pre-pandemic levels for the next decade.
Households are currently covered by the Energy Price Guarantee (EPG) which has set the typical energy bill at £2,500 a year.
This is due to rise to £3,000 from April, although there are expectations that the Chancellor could keep the EPG at its current level for a further three months, until July.
If the EPG remains at £2,500, research commissioned by Citizens Advice suggests ten million households will face crisis-level energy costs, with more than 10% of their income after housing costs going on energy.
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If the EPG increases to £3,000, the number of households affected in this way rises to 12 million.
This is why the charity group - which commissioned thinktanks The Social Market Foundation and Public First to conduct the research - is calling for the Government to introduce a social energy tariff by 2024.
The study suggests a social tariff would see the average energy bill for a qualifying household reduced by £381 – with some getting as much as £1,500.
The cost to the Treasury would be £5.6billion.
Both the Government and regulator Ofgem are currently looking into how a social tariff would work, while Energy UK said suppliers are “ready” to work with ministers.
In its report, Citizens Advice suggests households could be deemed eligible for a energy social tariff if they’re identified as having high energy use relative to their income.
It could be paid through a cash payment taken off bills, or a fixed discount either on bills or the units of gas and electricity used.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Energy affordability is a long-term problem that needs a long-term solution. A social tariff protects millions of people from spending excessive amounts on their bills.
“High energy costs have left too many people choosing between heating and eating. Uncertainty over future high prices only adds to the stress and worry felt in households across the country.
Martin Lewis, founder of MoneySavingExpert, said: “I’ve argued for a social tariff for years, and now it could be a crucial building block to help repair our broken consumer energy market.
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“When things return to a more normal situation we must work out what energy market we want.
“There are two main routes - either regulate all pricing or have a competitive switching market. We’ve long aimed for the latter situation, but it has failed many.
“That’s why we must be blunt and identify who are the legitimate and who are the illegitimate victims of competition.”
Dhara Vyas, Deputy CEO of Energy UK, which represents energy suppliers, said: “Energy UK welcomes this research. It solidifies the need for more targeted support for consumers on an issue which requires an enduring solution, such as a Social Tariff.
“To ensure continued support for everyone and ease the burden of high living costs, suppliers are ready to work with the government to make progress with the introduction of targeted support, such as a social tariff, no later than April 2024.”
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