Debt Free Advice joins Martin Lewis in urging Chancellor to postpone planned 20% energy price guarantee hike

MoneySavingExpert founder Martin Lewis has today written to Chancellor Jeremy Hunt urging him to keep the energy price guarantee (EPG) at a typical £2,500 a year, rather than hiking it to £3,000 a year from 1 April 2023 as planned. See the letter in full below.

The Rt Hon Jeremy Hunt MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London SW1A 2HQ
CC: The Rt Hon Grant Shapps MP

Thursday 9 February 2023

Dear Chancellor,

In your November Autumn Statement you announced a 20% increase of the energy price guarantee (EPG) – the state-subsidised energy rate – from April. This will increase energy bills yet again for almost every home across England, Scotland and Wales. This comes at the same time that the £400 energy bills support scheme comes to an end.

Yet things have changed since then, and I would ask you to urgently consider postponing that increase. This cannot wait until the Budget – in practice, energy firms will need to know much sooner if the planned rise isn't happening on 1 April, or they are bound to have to communicate to customers that it is coming.

This decision to increase prices was made at a time when wholesale rates were looking to be far higher than they are now. In fact, on current predictions the EPG subsidy may well only be needed from April to July. After that, the underlying price cap currently looks like it may be cheaper than even the current EPG rate of £2,500 a year for a typical household.

This means the provisioned Government expenditure on the energy subsidy will be billions less than expected when the plans were made, giving significant headroom to enable a postponement. Plus, maintaining a lower EPG will also help reduce inflation.

While the EPG isn't perfect, as it's not targeted, it is the method the Government currently uses to support people. Postponing the increase is a practical and fair decision, with household energy bills already double what they were the prior winter. Crucially, the damage to people's pockets and mental health of another round of energy price rise letters is disproportionate.

Without intervention, and soon, the charity National Energy Action predicts that the number of fuel poor households will rise drastically from an already shocking 6.7 million to 8.4 million from April – approaching double the 4.5 million households in this position in October 2021. [i] That is a frightening statistic.

There is widespread support for this move, which the likes of Citizens Advice, Fair By Design, National Energy Action, and StepChange agree with. I trust you'll consider this change and I look forward to receiving your response.

Yours faithfully,

Martin Lewis

Founder and Chair, MoneySavingExpert.com

[i] National Energy Action, UK Fuel Poverty Monitor 2021-2022, 17 January 2023. https://www.nea.org.uk/publications/uk-fuel-poverty-monitor-2021-22/

Since the letter was sent on Thursday 9 February, more charities, including Debt Free Advice, have come out in support of Martin's call to postpone the hike – in addition to those mentioned in the letter. 

These include Age UK, Money and Mental Health Policy Institute, Christians Against Poverty, End Fuel Poverty Coalition, Warm This Winter, Advice UK, Centre for Sustainable Energy, Energy Action Scotland, Huntington's Disease Association, Epilepsy Action, Fairer Housing, Advice for Renters, Scope, Money Advice Trust, Money Advice Scotland, South West London Law Centres, FareShare, Green Alliance, Joseph Rowntree Foundation, MS Society, Nesta, Sense, Leonard Cheshire, Mencap, Big Issue Foundation, Debt Free Advice, Parkinson's UK, Royal National Institute of Blind People (RNIB), Stroke Association, WellChild, Alex The Leukodystrophy Charity, Arthritis Action, Asthma + Lung UK, Diabetes UK, Disability Rights UK, Environment Centre Swansea, FND Hope UK, Kidney Care UK, The National Kidney Federation, The Money Charity, The Neurological Alliance, Refuge, Rethink Mental Illness, Young Lives vs Cancer, Your Own Place and 38 Degrees.