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Martin Lewis today branded expected savings of more than £230 on energy bills as a “meaningless” figure following this morning’s energy price cap announcement.
Today it was announced that in April families will save on average hundreds from their annual bill with the Ofgem price cap at its lowest level since February 2022.
The founder of Money Saving Expert told Good Morning Britain, however, that he remained concerned about today’s high prices.
Mr Lewis told the ITV show that the £230 figure is “completely meaningless”, “doesn’t affect anybody” and is “just a made up figure based on typical usage” across Britain.
He said the key thing to bear in mind was: “The amount you pay for gas and electricity will be dropping by an average – and it depends on region and the amount you use – of 12.3 percent on the first of April.”
Mr Lewis added: “For every hundred pounds for energy you’re paying at the moment, on the same usage you will pay £80.70 from the first of April.
“But prices are now still nearly double the cheapest prices we had before the price cap. But the big picture is it is better news, good news i probably can’t go as far as, and from the first of April the money you pay for same amount of energy will be cheaper.”
The personal finance expert also highlighted what he called “the big change hidden under the figures”, saying: “For the first time, pre-payment will probably be the cheapest way to pay.”
Mr Lewis later broke this change down on X to his followers, writing: “Prepay standing charges have been lowered to equalise them with Direct Debit, yet as prepay unit rates are cheaper, that means overall for a typical user from April, prepay will be about 3% cheaper.
“Prepay, which many of the most vulnerable use, was always the rip off, so this is a staggering turn around. And this is unlikely to be a flash in the pan – this pricing structure is likely to continue for the foreseeable future. (To be fair even on the current Price Cap prepay is fractionally cheaper, but that is due to a small Govt subsidy. On 1 April the gap will grow, and all due to real pricing).
“So if you’re on the Cap, moving to prepayment will see a saving. Yet before you jump to it, a word of caution… if and when proper competition returns (see point 3) there are rarely any prepay deals. All the big money and discounts are thrown out to win new Direct Debit customers. So I strongly suspect Direct Debit will stay by far the overall cheapest for people who switch, but for those who don’t, it’ll be prepay.”
He also warned the what he brands “the energy bill poll tax” is set to “get worse”.
“Standing Charges for Direct Debit will rise to £334/yr (from £303 now),” Mr Lewis wrote. “Even though overall bills will fall, standing charges won’t. Here are the new average Direct Debit price cap rates (though they vary by region and we don’t have those yet, so it’s just averages).
“New Rates for three months from 1 April (current rates)
“- Elec standing charge 60.10.p day (53.35p). Elec unit rate 24.50p /Kwh (28.62p)
“- Gas standing charge 29.60p day (29.60p). Gas unit rate 6.04p /Kwh (7.42p)
“[I haven’t got the exact rates for prepay and payment in receipt of bills yet – I’ll put them out soon] I call standing charges a poll tax as you pay it regardless of usage eg many elderly who only use gas for winter heating, still pay for their meters in summer.
“I believe it is a moral hazard, as those on lower usage get less benefit and are disincentivised from cutting bills. I’ve long campaigned for change and am pleased Ofgem is currently reviewing it.
“Yet it told me the report isn’t ready yet, I hope for news within the next six weeks. And while it’d be tight, I’d love to see this review, and standing charges lowered, hopefully by 1 July price cap – and I’ll be pressing for that.”
