Martin Lewis calls for more pensioners to keep winter fuel payments as energy price cap rises – business live

It’s important to put the energy price cap increase in the context of the last few years: by standards of the decade before 2019, the UK is still in crisis territory.

Jillian Ambrose, the Guardian’s energy correspondent, writes:

The new cap is broadly in line with the costs of energy last autumn and winter, when it rose to £1,834 between October and December and £1,928 from January to March. However, bills will remain well above the cap set before Russia’s war on Ukraine triggered a global energy market shock, when the winter price was £1,216.

Gillian Cooper, the director of energy at Citizens Advice, said:

Energy bills will now be around two-thirds higher than before the crisis, and with record levels of energy debt and the removal of previous support, people are in desperate need.

Our research shows people are so worried about price increases that one in four say they could be forced to turn off their heating and hot water this winter. We’re particularly concerned about households with children and young people and those on lower incomes, who are most likely to struggle with their heating costs.

You can read our full report here:

Labour, Conservative and Lid Dem politicians criticise government over winter fuel payments

Insurer Hiscox has appointed its senior independent director, Colin Keogh, as interim chair after Jonathan Bloomer died this week in the Bayesian yacht tragedy.

Jonathan and his wife, Judy Bloomer, were among those who died after the yacht foundered during a storm after being hit by a waterspout. The Bloomers had joined tech entrepreneur Mike Lynch on the yacht to celebrate his acquittal on US fraud charges.

Jonathan Bloomer, a friend of Lynch who testified at his trial, was the executive chair of Morgan Stanley International as well as chair of Hiscox, the FTSE 250 insurer.

Of the 22 crew and passengers on board, 15 were rescued. Angela Bacares, Lynch’s wife and tech company shareholder, survived the disaster, but Lynch died and their 18-year-old daughter, Hannah, is missing, and presumed dead.

The others who died were Recaldo Thomas, who was the yacht’s chef, Neda Morvillo and her husband, Chris Morvillo, who was Lynch’s longtime lawyer.

Martin Lewis called for a bigger cut in standing charges – and urged the government and Ofgem to work together to sort out the issue.

Lewis has campaigned for several years for reform of standing charges. He said:

For many elderly pensioners they don’t turn their gas on in summer months, but they still pay 30p a day just to have a gas meter.

This move to drop standing charges … has to be done in concert with specific help to help vulnerable high users who have it for medical or disability conditions. The problem with our government is Ofgem is in charge of standing charges; government is in charge of support for vulnerable users. You have to join the two up.

You want to grab both heads and bang them together and say, you two have to work together to make this work.

Lewis said that standing charges are a “poll tax” – one levied at a fixed sum on every individual (or in this case, every household) – and a “moral hazard” because lower energy users do not get the benefit.

Martin Lewis has said he is due to meet Rachel Reeves in a couple of weeks, and that he will raise his proposal with the chancellor then.

The main advantage of his proposal to re-extend winter fuel payments by council tax band is that it could be rolled out quickly, Lewis said.

The government has surprisingly little insight into the earnings of each household, which makes rapid deployment of means-tested payments very tricky. (It’s worth reading this by Robert Colville, head of the Tory-aligned Centre for Policy Studies thinktank, who said: that “database management is both the most important part of modern government, and its most intractable limitation”.)

Lewis said:

It’s an imperfect solution, but it is a workable, quick solution.

The key for me is it’s fine to drop universality, but we’ve gone from everyone having it to just the poorest pensioners on the very lowest incomes. As always it’s those just above the threshold that miss out. We need to look at a broader eligibility criteria if we are going to means test it.

Martin Lewis calls for broadening winter fuel payments

Energy prices dropped earlier this year as the summer months delivered lower demand for gas. But that was “only a brief moment of respite”, said a charity leader this morning.

Joanna Elson, chief executive at Independent Age, which supports older people in financial hardship, is campaigning for the government to reinstate the winter fuel payment.

Chancellor Rachel Reeves last month limited the winter fuel payment to those on pension credit, arguing that wealthier households were receiving a payment meant to help those struggling financially.

Elson said she was concerned that many households who should be eligible will not receive the payment:

As the weather starts to turn colder, older people in financial hardship up and down the country are worried about their budgets. Many are on a low fixed income, and they will now need to find more money to cover their rising energy bills.

To make matters worse for older people in poverty, this bill increase coincides with the ending of the winter fuel payment for people not receiving pension credit. There could be up to 1.2 million older people eligible for pension credit who don’t receive it. On top of that, many are just above the eligibility threshold but still live on a low income and struggle to make ends meet. We are incredibly concerned about the people in later life who will be cut off from a vital source of income worth up to £300 at a time when their bills are rising.

Four in 10 consumers are still having to cut back their non-essential spending due to the cost of living, according to KPMG, an accountant.

Ofgem told British consumers to “shop around”. But that message has not quite got through to households, who are hard-pressed.

Simon Virley, vice chair and head of energy and natural resources at KPMG UK, said:

Rising energy prices will be a huge concern for the many households who are not on fixed deals just as we enter the winter months. Average dual fuel bills remain well above the levels prior to Russia’s invasion of Ukraine and the fact that prices remain slightly below the levels of last winter will be of little comfort to those households.

Switching appetite remains well below the levels seen before the price cap was even introduced. The price cap has effectively become the default tariff over the past 18 months, which limits the incentives for investment and innovation. So, it is important that reform of the retail market remains a priority for the government and the regulator if we want to reap the benefits of a smarter, greener energy system.

The UK’s reliance on imports of fossil fuels – particularly gas – means it is vulnerable to rising global wholesale prices, according to Cornwall Insight, a consultancy.

Cornwall regularly tracks the price cap, using the same calculations as Ofgem to work out where the price cap will be ahead of time. Prices are due to rise further this winter, Corwall said.

The January 2025 cap is projected to rise by an additional £45 to £1,762. This would mark a 3% increase from October’s cap.

Craig Lowrey, principal consultant at Cornwall Insight, said:

As we move into the colder months, a lift in bills, while expected, is certainly not welcome. Unfortunately, a volatile wholesale market, and a country heavily reliant on imported energy has created a perfect storm for fluctuating household bills.

Today’s announcement, coupled with our forecasted energy price hikes in the new year, will only intensify the calls for government action to protect vulnerable households. There is a range of options available for the new government, from social tariffs to targeted support. But with just over a month until the cap increases – coupled with the fact that Parliament in on its summer recess – time is not on their side.

The increase is also likely to reignite the debate over the effectiveness of the cap. While brought in with good intentions, it was only meant as a temporary measure, and some may argue the cap has served its purpose. One thing is clear: the current system is not meeting the needs of households, and without change, this risks being the case on an enduring basis.

It would be unrealistic to expect the market to simply correct itself and return to pre-crisis price levels, especially as bills remain far from historic norms three years on. We hope that Ofgem’s review of the cap, along with a renewed focus on renewable energy by the government, will provide viable solutions, helping to deliver fair and sustainable energy bills for everyone.

The regulator may have said the average energy bill will rise by £12 a month, or £144 a year, but that average masks a lot of variation.

The properties with the worst energy efficiency – a G rating – could rise by as much as £558 a year, according to calculations by Rightmove, a property website. That would leave average bills for those households at £6,140.

By contrast, the most efficient, A-rated properties could pay only £620 annually – so prices would rise by only £56 annually.

Of course, the standard health warning: all of these numbers are average numbers, but the price cap is based on the unit rate, which is actually what is capped. So households can spend more or less than the cap, depending on what energy they use.

Tim Bannister, Rightmove’s property expert, said:

The rising price of energy in recent years means that renters and homeowners are likely having to closely consider their total monthly outgoings when choosing their next home. We know that lower bills is one of the biggest motivators for people to go greener, so we expect over time people will increasingly seek out more energy efficient properties in order to keep bills down over the long-term.

Our research suggests that if something like a dynamic price cap, where energy is cheaper at less popular times of day, was to be introduced, the majority would welcome it if it meant lower bills.

Ofgem’s boss has outlined that there are no easy answers on how to cut energy bills, including via standing charge reform.

Standing charges have increased in recent months, and unlike with energy use, households have no ability to change their usage.

Jonathan Brearley, Ofgem’s chief executive, said:

We are working with government, suppliers, charities and consumer groups to do everything we can to support customers, including longer term standing charge reform, and steps to tackle debt and affordability.

Options such as changing how standing charges are paid and getting suppliers to offer more tariff choices and give customers more control are all on the table, but there are no silver bullets. Any change could leave some low-income households worse off, so it’s important we hear views on our proposals and continue working with the government to see what targeted support could help customers.

Ultimately the price rise we are announcing today is driven by our reliance on a volatile global gas market that is too easily influenced by unforeseen international events and the actions of aggressive states. Building a homegrown renewable energy system is the key to lowering bills and creating a sustainable and secure market that works for customers.

Scrapping standing charges could raise energy bills by 10% for 500,000 poorer households

Thames Water monitors to stay in place until credit rating improves

‘Shop around’ as price cap adds £12 to monthly average British energy bill