MARTIN Lewis has explained how fresh help for millions of Brits struggling with energy prices will work.
The government announced a £200 discount on energy bills this week as they are set to rocket again in April by nearly £700.
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The money saving expert has published a new video to help people understand the scheme and clear up “confusion” and “misunderstanding” around it.
The help has been described as a discount by the government, but the money is repayable, leading some, including Martin, to call it a loan.
I the two-minute recording is titled “How the new flat-rate £200 home energy bill loan really works, Martin Lewis video explainer…”
Martin said: “What will happen is this – in October, on every single electricity bill in England, Scotland and Wales, you will either have your bill reduced by £200, or you’ll be given a bill credit.
“If you’re on prepay, they’ll pay it through your smart meter or they’ll give you a voucher or a cheque.”
This will be applied automatically to every single bill, he said, and is not optional – you can’t choose not to get it.
He said: “Then from the following April, and for five years after that, you will then have your bill automatically – without choice – increased by £40 a year. That is how it will work.”
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He said the best way to think about the scheme, rather than a discount or loan, is as a levy – but initially this will be a “negative levy” which means you get money back.
Then there will be a £40 levy over the next five years to return that money.
Martin also highlighted that the scheme does not involve a personal loan to individuals, and there is no interest payable like there is with a loan.
For example if you were living with parents, the household would get a £200 discount in October.
If you then moved out you would have the £40 “levy” added on to energy bills you were paying from April 2023.
Chancellor Rishi Sunak announced the bill help along with a £150 council tax discount for millions of Brits in an attempt to ease the cost of living crisis.
RISING BILLS
Soaring wholesale gas costs, global demand and restrictions in the supply of gas which comes from abroad are behind energy bills rising.
The announcement of extra help came as energy regulator Ofgem said that the price cap will rise from £1,277 to £1,971 – a rise of £693.
For those on prepayment meters the price cap will rise from £1,309 to £2,017 – an increase of £708.
Nearly 30million households now have bills subject to this cap, which is linked to wholesale gas prices, as fixed deals on offer are now far higher.
The cap means that suppliers can’t charged more than a certain amount for the the KW price of energy.
The £1,971 figure is what it works out as for the average dual fuel bill and your bill could still be more or less depending on your energy usage.
The cost of living crisis has also seen the price of food and fuel increase, putting pressure on household finances.
If you’re struggling with energy costs or other bills there are plenty of organisations where you can seek advice for free, including:
You should speak to your energy supplier in the first instance as they have schemes in place to help with bills and arrears.
Your local council may also be able to help with cash and grants if you are struggling with bills through the Household Support Scheme
The winter fuel payment scheme, where those getting the state pension can get between £100 and £300 to offset the cost of keeping their homes warm.
Low income households can get £25 a week to help with energy bills during the winter thanks to the cold weather payment scheme too.
The warm home discount scheme means you can a £140 payment that goes toward your heating costs – but you need to act quick as this scheme has already closed at most energy suppliers.
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