MARTIN Lewis is leading calls for the Treasury to revise or scrap its proposed £200 energy bills rebates.
Critics of the rebate have said it is unfair that they can’t opt out and will be saddled with a £40 annual debt for five years from April 2022 to repay the support.
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Chancellor Rishi Sunak unveiled plans for a £200 energy rebate last week as part of a range of measures to help consumers cope with the cost of living crisis.
It comes as inflation has hit a 30-year high of 5.4% and the energy price cap is set to rise in April 2022, pushing up default tariffs from £1,277 to £1,971.
To help with these rising costs, the Treasury has said it will provide funds to energy suppliers to back £200 discounts on energy bills for all domestic customers from October 2022.
This is not free money though and Mr Sunak said households will need to pay this back at a rate of £40 per year for five years from April 2023, when energy bills are expected to be lower.
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Critics have said it is a gamble that energy costs will be lower by then and there are already calls for consumers to have an opt out.
A poll by MoneySavingExpert showed 57% of people would opt-out of the scheme if they could.
Mr Sunak has previously said it would not be possible to opt-out and urged households to not treat the money as a loan.
But Mr Lewis said there is too much confusion about how the scheme would work and called for it to be scrapped or substantially amended.
He said: “With this scheme, the Chancellor is effectively taking a worrying gamble with people’s finances.
“He is following the market’s view that rates will finally start falling later this year, meaning the price cap will fall in April 2023.
“Therefore, he hopes the impact of this scheme will mean lower bills now and in the future as the extra costs then will be covered by the drop in bills.”
Mr Lewis said there are no guarantees that bills will drop, especially with the escalating conflict between Russia and Ukraine.
He added: “Crucially, if rates don’t drop – or don’t drop a lot – people will be left in a lose-lose situation, with far higher bills than now and an additional levy on top.”
MPs could also face pressure to get the scheme changed.
A parliamentary petition has been launched calling for consumers to be given a right to refuse the rebate.
The petition highlights that it could be unfair on children who live at home now but move out or go to university from April and start having to pay back a £40 debt for a discount they didn’t get.
Additionally, a couple could benefit now but then both would have to repay separately if they split up and move out after April 2022.
It currently has almost 3,000 signatures.
The government will need to respond if the petition reaches 10,000 or a parliamentary debate will have to be considered if there are 100,000 backers.
Martyn James, of consumer complaints website Resolver, has echoed these concerns.
He tod The Sun: “This isn’t a rebate in the traditional sense – it’s a loan.
“So rather than help alleviate the problem, it just moves it further down the line – and for five years after too.
“Our research shows that well over a third of the people who contacted Resolver last year for help with an energy problem could fall in to a category where they could be considered ‘vulnerable’.”
He said these people don’t need a loan but require practical, tangible help to reduce their bills.
Mr James added: “MoneySavingExpert’s research shows that even when in dire need of support, people are deeply concerned about getting in to further debt.
“We are not all equal when it comes to the challenges facing us in the year ahead – so help should be given to those who need it the most. But not in a form that could make things worse in the coming years.”
Other groups have separately questioned if the support will go far enough.
Debt charity StepChange said the people it helps are still worried about having enough to pay the bills.
It estimates that two in five clients may have a negative budget, not enough to pay essential bills, even before thinking about debt repayments following the price cap rise.
The Treasury has said it will publish a consultation on how the scheme operates in the spring.
The Sun has asked for further comment.
We have spotted one loophole that could mean you don’t have to repay the whole rebate.
The government also announced a £150 discount on council tax bills to help ease the cost of living – and you won’t have to pay it back.
Here’s who will get the help and when you can expect the payment.
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