Martin Lewis says Rishi Sunak likely to cancel plan to increase energy bills

Martin Lewis from Money Saving Expert speaking to an audience of Londoners about the challenges they are facing as a result of the rising cost of living, hosted by London Mayor, Sadiq Khan at City Hall in London. Picture date: Thursday February 2, 2023. (Photo by Stefan Rousseau/PA Images via Getty Images)
Martin Lewis has called on the government not to raise energy bills. (PA)

Martin Lewis has predicted Rishi Sunak could scrap the government's plan to increase energy bills in April.

The broadcaster and founder of MoneySavingExpert said he believes the prime minister will backtrack on plans to raise energy bills by 20%.

The government's energy price guarantee (EPG), the taxpayer-funded cap on bills, is set to rise from £2,500 a year for the typical property to £3,000 in April.

But there have been widespread calls to ditch the increase as wholesale energy prices have fallen while the UK continues to grapple with a cost of living crisis.

Speaking to LBC Radio on Monday evening, Lewis said: "Reading the runes, and I'm careful of my phrasing, I think we may well get a win here.

"I think there is better than a 50/50 chance of it not going up."

Lewis described the planned rise as a "national act of mental health harm".

He added: "Politically, it's not a very clever move either. It's the government that sets prices, not the regulator, not firms. And it's the government that will be putting them up 20% in April if it happens."

Lewis has previously said that then-chancellor Sunak called him to discuss the government's energy bill support package last May, days before the government announced a £15 billion support package.

In December the current chancellor Jeremy Hunt met with Lewis and the head of the Financial Conduct Authority (FCA), to discuss how lenders provide support for those who encounter problems paying their mortgage.

Energy price cap

On Monday, regulator Ofgem announced that from the start of April it is lowering its energy price cap - the amount suppliers are able to charge – from the current £4,279 per year to £3,280 for the average household.

Read more: The supermarket where prices have gone up the most

The regulator said the reduction of almost £1,000 reflects recent falls in wholesale energy prices.

The £3,280 figure indicates how much consumers on their energy suppliers’ basic tariff would pay if the government’s EPG was not in place.

Watch: Ofgem lowers energy price cap but bills still expected to rise

But customers will pay about 20% more on their bills – approximately £500 – as the government’s EPG becomes less generous from the beginning of April, leading to an average bill of £3,000.

When the upcoming end of the £400 energy rebate scheme – paid in six instalments of £66 and £67 a month – is factored in, the potential energy cost for households will increase even more.

Ofgem chief executive Jonathan Brearley warned: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the energy price guarantee. This means that, on current policy, bills will rise again in April. I know that for many households this news will be deeply concerning."

And Citizens Advice chief executive Dame Clare Moriarty said the increase will “spell catastrophe” for millions of households without further support from the government.

With energy prices falling faster than expected, chancellor Jeremy Hunt is under pressure to maintain the energy price guarantee at its current rate when he delivers his budget on 15 March, as the cost to the taxpayer would be lower than forecast.

On Tuesday, energy secretary Grant Shapps said he was "very sympathetic" to calls to protect households from the rise in the price guarantee.

File photo dated 08/01/22 of a person holding an energy bill. The number of people who cannot afford their energy bills will double, Citizens Advice chief executive Dame Clare Moriarty said. She told BBC Radio 4's Today Programme:
Energy bills are set to rise for UK households from April. (Alamy)

He told The Times: "I completely recognise the argument over keeping that price guarantee in place, and the chancellor and I are working very hard on it. I’m very sympathetic to making sure that we protect (people). We’re looking at this very, very carefully."

Sunak said on Tuesday: "The government is still continuing to cap energy bills.

"That’s what the energy price guarantee is, it means that whatever happens, the government is going to step in and cap the maximum that anyone will pay. So that is a really big statement of support to everybody."

Asked about Shapps’ comments on the EPG, the prime minister’s official spokesman said: "It’s something we are just keeping under review. I don’t think there’s a specific time we are working to.

"By the end of June the energy price guarantee will have saved the typical household in Great Britain around £1,000 since it began."

Watch: Rishi Sunak says 'energy costs are a major challenge'