Martin Lewis has implored the government to do something for the most vulnerable in the UK as energy bills are set to soar within weeks of the price cap being raised. Mr Lewis listed a variety of schemes the government could put in place to help those most in need, but was skeptical of Labor’s proposed VAT cut. The financial expert felt that the VAT reduction could be used to fund the support policies he has set out so that people are not without heat for the coming year and called the reduction a “tool blunt”, but admitted that it was still a tool to consider.
Speaking on BBC Politics Live, Mr Lewis spoke of rising energy costs set to hit in April and looked at what the government could do to ease the burden on the public.
He told the programme: “We now know that the first price cap will last from April to October.
“During this six month period, on average, people, vulnerable people and low income people will need £300 just to keep them in the expensive position they are in now.
“And unfortunately, it’s likely that rates will go up again next October, so even more will be needed…
“Now I know Labor has the TVA policy, I think it’s a bit of a blunt tool because it helps everybody in some way.
“You might say it would be better to keep the VAT and use the money from that to pump it out to people who will just choose between freezing or starving and that’s no exaggeration in some households.
“We’re in this position, the mechanics of how you do it, by the way, doesn’t really matter.
“Expand the hot house discount and pay £300 there, do it through Universal Credit, have a price cap for vulnerable customers. None of this matters, you just have to do it.
Labor has proposed a 5% VAT cut on energy bills to help people cope with rising utility bills over the next year.
The amount saved from the reduction depends entirely on the tariff and energy usage, but Ofgem says the average annual energy bill is around £1,277.
The VAT on this is £61 a year, with much of the cost being wholesale and network expenses.
Mr Lewis said the price cap – which he calls a “price cap” because it sets the amount companies can charge – is expected to increase by more than 50% after April.
Ofgem will review and publish how much the price cap will rise in February.