Martin Lewis, the financial guru behind MoneySavingExpert.com, has issued a stark warning to households languishing on standard variable energy tariffs: switch to a fixed tariff without delay. This urgent advice follows Ofgem’s announcement that from April 1, energy bills will jump by 6.4%, marking the third consecutive quarterly increase of its price cap.
The regulator attributes this hike, which will see the average annual bill for those in England, Scotland, and Wales on a standard variable tariff rise from £1,738 to £1,849, to a recent surge in wholesale prices. Households can expect to fork out an additional £111 annually or approximately £9.25 monthly over the cap’s three-month duration.
Although this is a 9.4% (£159) increase from last year, it’s still 22% (£531) less than the peak of the energy crisis at the beginning of 2023. Speaking on BBC Radio 4’s Today Programme, Mr Lewis highlighted that the most competitive fixed deals are currently about 4% cheaper than the existing price cap, a gap set to widen to roughly 10% after Ofgem’s imminent rise.
He cautioned: “Based on the predictions at the moment, once it goes up in April it isn’t coming back down to these levels for the next year. So as you can fix currently at cheaper than the current cap, never mind before it goes up, it is a no-brainer to fix.”
Mr Lewis has advised consumers to hold off until around lunchtime on Tuesday to scout for the best deals, emphasising the importance of using comparison sites that encompass the entire market. He highlighted that some platforms may exclude certain suppliers who don’t pay to be featured, but he’s aware of some cost-effective offers set to launch this morning.
He explained: “And remember that when you do a comparison, remember that the savings you’re given on the cheapest fix are compared to the current price cap. So they won’t look big, they might say £30, £40 a year. But remember it’s going up by 6% so if you do nothing your price would rise whereas if you fix your price would drop.”
Ofgem’s chief executive Jonathan Brearley said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.”
He further addressed the growing concern of energy debts, saying: “Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.”
