Martin Lewis: How the new flat rate £200 energy bill loan really works

mumf

What happens when the price cap changes again in October- ready for Winter? More ‘loans’,more smoke and mirrors?

Frogletina

 

The extra £40/yr levy stops after 5 years( 5 x 40 =200) when the £200 has been re-payed. Giving (Loaning) £200 is like giving a starving child a single sausage and expecting it to nourish them for a year!

 

It's more like giving a starving child 5 sausages which they then eat, and then asking them to give one back every year for the next 5 years when they have none left.

QrizB

Frogletina said:

The extra £40/yr levy stops after 5 years( 5 x 40 =200) when the £200 has been re-payed. Giving (Loaning) £200 is like giving a starving child a single sausage and expecting it to nourish them for a year!

It's more like giving a starving child 5 sausages which they then eat, and then asking them to give one back over the next 5 years when they have none left.

I try not to get political but this price rise has been foreseeable for at least three months. Announcing this particular measure at the 11th hour makes me think that the relevant Ministers haven't been doing a very good job.

Malchester

I took out a 3 Yr fix with EDF in Sept 2021 ending Sept 2024. The rate was less than the current price cap, never mind the increase. I don't really need the £200 reduction but accept it is not optional. My question is, paying it back at £40 a year from April 2023, how will it be done from those on fixed tariffs? Can the rates be changed when I have signed up for a fix to collect the money, or will it be added to each bill as a separate item (as VAT is currently shown on bills)?

GingerTim

Malchester said:

I took out a 3 Yr fix with EDF in Sept 2021 ending Sept 2024. The rate was less than the current price cap, never mind the increase. I don't really need the £200 reduction but accept it is not optional. My question is, paying it back at £40 a year from April 2023, how will it be done from those on fixed tariffs? Can the rates be changed when I have signed up for a fix to collect the money, or will it be added to each bill as a separate item (as VAT is currently shown on bills)?

Most likely it will be simply folded into an increased standing charge and not be separately itemised.

wrf12345

In April DD will go up by "54" percent but arguably you can decrease it by 200/6 for six months to reflect the money coming into the account later in the year and low gas usage during that period.

Sterlingtimes

How does the energy price increase impact inflation? The annual State Pensioner CPI for 2023/24 will be decided in September 2022 before the £200 is applied. If a pensioner lives on a new basis pension only then energy inflation for that person could be £700/£9,617 = 7.3%. 

How high could the September 2022 CPI be in these circumstances? 

wild666

EssexHebridean said:

it won’t be stopping in anything LIKE as soon as 5 years, after all… 

I agree energy suppliers will find a way of incorporating the £40 into the yearly price of the energy bills. IMHO this loan will turn into another stealth tax on energy users. 

QrizB

Sterlingtimes said:

How does the energy price increase impact inflation? The annual State Pensioner CPI for 2023/24 will be decided in September 2022 before the £200 is applied. If a pensioner lives on a new basis pension only then energy inflation for that person could be £700/£9,617 = 7.3%. 

How high could the September 2022 CPI be in these circumstances? 

CPI has already risen 2.4% since last September (the index has risen from 112.4 to 115.1). The rate for the full year to September 2022 could be eye-opening.

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest

Sterlingtimes

wild666 said:

EssexHebridean said:

it won’t be stopping in anything LIKE as soon as 5 years, after all… 

I agree energy suppliers will find a way of incorporating the £40 into the yearly price of the energy bills. IMHO this loan will turn into another stealth tax on energy users. 

At the time of COP26 a few months ago, there were suggestions that UK energy consumers should suffer an energy levy to help the less developed countries pay for their "greenification". That view may now not be so popular.