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

Topher

Doesn’t this make the future private trading & taking over of energy companies more desirable, all clients obliged to pay back a guaranteed higher rate whether or not actual prices go down, for a set period of time? Captive debtors, in some cases not even having”benefitted” from the original “loan” (misnamed a rebate). It’s also not as if it’s two hundred pounds off the current costs, but just taking a slight edge off a massively painfully inflated future bill, this will never therefore feel like being gifted two hundred pounds. (Not forgetting that the “gift” is only a shifting round of our money by it’s elected custodians). I really object to this, and feel strongly that it’s deckchair moving or a “Find The Lady” (three card trick) which is distracting. I want to be able to opt out of going into a debt whatever its description. I want to be treated like an adult who lives in a country with certain freedoms & not patronised as if a child having its pocket money controlled. Is there some way of adding to voices asking for opt out? (Not the extreme ones I’ve seen on Facebook).

QrizB

Topher said:

Doesn’t this make the future private trading & taking over of energy companies more desirable, all clients obliged to pay back a guaranteed higher rate whether or not actual prices go down, for a set period of time?

No. There's no money in this for the suppliers. They give you £200 from the government, they take £200 back from you and give it to the government.

I want to be able to opt out of going into a debt whatever its description.

You won't be in debt any more than you already are. If it helps, think it as part of your share of the £2.2 trillion of debt that the country already has; an extra £6 billion is hardly here or there.

Topher said:

... feel strongly that it’s deckchair moving or a “Find The Lady” (three card trick) which is distracting.

I think that's clear to most of us.

swaledale_one

QrizB said:

Topher said:

Doesn’t this make the future private trading & taking over of energy companies more desirable, all clients obliged to pay back a guaranteed higher rate whether or not actual prices go down, for a set period of time?

No. There's no money in this for the suppliers. They give you £200 from the government, they take £200 back from you and give it to the government.

I want to be able to opt out of going into a debt whatever its description.

You won't be in debt any more than you already are. If it helps, think it as part of your share of the £2.2 trillion of debt that the country already has; an extra £6 billion is hardly here or there.

Topher said:

... feel strongly that it’s deckchair moving or a “Find The Lady” (three card trick) which is distracting.

I think that's clear to most of us.

The way it's been put across the energy suppliers will indeed make a vast amount of profit from this due to the fact every energy account holder regardless if they have or haven't received a £200 credit this October will next April have to pay £200 over 5 years.

In plain English if 100 households get the £200 they will start paying back EDF next April however out of the 100 households 50 children move out into separate properties between November and March and sign up to EDF, come April they will then start paying back £200 each.  That'll mean EDF will collect the loan from the 100 homes and the other 50 they will pocket as pure profit.

Now think of all the potential empty properties in October that may be occupied between April 2023 though to 2028 that will have to pay the charge which will be pure profit for their energy supplier

All the new build homes that will be built between this October and the next 5 years will also pay the charge which will be pure profit also.

QrizB

swaledale_one said:

ay it's been put across the energy suppliers will indeed make a vast amount of profit from this due to the fact every energy account holder regardless if they have or haven't received a £200 credit this October will next April have to pay £200 over 5 years.

In plain English if 100 households get the £200 they will start paying back EDF next April however out of the 100 households 50 children move out into separate properties between November and March and sign up to EDF, come April they will then start paying back £200 each.  That'll mean EDF will collect the loan from the 100 homes and the other 50 they will pocket as pure profit.

At the risk or repeating myself ...

No. There's no money in this for the suppliers. They give you £200 from the government, they take £200 back from you and give it to the government.

Topher

QrizB said:

swaledale_one said:

ay it's been put across the energy suppliers will indeed make a vast amount of profit from this due to the fact every energy account holder regardless if they have or haven't received a £200 credit this October will next April have to pay £200 over 5 years.

In plain English if 100 households get the £200 they will start paying back EDF next April however out of the 100 households 50 children move out into separate properties between November and March and sign up to EDF, come April they will then start paying back £200 each.  That'll mean EDF will collect the loan from the 100 homes and the other 50 they will pocket as pure profit.

At the risk or repeating myself ...

No. There's no money in this for the suppliers. They give you £200 from the government, they take £200 back from you and give it to the government.

In which case the Government get the extra payments from the moved out 50 children and still profit from this enforced loan situation. Like I said originally, a complicated difficult to understand distraction that I don’t agree with and don’t want to have imposed on me. It distracts from what should be going on if our complacent government did some real work on the problem in hand, you know, almost as if the welfare of the electorate that put them there mattered.  At the same time as many companies, not only the energy companies are making record profits, giving out dividends to shareholders and being described as a money machine by their top brass, the damaging hell of poverty is increasing as are the numbers of our population suffering from it. I cannot see this loan being a valid solution, how does it help? 

bristolleedsfan

QrizB said:

swaledale_one said:

ay it's been put across the energy suppliers will indeed make a vast amount of profit from this due to the fact every energy account holder regardless if they have or haven't received a £200 credit this October will next April have to pay £200 over 5 years.

In plain English if 100 households get the £200 they will start paying back EDF next April however out of the 100 households 50 children move out into separate properties between November and March and sign up to EDF, come April they will then start paying back £200 each.  That'll mean EDF will collect the loan from the 100 homes and the other 50 they will pocket as pure profit.

At the risk or repeating myself ...

No. There's no money in this for the suppliers. They give you £200 from the government, they take £200 back from you and give it to the government.

Being as very little is known on how they scheme will be administered/operated, suppliers themselves reported to have been not been involved in discussions it is unlikely consumers/customers know with any certainty whether or not there will be any money in it for suppliers.

wild666

badmemory said:

So at the end of the 5 years will that extra £40 come off the standing charge?  Answer I strongly suspect is not a cat in hell's chance.

I'm thinking the same once the £40 is added suppliers will find a way of adding it to either the SC or kWh prices or both after the 5 year period.
What goes up in price, or is added for a period, rarely sees the prices decrease once the period is over.

daveyjp

Astria said:

cherrink said:

I have looked through a few posts and read the main article but there seems to be no mention of VAT on here. If they increase bills by £40 and that is VAT able then thats a really expensive loan frankly and people should be allowed to refuse.

I don't see how it turns it into a really expensive loan.

Your bill already includes VAT so it makes sense that the £200 will be a simple payment/reductions/however you see it from that figure.

Then you'll pay £167 + VAT back which will be £200, or close enough.

Even if VAT went upto 22.5% next year, that would equate to approx £4 extra.

 

VAT on residential electricity is 5%, not 20%.

marie_hc

MSE_James_F said:

Martin Lewis explains how a new £200 energy bill loan offered by the Government really works in his latest video. The initiative was announced this week in a bid to help households with the rising cost of living, following confirmation that typical energy bills will rise by £693 a year from 1 April. But there's lots of confusion about the loan, which MoneySavingExpert.com founder Martin debunks below.  

Read the full story here:
'Martin Lewis: How the new flat rate £200 energy bill loan really works'

Click reply below to discuss. If you haven’t already, join the forum to reply.

Hello  Not sure if I'm on the correct topic page. 

I am confused about Martins video about this £200 credit thing.  I understand my bill may be reduced or credited and we all have to pay a £40 levy per year for 5 years. 

 My query is why?  Why reduce bills why not just leave them as they are then no one has to pay £40.   
What is the point of it.  All the company's do  is keep the £200.  
Also what happens after the five years?  
Who has created this system.
Can Martin explain this or has he done so already ?

GingerTim

marie_hc said:

MSE_James_F said:

Martin Lewis explains how a new £200 energy bill loan offered by the Government really works in his latest video. The initiative was announced this week in a bid to help households with the rising cost of living, following confirmation that typical energy bills will rise by £693 a year from 1 April. But there's lots of confusion about the loan, which MoneySavingExpert.com founder Martin debunks below.  

Read the full story here:
'Martin Lewis: How the new flat rate £200 energy bill loan really works'

Click reply below to discuss. If you haven’t already, join the forum to reply.

Hello  Not sure if I'm on the correct topic page. 

I am confused about Martins video about this £200 credit thing.  I understand my bill may be reduced or credited and we all have to pay a £40 levy per year for 5 years. 

 My query is why?  Why reduce bills why not just leave them as they are then no one has to pay £40.   
What is the point of it.  All the company's do  is keep the £200.  
Also what happens after the five years?  
Who has created this system.
Can Martin explain this or has he done so already ?

To help those most in need, think of it as a universal Warm Home Discount, and the quickest way to get help to people who need it with their bills. It's a blunt instrument, but then so is our Prime Minister.

Also, the companies don't keep the £200, they collect it on behalf of the government who are funding the bill discount.