Martin Lewis mounts pressure on energy firms to deliver Labour’s £150 bill cut
Energy companies have been called on to fully deliver on Labour’s pledge to cut energy bills by £150 for the average household through changes announced in the Budget.
Rachel Reeves has announced several measures that she says will deliver significant cuts to financial efficiency for thousands of households. This included ending the energy company liability (ECO) scheme, which eliminated taxes the scheme added to energy bills.
The chancellor also announced that 75 percent of the cost of subsidies for legacy renewable energy projects, known as the “renewable energy liability,” will be deducted from electricity bills and included in general taxes.
The Chancellor said that with the VAT savings from these two measures the average household should save £154 a year.
But in the days after the Budget, energy secretary Ed Miliband wrote to providers expressing the government’s “clear expectation” that “every penny” of the savings from these changes would be transferred to energy bills.
The former Labor leader added that although they remain fixed at an agreed rate for a period of time, these savings should also be passed on to energy customers through fixed energy contracts.
Octopus Energy, which became the UK’s largest energy supplier in January, has confirmed that it will automatically pass on savings to both variable and fixed tariff customers from 1 April.
Greg Jackson, CEO and founder of Octopus Energy, said: “Octopus has long been calling for policy cost cuts to help reduce bills, so we are pleased to see the government taking action.
“These changes will bring welcome relief to customers and we will roll them out to all our tariffs as soon as they come into force, so no one misses out.
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“Octopus customers can rest assured; we will do everything automatically. We hope other suppliers will follow our lead so everyone can benefit.”
E.ON Next and British Gas have also confirmed they will follow a similar approach, with a simple rate reduction for all customers from April.
E.ON Next said: “When these savings kick in in April, we will pass them on in full to all our customers. No ifs. No buts. No fine print. People are under pressure and they deserve to feel the benefit directly on their bills.”
British Gas said: “We welcome the Government’s steps to ease energy costs as we have called for these duties to be transferred into general taxation for a period of time.
“Of course, we will ensure that all our customers benefit, including those using fixed-term tariffs.”
ScottishPower said it was “in close contact with the Government” on how the changes would be implemented, adding: “Our expectation is that the changes will apply to both variable and fixed term tariffs from 1 April to ensure all customers see the benefits.”
EDF and OVO have also committed to passing on the full savings but have so far provided less detail on how this will work for customers.
Monetary expert Martin Lewis is pressing all energy companies to outline exactly how they will implement the cut, and recommends everyone should take a similar approach to Octopus, E.ON and British Gas.
Explaining how much households will save from the changes, he said: “All else remaining the same, the cut to the price cap will come through a 3.5p/kWh (about 13%) reduction in electricity prices and a 0.35p/kWh (about 6%) reduction in gas prices.”
“All else is unlikely to remain equal as the April price cap is expected to increase, so the actual deductions you will pocket will be slightly less than this; a drop in the April Price Cap is currently estimated at around 6% from January,” the money guru explained on X.
