Energy Price Cap Rise: what to do… and why we pay more than the rest of Europe

The energy price cap, which determines prices for two-thirds of homes will rise by 6.4% in April… yet some people will see rises of up to 9%. In this pod Martin Lewis looks at what it means for you, and how do you beat it. Former head of strategy at BP, Professor Nick Butler - who is now visiting professor at the policy institute at Kings College London - explains why UK energy prices are so much higher than Europe, the problems with the way the price cap is set, and the impact of green energy on our bills. Plus, a warning on pay-by-app, a pension-themed Mastermind, and the Tell Us is about the most shocking, horrifying, unexpected bill you’ve ever received. And there are tips on childcare costs and the scourge of council tax debt collection. There’s also urgent advice on how to cut the cost of train tickets, and what Martin told MPs this week about Lifetime ISAs.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:10Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Usually, much of it comes from my BBC Radio 5 live show with Adrian Charles, but there's bonus money-saving tips just for you lucky, lucky podcast listeners. In today's pod, the energy price cap that two-thirds of homes in England, Scotland and Wales are on is to rise 6.4% in April, the third rise in a row. Yet some will see their prices rise by up to 9%. What does it mean for you? And how do you beat it? Plus, we've got a professor on to talk about his views on why UK energy prices are so much higher than those in Europe, the problems with the way the price cap is set,

• 1:53Martin Lewis?

  and does green energy help or hinder our bills? It's fascinating stuff. It answers many of the frustrated questions many of you get in touch with me about, but it's outside my expertise, so I've brought him on. Plus, I've got a quick warning on Pay by App. Be careful. The mastermind question is on pensions. The tellers is about big bills that were shocking, that I segue into tips on childcare costs and the scourge of council tax debt collection. I have an urgent tip on how to cut the cost of train tickets. And at the end, what I told MPs this week about the lifetime ISA. Basically, there's a shed load of stuff. It's all worth listening to. Let's get on with it. Play the theme tune.

• 2:55Speaker 05

  And let's start with Pay by App. Let me try and work out, can we make this the mastermind? What is Pay, what is Pay by App? Um, I reckon it's when you pay using an app.

• 3:04Martin Lewis?

  You, I mean, incisive and intelligent as always. Pay by App is a new thing that we're starting to see offered more and more. Just Eat are offering it, Ryanair have offered it, others have offered it for a long while. It's when you go to pay for something at a checkout. It says Pay by App and then what you do is you click a button, you tell it your bank. And then you instantly go to your bank's app where you use your biometrics, you know, your eyes or your fingerprint, whatever you tend to use. And then it's paid. So it is much quicker and simpler than normal payment. You don't have to put in your card details. You don't have to do any of that. And it is growing and it's growing for a number of reasons. One, because people like it because it's quick. And two, because there are less fees for the people who are doing it at checkout and not having to pay the card fees. They're just sending you straight to the app.

• 3:49Martin Lewis?

  And it cuts the fees down quite substantially. Now, what I want to say about it, of course, is a warning.

• 3:58Martin Lewis?

  Lots of people are starting to use it and I get the convenience. But what you need to understand is technically all it is is a bank transfer. It's a BACS payment. It's a payment from your bank to the retailer. So all of the consumer protections that you normally have when you pay by card, you do not have when you pay by app. So remember, when you pay by card on all plastic, Visa, Mastercard, Amex, you have chargeback protection, which is our internal rules that mean if you don't get what you paid for, then you can get your money back generally. And on credit cards, you have section 75 protection. That means the credit card is jointly liable with the retailer for the purchase. So you could go straight to the credit card company. You don't even need to go to the retailer to get your money back.

• 4:42Martin Lewis?

  If you do pay by app, you have none of that. You are totally unprotected, apart from in the event of a scam, but it's not a scam, just, you know, normal dealing with the retailer, just like you're unprotected when you pay by cash and you're paid by cheque. So for small things, I'm not that bothered. For transactions where you would normally pay by bank transfer, for example, paying HMRC, and listen, HMRC, you're paying the tax, it's not the biggest where in the world, I'm not that bothered. But if you're making big retail purchases by pay by app, understand you are naked in terms of consumer protection and I would caution you against it. Even though it feels quick and convenient, I would make sure you're paying by card to get the extra protection.

• 5:27Speaker 05

  Let's get into the price cap. What have we learnt this week?

• 5:31Martin Lewis?

  So we got the announcement on Tuesday that the energy price cap set by Ofgem, the regulator, moves every three months, will rise an average 6.4% on the 1st of April. That's the third consecutive rise. It went up 1% in January, it went up 10% in October. Now, there's lots of convoluted ways to explain this. The one I hate is I'm hearing this figure that a typical homes bill will go up £111 a year. That is absolute nonsense. First of all, because virtually nobody is on the typical use figure, but more importantly, because this price cap is only lasting for three months. So to give you an annualized difference makes no sense. The best way to think about it, if we want to make it really simple, and it isn't really

• 6:09Martin Lewis?

  simple, is for every £100 you currently spend on energy, in April, May and June, you will spend £106.40 on average. Now, the most important thing I want to say is the price cap. Is a pants cap. Get off it if you can. It is a pants cap. It is a backstop for those who never switch. If you're capable of switching, if you can get a better deal, there are better deals out there than the price cap and you should. And we will talk through all of those in a little bit. But I just want to go through a few of the key points about what the price cap actually is, so you know if it affects you and how it's going to work. Price cap is only in England, Wales and Scotland.

• 6:54Martin Lewis?

  Northern Ireland has a totally different system. I won't be talking about that. If you're in Northern Ireland, go to the Consumer Council for Northern Ireland's energy comparison. But it's totally different system to the rest of the UK. Now, you are on the price cap if you are on your energy provider's standard tariff. It's default tariff, the "I've never done anything tariff", the "my fix or special deal ended and I didn't do anything afterwards" tariff. If you're on a fix, if you've opted for a special deal, you are not on the price cap. This doesn't affect you. Now, interestingly, the last time we talked about it, three months ago, the stat I was giving you was that 80% of homes are on the price cap. The stat is now, two thirds of homes are on the price cap. Because many people have moved off the price cap because it's a pants cap and they've

• 7:39Martin Lewis?

  started to fix. If you're still not sure, let me just make this really plain. I'm going to give you the biggest providers in the country and I'm going to give you the names of their standard tariffs, their price cap tariffs. So if you are on one of these or you are on the price cap. British Gas Standard Variable, EDF Standard Variable, E.ON Next Flex, Octopus's Flexible Octopus, OVO's Simpler Energy and Scottish Power's Standard. So basically, standard and flexible are the two key terms that tend to be used in the price cap. Now, when we say that the price cap has gone up by 6.4%, it's actually far more nuanced than that.

• 8:22Martin Lewis?

  Because what we're seeing on the new direct debit price cap. You need to understand the price cap does not cap what you pay. It is not a you can't pay more than two grand thing. It doesn't work like that. It is a cap on the standing charge, the daily charge you pay just for the facility of having gas and electricity and a cap on the unit rate, the amount you pay for each unit of gas and electricity that you use. Now here's what's happening in April. The unit rate for electricity is going up an average nine percent. The unit rate for gas is going up an average 10%. The standing charge for electricity is going down 12%. The standing charge for gas is going up 3%.

• 9:05Martin Lewis?

  So what you can see by that, the amount you pay for each unit is going up, but the standing charge is either going down on average or not going up very much on average. Now, when you factor in, and I got a graph that I did on this on the first day, just to try and work this out, there's a really interesting distributional curve on the back of this. What it says is very low users, let's say those people who only pay £50 to £100 a month, in April will see a rise on average of typically 2% to 4%. Mid-users will see a rise of 4, 5, 6, 7%. The midpoint, by the way, is roughly, and it depends on which region you're in, and it depends on your split between gas and electricity, but let's just, it's about somebody who's paying £150 a month.

• 9:46Martin Lewis?

  If you're £150 a month, you're probably going to see that 6.4% rise. If you're a bigger user, £200 a month, £300 a month, £400 a month, then you start to see your rise getting more. The percentage rise for higher users on, say, £300 a month is 9%. So not only is your percentage rise bigger if you're a higher user, but obviously because 9% of a bigger amount is a bigger amount. So the distributional curve of the way they've done it this time actually is better for lower users and worse for higher users. Now, I've been campaigning to get the standing charge down, so that isn't a bad thing. Final point on this, it's the biggest regional variation I've seen in the price cap change. So you will note, I said the electricity standing charge has dropped by an average

• 10:31Martin Lewis?

  12%. Not if you're in North West Wales, not if you're in London. Then your standing charge is actually going up. So I'm only giving UK averages. You do need to check what is happening to you. But if you really want me to summarise it, and that was all too complicated. It's going up quite a lot on the 1st of April and the more you use the bigger percentage rise.

• 10:52Speaker 05

  Amanda, it does fixing mean that I will have to pay a set amount every month, currently on standard rate but paying by variable direct debit, so controlled spending by adjusting usage?

• 11:05Martin Lewis?

  So, that's a really interesting question. Variable direct debit and monthly direct debit are worth just splitting up the difference between the two at the moment. Monthly direct debit is the one the vast majority of people are on. That's where they effectively look and say, how much energy are you going to use across the year? For simple maths, we'll say it's £2,400 because that helps. £2,400, so therefore you have to pay £200 a month. We spread it and, you know, if that didn't exist, someone like me would be calling for it, saying, look, we need to help people budget so they're not paying too much in the winter and paying a little in the summer. Therefore, a monthly direct debit is a wonderful system for budgeting. The problem is how it's put into place and they take too much money off you and the estimates aren't very good and you need to do a meter reading, but conceptually it's a great system.

• 11:48Martin Lewis?

  Variable direct debit says you pay by direct debit. As soon as they know how much you've used in a month, they take out that month's worth of bills. So in the winter, it might be £400, £500 a month, in the summer it might be £100 because it's a variable direct debit. Not every firm offers variable direct debits. Now, what I'm being asked is, on a fix, clearly when you fix, it isn't a fixed amount that you pay, that you use more, you pay more because it's the rate for each unit of gas and electricity that you use that is fixed. But I believe the question is therefore saying, would I have to shift a monthly direct debit to get a fix? For example, Fuse Energy, which has the cheapest electricity-only fix on the market, is monthly variable direct debit.

• 12:30Martin Lewis?

  So what I'd say is you're cut out of probably 60 to 70% of the cheapest fixes require you to pay by monthly direct debit or smart prepayment meter. You can't do variable direct debit, but not all of them. So what you need to do is go and do a comparison and then check the method of payment and go through and filter through. But just as an example, Fuse, it's only for electricity, not for gas, but it is particularly cheap for electricity. You can do that fix on variable direct debit, which is what you want to be on.

• 12:59Speaker 05

  Okay, how long before the end of a fix can you switch if your current switch includes exit fees?

• 13:04Martin Lewis?

  You can always switch. You cannot be locked into a tariff, but they can charge you early exit penalties. However, they cannot charge you early exit penalties within the last 50 days of your switch. So being technical, 49 days and less. If your fix ends in 47 days, they cannot charge you early exit penalties. They may do so, it does happen, in which case make a formal complaint, go to the Ombudsman and let me know, because we've had companies fined by reported systemic abuse of that. But the rules state they can't give you an early exit penalty within the last 50 days.

• 13:34Speaker 05

  And do the exit fees vary at level?

• 13:36Martin Lewis?

  Yeah, they do. They've come down a lot. I mean, during the energy crisis, they were up at £200, £300. Now, I mean, some have no early exit fees. Now you're typically corking £25 to £50 per fuel. So £25 to £50 per gas, £25 to £50 per electricity, so £50 to £100 per dual fuel. The important thing to understand when you're thinking about locked in on early exit fees, well, let's just do it really simply. Imagine you've got a £50, £50 early exit fee and you pay £100 a month. Right, you're a low user. Well, that's 5%. So actually, that has quite a big impact. You want to be sure, once you're locking in, that you're not going to want to get out. If you're paying £400 a month, so £5,000 a year, an early exit fee of £50 is neither hidden nor tither, because you may as well just pay it if things get cheaper afterwards.

• 14:21Martin Lewis?

  So interestingly, it's interesting that early exit penalties are actually regressive. They lock lower users in more than they lock higher users in.

• 14:29Speaker 05

  Stu wants to know if there are any fixes where you don't have to pay by direct debit. It's appalling that companies can stop you fixing because you don't want to have a ridiculous monthly payment set by them that is more than your usage.

• 14:39Martin Lewis?

  We've already discussed that, that there are some that don't require you to pay by direct debit. You have to go through them. And again, you can also smart prepayment. There are a couple of smart prepayment fixes out there. The one category that you can never get at the moment is non-smart prepay. So if you're on a non-smart prepayment meter, you're not going to be able to get a fix. It is worth noting though, just an aside, and I'll come back to that question, but the information's flown my head and I'm on to talk about what's coming in. If you are on the price cap, the cheapest way to pay is now prepayment. Prepayment, used to be the poor relation, is now actually 2% cheaper than direct debit. And payment in receipt of bills is 6% more expensive than direct debit.

• 15:24Martin Lewis?

  Payment in receipt of bills is a bit like variable direct debit, but you're not on a direct debit, you just literally pay it. Most expensive way to pay, get off that if you can, move to variable direct debit if you don't want monthly direct debit.

• 15:33Speaker 05

  How would prepayment work in that context then?

• 15:36Martin Lewis?

  So you're literally, you'd be on the price cap and the rates that you would pay would be less than if you're on direct debit, but you have no market competition. So it's a really, for those who would never switch, prepayment is actually the cheapest way. But what you don't get is the access to the deals that are out there. So if you're going to be able to switch and want to switch, then prepayment isn't the cheapest way because the direct debit deals are cheaper than prepayment. But if you're not switching and you're just sitting on the backstop of the price cap, then prepayment is now cheapest.

• 16:05Speaker 05

  Jerry says, I'm currently paying 5.74p for gas until December and the cheapest fix with Octopus is 6.29p for 16 months. I'm really into the weeds here. Do I stick with my gas fix until summer and review or jump now? Hard to work out what to do. Jerry, sorry, it's Jerry, it is hard.

• 16:25Martin Lewis?

  Is he on a fix? I didn't get the note.

• 16:27Speaker 05

  Cheapest fix, yes, I think so, yeah.

• 16:30Martin Lewis?

  Right, look, so in a nutshell, that question-

• 16:33Speaker 05

  Hang on a minute, no, he's currently paying 5.74p for gas until December. The cheapest fix it can find to go to.

• 16:40Martin Lewis?

  With Octopus. And the problem with the question is the with Octopus, right? And a lot of people are doing this these days, they're only looking for their cheapest fix with their existing company. And it's interesting, and I'll come back to the specifics, but lots of people, I get a lot of anger, people saying, do I have to have a smart meter? Why are they telling me I have to have a smart meter to fix? And that's generally because you're speaking to your existing company and companies get fined if they don't install enough new smart meters. But when you're talking about switching, most of the cheapest switchers deals out there don't require you to have a smart meter. Now, in this case, what I'm not sure is whether you're on a fix. The difficulty in answering the question, I'll be straight, is the regional pricing. I don't know what region you're in. The gas deal that you're on now compared to UK average is cheap.

• 17:26Martin Lewis?

  But I don't know how it compares to the price cap in your region. My guess is that you're on a fix. And if the underlying question is, should I get off the fix that I'm on to do another fix that's going to be more expensive because energy may go up? Then I think there is a fundamental misunderstanding that is very common here that I'd like to disabuse, if that's okay.

• 17:47Martin Lewis?

  When we talk about prices going up and down, we are specifically and directly talking about the energy price cap. The price set by the regulator OFGEM, which sets the maximum that firms can charge that moves every three months, crucially based on a time lag. The April energy price cap is based on wholesale rates from the 18th of November, and maybe a couple of days out, the 18th of November to the 17th of February. Right? So April is based on November to February, that are happening right now in the market, will dictate July's price cap. Now, interesting, if you look at the curve of wholesale rates, frustratingly, they were

• 18:31Martin Lewis?

  going up, hence it's going up 6.4%. Pretty much two days after the assessment period for April ended, they've dropped down. But we won't feel any benefit of that drop until July because of the time lag on the price cap. But that only affects the price cap. The only price that changes in April is the price cap. When it comes to at what rate you can fix, that's based on two things. I'm going to give you an anecdotal percent that I've just made up just to try and help you understand it. My guess is 80% of it is based on the underlying wholesale rates at that the firm can buy at at the time they're selling you the fix.

• 19:14Martin Lewis?

  So the price you'll be able to fix at in April will depend on wholesale rates in April. The price cap in April depends on wholesale rates in November to February. So there is a time disjoint. If wholesale rates continue to go down, you may be able to fix a lot cheaper than you can right now. I don't know whether they will, they may go up in July. Now, the problem with all of that, I'm sorry, the other- Twenty percent would simply be competition. So, look, when the price cap goes up, firms don't have to have fixes quite as cheap because they'll still be cheaper than the price cap without such a cheap fix. So they may well not set the fixes a cheap, even though they can buy them cheaper because, hey, they get some competitive advantage and they can increase their margins by doing a higher fix. But most of it is based on wholesale rates.

• 19:56Martin Lewis?

  So what a lot of people are looking at is saying prices are going up because the price cap is going up in April. No, prices went up in November to February. That's why April's price cap is going up. But the price you get in April to fix from is based on the wholesale rates in April and we don't know what they are yet. There's a disjoint, I can't tell you whether they'll be cheaper or more expensive in April, but because the price cap's going up doesn't mean that fix rates will be going up.

• 20:19Speaker 05

  John, a man after my own heart, says, if everyone were to fix at a lower rate than the cap, why does the cap even exist? Is it just a catch for customers who aren't savvy? Why wouldn't providers simply put every customer on the best rate automatically? I guess I'm being too ridiculous here. Well, join the ridiculous club with me, John.

• 20:36Martin Lewis?

  Well, look, I was never particularly in favour of the price cap in the first place. I think it perverts the market and it has certainly perverted the market, but in a way no one predicted. When the price cap was abridgently brought in, it was designed as a backstop tariff. Right? It was there to stop the huge margins that happened before for the people who never switched. So all those people who never switched, about 30% of the market, you know, lots of elderly people who weren't on the internet never switched.

• 21:04Speaker 05

  It was to protect them.

• 21:05Martin Lewis?

  It was to protect them.

• 21:06Speaker 05

  But it hasn't worked out.

• 21:07Martin Lewis?

  Well, no, because it then became a default tariff that almost everybody is on. Now, you asked if everybody switched. Well, first of all, everybody won't switch. I mean, I have worked my socks off to try and get people to embrace market competition for 20 years and I can tell you, I've been up and I've been placed and people who, and I've explained it as simply as I can. I remember holding the hands of an old granny and I can't remember where I was, it was, I was somewhere in the north east of England and she just said, and I explained it to her, I took it step by step and I, we were filming, but I took like 15 minutes to talk her through it and at the end she said, oh, Martin, I just don't get it. Can't you just do it for me? In fact, I invented a tool that would help on the back of that because I was like, some people just want someone to do it for them. And so not everyone would go to that. But again, I need to, in answer to that question.

• 21:53Martin Lewis?

  Two different things at play. April's price cap is based on November to February prices. The deals you can get now are based on today's prices. So that there's two different things. If prices go up right now, the price cap might look cheap. If they go down right now, the price cap will look expensive.

• 22:07Speaker 05

  John is currently on an octopus fix ending in June, but thinking of refixing until June 2026. No exit fees. As expecting fixes in June 2025 to be higher than now. He just gives me a headache.

• 22:23Martin Lewis?

  Well, no, but I don't know how he thinks they will be higher right now, because that will be based on wholesale rates in July. Now, if we have peace in the Ukraine, that could potentially bring those prices down. We don't know what's going on in the Middle East. We don't know whether Trump's gonna drill, baby, drill. I mean, we don't know any of that. And all of that will factor into the price. What I can say is what I would be doing in your case with no early exit penalties right now, the only thing is if your current fix is cheaper than the fix that you can get, because if you fixed a year ago, you probably fixed it at a cheaper rate than the cheapest fixes now. Well, I would stick on that as long as possible because you're dealing with an uncertain future. And at least we know the price cap's there to back you up. But I think this is a very

• 23:06Martin Lewis?

  useful time to bring somebody else in because ultimately, whether you should fix or not, depends on what is going to happen to prices. People always ask me about the sort of the wholesale market and generation market. My focus is on consumer. It is not on that side. But Nick Butler is the former head of strategy for BP. He's now a visiting professor at the Policy Institute at King's College.

• 23:29Speaker 05

  And he can see the future.

• 23:30Martin Lewis?

  And I'm gonna offset this to him. Nick, July. Let's put you on the spot. Good morning. Hello, mate. Thank you so much for joining us.

• 23:38Speaker 05

  Can you do tomorrow's racing results as well, please, while you're there, Nick?

• 23:42Martin Lewis?

  Where do you think, I've got the predictions from all the big firms. I'll do those in a minute. But let's put you, where do you think in July wholesale rates will be compared to where they are right now, which of course then reads across to where you'd be able to fix at in July?

• 23:53Speaker 06

  Frankly, no idea.

• 23:57Speaker 05

  Thank you very much for joining us Nick.

• 24:00Speaker 06

  It could go in any way, but I mean, I think the obvious change that seems to be coming is some sort of ceasefire in Ukraine. Now, if part of that involves allowing Russian gas back into the European market, then that element of the price cap will be adjusted and I think there'll be more supply of gas than demand. So you, on that alone, you'd think prices should come down. But as you say, you can't control the world, you can't control what Mr Trump is going to do. So I, I'll avoid making a precise forecast.

• 24:33Martin Lewis?

  Let me give you, let me give you some forecasts. Disclaimer, these are not forecasts by Martin Lewis, these are forecasts by other forecasting agency that Martin Lewis is repeating for you. Please do not blame me for anything I say in the next few moments.

• 24:44Speaker 06

  Terms and conditions apply.

• 24:45Martin Lewis?

  Terms and conditions apply. So these are combined forecasts of Cornwall insight, EDF analysts, EON analysts and British gas analysts. They are currently predicting that the July price cap will be down between 3% and 5% on the April price cap. But worth noting, that still means it is above the current price cap because it's going up 6.4% in April. They're then predicting in October, and the further out you go, the more, woo, crystal ball, crystal ball, crystal ball. They're then being in October, it goes up again, 2% to 3%, so it goes back roughly to the April level. And then from next January, it doesn't move very much. So on the current predictions from all the big analysts who factor all these things

• 25:28Martin Lewis?

  in, but it is crystal ball gazing, they are predicting that for the entirety of the next 12 months, the energy price cap will be more expensive than it is right now. Hence why the fact that the cheapest fixes on the market that are 6% lower than the current price cap, look a very good deal if those predictions are right. So let's just talk that through for a second. If you fixed right now on a 6% price cap, you've got a 6% saving. When we get into April, the savings are around 11%, 12% because the price cap goes up. After that, we're in uncertain territory. But after that, if those predictions were right, you would still be sub-saving substantially by fixing right now. So the risk averse thing to do right now is to fix, but make sure you haven't got early exit penalties so you could get out of that fix if you needed.

• 26:14Speaker 06

  Well, I won't disagree with that because I still have absolutely no idea where it's actually going. I think that the real problem is the way the price cap is set and it's set by adding up the costs of running the grid and upgrading the grid and a small element of VAT and the green levies. But then half the price cap is set by reference to European wholesale gas prices. Half of where you get to with the cap on each revision every few months, as you say. I think it's time Ofgem, who I think are one of the least, the most underperforming regulators in the business, should actually relate it to the actual shares

• 26:58Speaker 06

  of production of different sources of power. Gas is about 40% of what we use, but when you have this sort of system, there's a windfall gain for people producing wind power and all nuclear power and so on. Their prices haven't changed, but they get the benefit if the price cap allows an increased charge to consumers. I think if we change that, you would have a better system.

• 27:25Martin Lewis?

  Now, I did actually ask the boss of Ofgem on my telly show about that the other day and they said they are looking at changing the way the structure of costs come in the country.

• 27:32Speaker 06

  They've been looking for years.

• 27:33Martin Lewis?

  I agree, I agree. And I have my similar complaints.

• 27:36Speaker 06

  He's paid about five times what the prime minister's paid.

• 27:39Martin Lewis?

  My biggest issue, I have exactly the same on consumer elements in that the decisions that are made tend to suit the market two or three years ago. You know, I've got, you put my head in my hands that they still have this ban on acquisition tariffs which would kickstart competition. Normally I would be in favour of a ban on acquisition tariffs in normal times. These aren't normal times, we need a nimble regulator. I agree with you. Can I just ask one thing?

• 28:00Speaker 06

  And I would say one more thing, that they're about, they will soon start putting the charge of new nuclear on the construction of Sizewell on to people's bills unless some policies change now.

• 28:12Martin Lewis?

  Can I just ask?

• 28:14Speaker 06

  That should go on general taxation if it's going to go anywhere.

• 28:18Martin Lewis?

  Can you just explain on the wholesale rate?

• 28:20Speaker 06

  Sure.

• 28:20Martin Lewis?

  When we talk about, people are, you see on social media, people always show you a graph of the spot rate. But we don't have storage in this country and the regulator wants companies to buy ahead for energy security, doesn't it? So the specific wholesale rates we're talking are not the spot rate. What rate are they? Could you explain that to people, please?

• 28:38Speaker 06

  There's a wholesale market in Europe, which is based on Dutch prices and it varies, but it's not the day-to-day spot rate. And it, but it is regarded by the regulator as the marginal cost of supply to the UK market. I think that that ignores the fact that most of the supply in the UK is not natural gas. It's other sources who don't have the sort of volatility that European gas prices always have. So I think they should rebalance the basket they use and that would give more certainty to consumers. They wouldn't have to go through these complex calculations that you've been talking about. They would know what their prices and their bills are going to be.

• 29:18Speaker 05

  Um, I mean, the question you wanted to get to was regarding.

• 29:20Martin Lewis?

  So look.

• 29:21Speaker 05

  It boiled down to is green or not?

• 29:22Martin Lewis?

  When I, when I was doing my show the other day with Offgem on, I think I had 6,000 questions and probably 700 of them, right, 700 of them. If I could summarize, and please, nobody take this, I am summarizing what came to me is, are all our high costs due to the net zero scam? That was the phrase that kept coming up. Clearly, there'd been some campaign to get it through. So from your experience, is our move towards green energy purely in cost terms, is it costing us more or less? And how will it cost, will it cost us more or less in future?

• 29:59Speaker 06

  It's certainly not the only reason for the prices being where they are. The main reason over the last few years has been the war in Ukraine, the loss of Russian supplies because of sanctions and the higher cost of importing gas into Europe, which drives our prices, as we were saying before the break. I think on green, you have to be very careful. I think the levy is there. People have generally accepted it. My feeling is.

• 30:28Martin Lewis?

  So that's the extra amount that's put on all our bills to help the green infrastructure?

• 30:32Speaker 06

  That's right. And I think people understand that, but now we're going, that has hardly begun. I mean, now we need a new grid. To cope with all the renewables and to distribute to cope with distributed sources of production. And we need things like new nuclear, which are very expensive. If that's put on the green levy, which is, I believe, the current plan, those bills are going to look higher than they are now, and that is going to wipe out any gain from a ceasefire in Ukraine and the return of Russian gas supplies. So it's a big challenge for the government. Those costs have got to be paid for somewhere. I think some of the costs are justified.

• 31:14Speaker 06

  Some of them, like big new nuclear at Sizwell, I think that's a white elephant. And if we go for it, customers will be consumers will be paying for it for years to come.

• 31:25Martin Lewis?

  But on the on the green, just to push in. So what I'm hearing is short term pain. Do we then continue? Can I continue the phrase and say long term gain once we build that infrastructure? Would it then, you know, in in 20 years' time, will everyone be going, oh, I'm so glad we did all that, it's made everything better, and we've shifted the way that this works?

• 31:43Speaker 06

  I'm I'm not convinced of that. I think the capital cost of doing all these things is going to last for quite a long time. I don't think we'll do it as quickly as people hope. So I think we're going to have the energy transition is a fundamental change in the way we produce and use energy. Somebody's got to pay for it. Somebody's got to pay for all these heat pumps in people's houses. Somebody's got to pay for scrapping their old cars in favour of electric vehicles. Somebody's got to pay for electrifying the railways and so on. This will take several decades, so it'll be a long time until people are celebrating seriously lower prices.

• 32:21Martin Lewis?

  Now, one proposal to help on this, Greg Jackson, the boss of Octopus Energy, says that we should change the way we price for energy so that it is much more regional. So if you're in Scotland and the wind's blowing and you've got all the wind farms there, it should be cheaper for you. I put this to Jonathan Brerley the other day. He said that they are somewhat supportive of that, and they hope to be able to move towards that system in the future. Are you supportive to changing to a much more regional pricing structure so the price of pay will depend on where you live and depend on where the energy is generated?

• 32:47Speaker 05

  Or you've got a pylon in your backyard.

• 32:48Martin Lewis?

  Well, yeah, that's sort of the cost of it.

• 32:52Speaker 06

  I think it's going to be extraordinarily difficult to have regional pricing and to decide where the boundaries are and to, if you make it a substantial gap, do people then move? Do businesses then move to capture their low prices? What are the knock-on effects of all that? I think we should probably generally have a much more stable and unified system across the country rather than going into that complexity.

• 33:19Martin Lewis?

  Nick, I think that's absolutely brilliant. I mean, clearly, just for the sake of balance, these are all opinions about the future and there are differing opinions from people with expertise just like yours on the top of it. But thank you for just giving a picture of the complexity that's out there in the pricing of energy right now. I mean, and clearly, what most people want is they want the energy to come into their homes, work well and not pay too much for it. And we're not there yet.

• 33:42Speaker 05

  More of the questions on the price. Well, there's more like-

• 33:46Martin Lewis?

  Let's go back to the practicals.

• 33:47Speaker 05

  Yes, it's more like a statement. Claire's frustrated, could save a parent £600 a year on their energy but can't get them basically to go on to monthly direct debits.

• 33:57Martin Lewis?

  So what, what, what, sorry.

• 33:58Speaker 05

  They're paying on receipt of bill.

• 34:00Martin Lewis?

  They're paying on receipt of bill.

• 34:02Speaker 05

  Yeah, and they just stop with that and just have got a theological blockage on going to month direct debit.

• 34:08Martin Lewis?

  I mean, that is absolutely the most expensive way. So, okay, set record now, and this is the bit to play them. To Claire's parents, you are on the most expensive way to pay for energy. Payment in receipt of bills is 6% more expensive than paying by direct debit, and that's just on the price cap. The cheapest way to pay for your energy is by getting yourself a cheap fix or specialist deal. And for that, you also need to be on direct debit generally. My suggestion, if you are ideologically opposed to monthly direct debit where it's spread, is to look for variable direct debit, as we discussed earlier in the programme. That's where it works very much like payment in receipt of bills.

• 34:50Martin Lewis?

  And payment in receipt of bills is, of course, where you get a bill and then you pay it each month. Variable direct debit is where you get a bill and the money is automatically taken each month based on what you used in that month. It's not spread across the year. So it's the halfway house, if you like, between monthly direct debit and payment in receipt of bills. And you can move across that way. But you are on payment in receipt of bills, you have to be aware of how much more money you are spending just to be able to do it. And it's worth just me noting a couple of other things. I've talked about fixing as being the prime route at the moment with fixes being 6% under the current price cap. And so at least until July, you would be making a substantial saving. And the predictions are after July, you would be.

• 35:32Martin Lewis?

  There are other options out there too. EDF and British Gas for very low users have tariffs which are essentially price cap trackers where you get £50 off the standing charge. They're the same as the price cap with £50 off the standing charge. For very low users, well under £100 a month, they can be beneficial because the standing charge is making up a bigger proportion of your bill. There are, and we've talked about them on the podcast many times before, the Octopus Tracker, the Octopus Agile, the Tomato Tariff. Octopus and tomato, it sounds like a bad salad, doesn't it? We talked about those and they are for sophisticated users, well worth it. The other thing is really worth mentioning and an interesting tariff at the moment is for those people who have electric vehicles.

• 36:14Martin Lewis?

  There are two types of electric vehicle tariffs. There is the add-on tariffs, which tend to be offered by Scottish Power and OVO, which is where basically you can get any of their normal tariffs and then you get an add-on where you get super cheap rates only for charging your electric vehicle. And then you have two-tier tariffs, which are offered by most of the other providers, which is effectively where you pay your normal rate during the day, but then you get a super cheap rate overnight, which you can get not just for your electric vehicle, but anything you use. Generally, the two-tier rates are good for those people who've got a big electric car that they're charging a lot and can shift other usage overnight. The add-on tariff are for those who just have an electric car. And what I wanted to note is OVO has a relatively cheap fix at the moment.

• 36:57Martin Lewis?

  And with OVO, it has an add-on. So you could get a cheap fix at OVO and do the electric vehicle add-on on top, which is worth looking at. You need to do your numbers.

• 37:04Speaker 05

  Two quick ones. Donald says, "I can't get an O2 signal where I live, so I can't use a smart meter, so I can't take advantage of cheap early hours of the morning electricity."

• 37:16Martin Lewis?

  So.

• 37:18Martin Lewis?

  The fact you can't get a smart meter, if it is not practicable to have a smart meter fitted, i.e. you've tried and they say you can't have one, you should be able to access all the tariffs that are available that are smart metered only, such as fixes. However, without a smart meter, time of use tariffs are particularly difficult because they can't measure when you're using what, so you are opted out of that. You may be able to get, I don't know, I'd have to check whether you could get an old school Economy 7 type meter, but it's not a particularly competitive way to do it. So I'm afraid, I mean, listen, there are massive problems with smart meter rollout. We've discussed before, I've written to Ed Miliband and I've had some warm feedback back on this, that currently the targets are all about installation. So firms get fined if they don't install enough

• 38:02Martin Lewis?

  new meters, but there's 20% of existing smart meters don't work. And I want the targets to be changed on working smart meters, so that they have an incentive not just to put a meter in your home, but to actually make sure it works as well. And until we get that, we're going to have hideous problems on this massive cost that we put into trying to get smart meters rolled out there, even though they're not working for lots of people. So I have a lot of sympathy, but I don't have a fix, I'm afraid. But we've got more of your questions to answer on energy in the podcast extras coming later, including what's the best tariff if you've got solar panels? When are they going to be bringing in the new no standing charge price cap option? And is it worth going for half price energy at the weekend? All of that to come. So don't turn it off yet.

• 38:47Speaker 05

  Let's get on to tell us, what is the most shocking, horrifying, unexpected bill you've ever received? And how did you pay or resolve it? We've been sent this tell us.

• 38:57Martin Lewis?

  Sort of fits the general subject of today with the price cap going up, doesn't it?

• 39:00Speaker 05

  We've sent this on voice note.

• 39:02Speaker 07

  Hi, Martin. Ben here. My unexpected bill was when I racked up £35,000 worth of charges. After a five day trip to Malta, and despite having EU roaming included in my contract, I came home to find my mobile phone completely cut off. When I opened the EE app, I saw the horrifying amount outstanding. I rang them and it turned out that all of my data, when I'd been in Malta, had been charged at a maritime rate, hence the astronomical costs. This was quickly refunded and my phone service was reinstated, but...

• 39:37Speaker 07

  Seeing that amount on the app was quite a shock.

• 39:41Martin Lewis?

  Wow, that's fascinating. And I've heard similar before for people who've been in the EU but nearer border to a non-EU country and then they're paying that they don't realise that they're on the signal for the non-EU country and it works that way. But the maritime rate, I mean, that's a sky-high astronomical rate. Well done for getting it sorted. I mean, this one isn't as nice. Kelly, as a new driver over 25 years ago, I crashed into a lamp post in the snow. I was honest and reported it and then received a bill for over £500 from the council. Huge amount all those years ago, too. I still drive past now and say hello to my own lamp post.

• 40:14Speaker 05

  I inherited my flat, which is leasehold, so somebody called Balkey. The housing association did work that needed doing and I got a bill for £10,500 payable over 12 months. Checked my lease, yes, I'm liable. Talked them into 18 months and took out cash transfer and 0% credit cards.

• 40:35Martin Lewis?

  It's not fun, is it, this stuff? But you know what else isn't fun, Adrian?

• 40:38Speaker 05

  Go on.

• 40:38Martin Lewis?

  Play the theme tune.

• 40:47Martin Lewis?

  Hello, welcome to Martin's Money Mastermind. I say not fun, it's a lot of fun for me, it's just not fun for Adrian. But hey, I think that's a sacrifice, it's worth you paying, mate. Now, the current score, Adrian has got seven right and 10 wrong, which isn't bad, it's slightly better than random chance. You're doing all right. The question this week. Now, listeners, please do congratulate our Adrian. He has won a very prestigious internal BBC prize, drawn by random lots. BBC Technology has managed to create the world's first time machine and Adrian has been forcibly volunteered as the first person to use it. He's decided to revert back to when he was 21 and just starting out his

• 41:31Martin Lewis?

  career, no doubt assuming he could probably do it better the second time around. So please, I want you now to close your eyes, unless you're driving. I want you now to close your eyes and picture a young, handsome, strapping, charming, whip-smart, keen young man with a West Midlands accent.

• 41:49Speaker 05

  That won't be me.

• 41:50Martin Lewis?

  And then picture a 21-year-old Adrian Charles sitting at the desk next to him.

• 41:54Speaker 05

  Sorry.

• 41:55Martin Lewis?

  You've ruined it.

• 41:56Speaker 05

  Sorry.

• 41:56Martin Lewis?

  You've ruined it.

• 41:57Speaker 05

  Sorry.

• 41:57Martin Lewis?

  I'm re-recording that for the podcast.

• 41:59Speaker 05

  Okay.

• 42:00Martin Lewis?

  Simon, take a note. My question, does our 21 year old Adrian in the current day, starting full time work, earning exactly nineteen thousand nine hundred and ninety nine pounds a year, automatically get opted into a workplace pension, including the employer's contribution? That's your question. So it's a 21 year old, nineteen thousand nine hundred and ninety nine pounds a year. Do they automatically get opted in to a workplace pension with a contribution from the firm as well? A, yes, indeedy. B, no, it's too young. C, no, it's not enough earnings.

• 42:40Speaker 05

  So we're talking about the here and now.

• 42:42Martin Lewis?

  We're talking about the here and now. We're talking about the current law, not when you were actually 21 though. Because the time machine has a wonderful factor to be able to do that.

• 42:48Speaker 05

  Are you automatically opted in?

• 42:52Martin Lewis?

  A, yes, indeedy. B, no, it's too young. C, no, it's not enough earnings.

• 43:03Speaker 05

  I think, no, it's not enough. What I'm thinking, I'm not, I'm thinking.

• 43:07Martin Lewis?

  Yeah, you were nineteen thousand nine hundred and ninety nine pounds a year.

• 43:10Speaker 05

  If it was yes, indeedy, there'd be no point asking the question. So because the point you're making is that you have to opt in or something. Or you too. Oh, I don't know. I think, actually, I'm going to say yes, indeed, because I think I'm just going to take the view. You should be doing what's right. And what's right is what should happen and you should. If you're in a full time job. You should have got a full time job. You should be opted in.

• 43:41Martin Lewis?

  I'll stop that. Yeah, you should be opted in. Okay, so let's go through it. Absolutely, in the UK, the vast majority of employees, when you start work, are opted into a pension. And if you're opted in, then the contribution is eight percent. And that means you put in five percent and your employer has to add in three percent. It's effectively a pay rise. It's one you should not be opting out of. But there are rules as to exactly who this applies to. Anybody earning over ten thousand pounds, so it's ten thousand and one pounds plus, will be opted in. And how much were you earning in this case?

• 44:15Speaker 05

  Nineteen thousand one hundred and ninety nine. So I might be right. I might be right. However.

• 44:18Martin Lewis?

  Except.

• 44:21Martin Lewis?

  That is only for people aged 22 to 66.

• 44:27Speaker 05

  The law is an ass, the world's an ass, I'm opting out, I'm opting out of life, never mind the...

• 44:31Martin Lewis?

  So I'm afraid we can instantly do the...

• 44:35Martin Lewis?

  You got it wrong.

• 44:36Speaker 05

  Well, I got it right, just the world...

• 44:37Martin Lewis?

  You should have got it right, but the reason for doing this question, you're right, there is always a reason for doing the question, it's not just to make fun of you. Right, there are, there are, there are three categories of people, people who can't join the employment pension scheme, people who are automatically opted in, and people who aren't automatically opted in but can choose to opt in, and if you do choose to opt in, your employer must match contributions. And that's the bit I want to focus on. So anyone aged 22 to 66 will automatically be enrolled into their workplace pension scheme and get the matching contributions. But if you are aged 16 to 21, or 67 to 74, you earn over £6,241 a year, you have a right to ask to be opted in.

• 45:21Martin Lewis?

  So a 21-year-old Adrian, who at that point would have no children, probably might even be living with parents and have no costs, earning 20 grand a year, absolutely should be asking to opt in, and then his employer has to give him extra money to go in his pension, and the fact that you're doing it at age 21 means it has a long time in order to be able to, to compound and to grow. Equally, and a more difficult scenario, if you earn £6,241 a year to £10,000 a year, then you're in your age 22 to 66, then again, you can ask to be opted in, although the contributions will be relatively small and it may be more difficult in those circumstances. But it is really worth, especially younger people, or people older who are still working, who've got the money, getting those matching contributions and asking to opt in.

• 46:06Martin Lewis?

  Now, if you had listened to the pod-only episode we did two weeks ago, this was all in there, and you would have known the answer at the time. I'm going to give one final warning just on this, it's really important. Remember you're opted in. Generally, I'd suggest you don't opt out, but I've gone even, because, you know, this is the best thing you're ever going to do for money-saving in the long term. But what people often ask me is, it's a little expensive putting the 5% in, can I drop down to, say, only putting 4% or 3% of my salary in? I just want to clarify the law for you.

• 46:37Martin Lewis?

  Firms, if you, once you're opted in, which is automatic usually, the contribution is, the minimum contribution is 8%. So if you put in 5%, they have, they have to put in 3% minimum. If you decide to put in 4.9%, you're no longer in that system. They are no longer mandated to contribute. So dropping down 1% if you're on the minimum could mean you get nothing from your employer. Now, some firms will still give you if you drop down it because it's a minimum. It's they don't, they can do what they like as long as they're doing the minimum criteria. But I would strongly caution you if you're going to drop down a percentage or two, to check what the rules are and check that that doesn't mean you are throwing away

• 47:19Martin Lewis?

  your employer's contribution if you're dropping down 1% because you're going by the minimum and they no longer need to contribute. And just to say on this, we did the Pension Pod Only show two weeks ago. It's been absolutely massive. It's been right up in the podcast charts for the last couple of weeks. If you're an employer, you're not an employee and you want to know about your pension, it's an absolutely crucial thing to understand. So if I can just plug that people go and they download that podcast and have a listen, that would be great.

• 47:48Martin Lewis?

  Now I've got good old PPS podcast producer Simon with me now and we're going to try and get through a few more of your energy questions. We had so many of them, I just want to try and do as many as we possibly can. What have you got?

• 47:59Speaker 07

  Yeah, we've got this one from Chris. When can we expect the zero slash low standing charge tariffs to be introduced?

• 48:05Martin Lewis?

  Okay, so the consultation came out about a week ago. This is the idea that there will be two price caps. You will keep the current price cap as it is and then firms will have to offer another one, which is probably a no or very low standing charge price cap option. Now, what they will do is while the standing charge will be lower, the cost for each unit of gas and electricity will be higher. This will be on the price cap. So there will be two price caps and you'll be able to choose which one you want. Now, this came about being really blunt because it's my suggestion. I've always been campaigning for them to get rid of the standing charge. I think it's a moral hazard. It disincentivizes. Is lower users from cutting their bills.

• 48:48Martin Lewis?

  It leaves many elderly people who only have their gas on in the winter, still having to pay every day for gas in the summer, even though they're not using it. The reason they're not getting rid of it in its totality is because there are costs associated to it that have to be paid for somewhere. And if you get rid of it, you put up the unit cost. And many of the charities who represent vulnerable high users, you know, you may have a disabled child on a ventilator, which is costing huge amounts of electricity each year, were worried about what happens there. Clearly, what should happen is the government should look after the people in that situation specifically, and then bring the standing charge for everyone. But that would involve the government and Ofgem working in concert, and that isn't happening. So I came up with this compromising idea that you have a dual price cap. We got the final consultation out on that about a week ago.

• 49:33Martin Lewis?

  I believe the idea is for it hopefully to be in place this winter, but I think that's relatively optimistic, maybe by next spring. And that means for those on the price cap, you would have a choice. You stick on the normal price cap or you move to the no standing charge price cap. Now, when I read the consultation, the biggest problem with the way the new system is proposed to be set up, which I will, of course, be feeding back on, and I've already discussed it with them, is this is the price cap. This is the backstop option for those people who don't do anything. And the real concern is many vulnerable people, especially elderly users, who are some of the most information disenfranchised, including someone, say, with onset dementia. Well, if we're asking them to pick which of a complicated tariff they're on,

• 50:16Martin Lewis?

  well, that's the reason they're on the price cap in the first place, because they don't pick. So, I mean, you know, in a perfect world, I'd say people should automatically, everyone should automatically be defaulted on to whichever one is cheapest for them. But I'm not going to get away with that. And when you're campaigning, you have to manage what's a legitimate expectation and what you're just not going to win and focus your energy on what's winnable. So my focus is looking at a cohort of vulnerable users and working at the moment with my team on exactly how we define what a vulnerable user would be. And for those vulnerable users, we want to mandate the energy firms to do a calculation based on their previous year's usage to work out which they would be cheapest on. And then to automatically default switch them with an opt out. So you'd notify people, but say you can opt out of it.

• 51:01Martin Lewis?

  Default switch them to the new no or low standing charge if that would have been materially cheaper for them. Now, I think that's the right way to go forward. I've also talked about how it should be communicated. I don't think it should be from the firm because people don't trust their firm. It should be on a sort of off gem letter sent through by the firm with off gems heading on it to explain what's happening. But I think we need that form of defaulting for the people who would not choose it anyway, for whom it would be best for if they're vulnerable. But you asked me when it's going to happen. Well, it would be nice if it were in by this winter. I think maybe next spring at best. We're at final consultation stages. I'm sure some energy firms are going to object to it. So we just have to wait and see, but cross your fingers.

• 51:41Speaker 07

  This is more of a statement than a question from Claire. Please stop making having a smart meter part of the cheaper deals. Not everyone wants one.

• 51:48Martin Lewis?

  Well, look, I mentioned this in the show. It is not a universal fact. I think one of the reasons for the confusion is because firms are incentivized to get you to install a smart meter because they're fined if they don't. They often talk about it in a way that makes you think you have to have a smart meter. Now, let's just be absolutely plain. They cannot force you to have a smart meter. They're not allowed to do that. Now, I've seen many letters sent by firms that tell people, it almost looks like they're telling you, you have to have a smart meter. But if you read it the right way, you can see there's nuance in there. You do not have to have a smart meter. There are a couple of exceptions to that. If you have an old school meter that

• 52:29Martin Lewis?

  has gone past its use by date, and they do have use by dates, the only meters they fit these days are smart meters. So you would have to have a smart meter fitted, but you do have a legal right to get it to be the smart element of the smart meter to be turned off. So it just looks like an old dumb meter, if you know what I mean. So it works like an old dumb meter. Now, listen, I have to say, I'm generally in favor of people having smart meters. I think they make life easier. You don't have to do the meter readings and you can see what you're using yourself. But many people don't like them. But when people ask me about fixing, what I suspect is happening, I said this in the main show with Adrian, but I'll repeat it. I suspect people are calling up their existing company and saying they want a fix and they're saying you have to have a smart meter, because there are quite a few fixes that require you to have a smart meter.

• 53:12Martin Lewis?

  But if I just look, I've got a list in front of me of the five cheapest fixes on the market. Right now, based on average, I'm not going to tell you what you are because you need to go on to a comparison site and do a whole of market comparison to find your cheapest fix because it depends on how much you use and where you live, which is your cheapest fix. Number one, smart meters not required. Number two, smart meters not required. Number three, smart meters not required. Number four, smart meters not required. Number five, smart meters not required. The idea that you must have a smart meter to fix is not correct. It is simply not correct. The cheapest tariffs on the market will allow you to switch without a smart meter at the moment. It's probably because they've hit their targets for this year on smart meter installs, so they're allowing it.

• 53:56Martin Lewis?

  And it does tend to be time of year dependent to an extent as to whether you need a smart meter or you don't. But right now, you can switch to a cheap fix without a smart meter.

• 54:06Speaker 07

  Louise wants to know, what if your current supplier is doing half price electric at the weekend? How do we work out if it's still cheaper to switch last fix?

• 54:14Martin Lewis?

  Look, in general, it's daytimes at the weekend. People's usage isn't that much. Even if we just say that you had standard usage at the time and that you were in. What are you talking? You're talking 1/14 of the weekly usage. So it's a 1/14 of the weekly usage at half price. So it's a 1/28 off. And when you start taking 1/28 off, which is 3 or 4%, with the price cap going up 6.4%, I'm doing back of the envelope's numbers as I talk live. I hope I haven't got them any wrong at all. I mean, that's nothing compared to the cheapest fixes that are 6% less than the price cap already and will be 10 or 11% less than the price cap when it comes in April. So unless you happen to have, you know, be able to save all your energy usage for that Sunday or whenever it is on the, whenever your particular firm is offering you,

• 54:59Martin Lewis?

  and you can put everything on, so a huge chunk of your energy usage is being done on that Sunday, generally, it isn't that big a factor.

• 55:06Speaker 07

  Impressive to do 28 times tables off the top of your head.

• 55:08Martin Lewis?

  Well, something like that, yeah. In fact, it's even less than that because it's not a half a day, it's generally about a third of the day, the actual hours they give you. So we probably make even smaller than all that. Carry on, carry on.

• 55:19Speaker 07

  David wants to know, what about those who fixed previously? Should we look to swap to something now before the fix runs out later in the year and the price has gone up again? I think I'm fixed till around October.

• 55:29Martin Lewis?

  As we discussed in the programme, if you're on a cheap fix until October, it's probably cheaper than you can fix that right now. I would personally, and remember I don't have a crystal ball, I don't know what's going to happen to energy prices, I would stick on your cheap fix now rather than having to pay a penalty to pay more by moving to another fix. There is absolutely no reason to assume that fixes will be a lot more expensive in October than they are right now. They could be more expensive in October, they could also be cheaper. And all you're talking about, you're talking about you'll move on to the price cap, but you can always fix again in October. Clearly though, there could be massive issues that change that and there's some crystal ball gazing. But if you ask me what I would personally do, I would stick on the cheapest deal that I can possibly get, which is probably the fix you're on.

• 56:11Martin Lewis?

  If you've got a cheap fix six, seven months ago, they were cheaper than the cheapest fixes you can get right now. In fact, just two weeks ago, I was telling people, I think fix is going to get more expensive fixed now, and they're more expensive than they were two weeks ago. So almost, you know, and that's more expensive than when I was telling you to fix two months ago. So this has been a constant battle for me, saying get off the pants cap. But that doesn't mean get off your fix, it means get off the price cap.

• 56:33Speaker 07

  Garnet's been in touch. We have solar panels and battery and are on an octopus flux rate where we get money back for exporting energy, useful in the summer, not so much in the winter. Would you suggest fixing or sticking with what we've got?

• 56:46Martin Lewis?

  Okay, there is a gap in the market for this information and it's one I'm working on trying to fill, but I haven't filled at the moment. So you're going to forgive me for giving you a generic answer rather than a specific answer, I hope. When you have solar panels, assuming you don't have the old antiquated feeding tariff, which is unbeatable, where you get paid a set amount for generating energy, depending on, irrelevant of who your supplier is. It moved to a market system four or five years ago. And that means that there's a market for paying you for the energy you're generating. Generating and sending back to the grid when you're not using it yourself. The smart export guarantee. And that's the price you get paid for generating electricity to the grid. Now, when you have solar panels, there's two gains.

• 57:28Martin Lewis?

  There's the amount it reduces your electricity bill just because you're not using it because you're generating it yourself. And then there's the excess that you're paying into the grid that you get paid for onto the modern system. Now, on that modern system, the tariffs fall into three broad categories. The best rates that you get paid for generating electricity come from if you did an agreement and got a firm to install your solar panels and give you a guaranteed rate. But then it might not have been the cheapest way to install your solar panels and the capital cost. So there's a, there's a balance to be had there. The next best rate is for firms who say, we will give you a better rate if you use us to supply your electricity.

• 58:09Martin Lewis?

  And the final rate are the open market rates that you can get, even if you're not using that firm to supply your electricity. And if you are on the last one, then very simply just go for whoever is going to pay you the most and you don't know. So you could be with podcast producer Simon's electricity firm. And you could be with Martin's solar payment firm. They don't have to be the same firm. Now, where it gets more difficult is when we're looking at those last two options. The option of your solar panel tariff is linked to your electricity tariff. How do you work out what's best for you? And at the moment, it's a case of doing it on a calculator. And it is literally a case of if your solar panels aren't generating much and your electricity is costing you a lot.

• 58:53Martin Lewis?

  You'll generally be better off just going to find the cheapest electricity provider. And then getting the best open market solar panel rate that you can pay you for what you're generating. If your electricity bills aren't that big and you're generating quite a lot of excess solar. Then you'd want to go for one where you're getting the very best solar rate interlinked with the best electricity rate. At the moment, I am not aware of any comparison that will work this out for you. I said it's something I'm working on trying to get done, but I don't have it at the moment. So it is literally, I'm afraid is the answer you're going to hate from me. It's getting your calculator. Later out and going through the different rates. There are lists of the different rates and who is offering what. So you'd want to go on to a comparison to find of the ones

• 59:36Martin Lewis?

  who are getting you to link your solar, how much you'd pay on your energy there, and then to work out yourself how much you generate on solar energy each year, and whether the better generation rate offsets the difference in price on the electricity. That was a very complicated answer. I hope it makes sense. Unfortunately, there just isn't a simple solution on that for the moment. That's what the podcast extras are for though, doing a bit more detail. And I hope we've done that. So that is the end of the energy section for today.

• 1:00:05Martin Lewis?

  And just quickly, let's zip through a few more of the tellers. Remember this week's tellers. What's the most shocking, horrifying and unexpected bill you've ever received? And how did you pay or resolve it? I have to say, I set this a couple of weeks ago and we didn't get time to go through it. I feel slightly bad I'm doing it in the same week as an energy price rise. It's all a bit too depressing. So we won't do too many of them, will we, Simon? I'll start if you like. I've got the Facebook ones. Shelley, one and a half grand for a private root canal and crown, and it was rather bloody painful, all thanks to a soft mint.

• 1:00:34Speaker 07

  Valerie sent us this one. Home late one night, find out we'd lost our keys, desperately called a locksmith, got charged £1,000 to change the lock.

• 1:00:43Martin Lewis?

  Wow. I don't know what type of lock you had or what type of locksmith. Was it on four o'clock on New Year's Day morning or just after the party or something? Tanya, a few years ago, I used my hot tub daily for nearly a week, and my electricity bill skyrocketed by hundreds. The very same week, my daughter's childcare gave me a bill for over 400 quid as they'd been undercharging me in error and I hadn't noticed. I got rid of the hot tub, but the daughter had to stay. Well, to Tanya, and just a quick note while we're on, while we're talking about childcare, there is lots of changes coming to childcare over this year. From September in England, all nine month to two years old will be entitled to up to 30 hours of funded childcare, joining three and four year olds who get it.

• 1:01:25Martin Lewis?

  But just a quick reminder about what's totally misnamed the tax-free childcare scheme, or as I like to call it, the working families childcare top up. The reason I like to call it the working families childcare top up is because that describes what it is. Whereas calling it tax-free childcare, it is neither tax-free nor about tax. So it's a completely ridiculous name that I'm campaigning to change. But just worth anyone who pays for childcare and isn't on benefits to remember. As long as both of you earn under £100,000, then you can save in the tax-free childcare scheme. And then effectively for every ATP you put in, there's limits, the state will add 20p. So for a pound of childcare, you're only paying 80p. It can be worth hundreds or thousands of pounds a year to some. I'm not going to dot all the i's and cross all the t's.

• 1:02:10Martin Lewis?

  But if you're paying for childcare and you haven't heard of it, go on to gov.uk and look up tax-free childcare. Totally misnamed though, totally misnamed. Drives me up the wall that why would you name something that just to confuse people? The answer is probably because you want a political gain to try and claim it was tax-free. Surely it's better communication to call it something like the working family. Because you have to be working to get it. Working family childcare top-up, because it tops up your childcare. It doesn't give it you for free. Surely that would be a better name because it actually helped people understand what it is. I will put my soapbox away.

• 1:02:45Speaker 07

  I'm in the childcare game, by the way.

• 1:02:47Martin Lewis?

  Well, how old's your little one now?

• 1:02:48Speaker 07

  She's 15 months old. So the nine-month thing came in at just the right time for us.

• 1:02:52Martin Lewis?

  Yes, 15 hours a week going to 30 hours a week. Yes, correct.

• 1:02:55Speaker 07

  But a key thing is you've got to get signed up early with nurseries. Like, and particularly if you're going to find a nursery that takes the hours. Like, you've got to be signing up like before the child's born. If you're pregnant now and you're listening to this, congratulations, sign up to a nursery.

• 1:03:10Martin Lewis?

  It's interesting you say that because I was in with the Secretary of State for Education, Bridget Philitzson, for a meeting yesterday. As always, it's a can't-met-pay meeting. So for freedom of speech, I don't talk about the specifics of what was said. But childcare was a big topic of discussion there, as was financial education and as was student finance. Lots of suggestions and changes. It was a preliminary meeting. She was listening, it was good. I think there'll be more to come and more to be done on that. But yeah, I mean, the way the childcare system works has to be improved. If you want to improve our economy and get growth, we have to provide people support when they go to work to make sure that their children are looked after. And one of the interesting discussions, and this came mainly that way, and I thought this was fascinating actually. I think we have to be very careful when we talk about childcare.

• 1:03:53Martin Lewis?

  I mean, my daughter's 12, yours is 15 months old, yeah?

• 1:03:57Speaker 05

  Yeah.

• 1:03:57Martin Lewis?

  She is the most precious thing in the world. I mean, forget jewel, my daughter's called Safa, so she is a jewel. But forget jewels and forget money. There is nothing more precious for most people than their child. So the last thing you want to think about is cheap childcare. The last thing you want to think about is that, oh, we're gonna, we're gonna have loads more, far fewer people looking after the same number of children. Because actually, the one thing that we want is we want to trust the person who we are putting our most precious attache into the hands of, the thing that we care about more than anything else in the world. And I think that they were talking about that, which I was quite impressed with. I think that's a really important part of the discussion. You just want to feel that where you're putting this thing that you love with every bit of your being, it is gonna be well looked after and they're gonna be happy, don't you?

• 1:04:40Martin Lewis?

  That it's not just, even from me, it's not just about the money.

• 1:04:44Speaker 05

  Oh, 100%.

• 1:04:45Martin Lewis?

  Yeah, anyway, let's get back on to bad bill stuff.

• 1:04:48Speaker 05

  Well, I'll tell you, I'll do my one on the bad bill. Me and a friend, and this is quite a long time ago, we started renting a flat and we used to both get paid on the 15th, but our council tax will come out on the 12th. So we used to just pay it on the 15th when we got paid. So we'd always pay it late and they don't like it when you do that. And we got quite a big bill. They basically, they sent us a court order and were like, you've got to pay your entire year up now.

• 1:05:12Martin Lewis?

  Well, I've talked about that before, that council tax debt collection is the most vicious form of debt collection from most councils. They can do things that no commercial lender would be allowed to do. And they can escalate. You miss a bill, they, within six weeks, you can go through the process of, first of all, they say, we don't want you to, you miss a month's bill, you now have to pay the whole year. If you then can't pay the whole year, they can go and you can have bailiffs in within six weeks. Now, it would take six months before they even started to escalate it properly on commercial lending. And I've been campaigning, I mean, it's terrible, through my money and mental health charity, campaigning for the way that council tax debt collection works, to be rapidly overhauled because it's not good for their constituents. I mean, it doesn't help people's financial situation. It doesn't help enable people to stay economically solvent.

• 1:05:55Martin Lewis?

  It actually risks catastrophizing their finances, the way it works. But that's a subject for another day. That's a couple of off topics we've done here. I think it's probably time for us to stop on this, Simon.

• 1:06:05Speaker 05

  Perfect.

• 1:06:09Martin Lewis?

  Now, just a little bit in the pod extra. I gave evidence to the Treasury Committee of MPs at the House of Commons this week over lifetime ISAs because they're doing an inquiry. I've often talked about the lifetime ISA in the podcast. It is a great thing for young people to look at. It's a product where if you save in it, you can put up to £4,000 per tax year in and the state adds 25% on top, provided you use it towards a first-time property under £450,000, or you keep it until you're aged 60 and then you get the bonus as well and you can take the money out. The problem comes if you try and take your money out for any other purpose when effectively you pay a 6.25% penalty.

• 1:06:53Martin Lewis?

  And that's one of a number of holes in the lifetime ISA I told them about. Let's hear just a bit of it. I have a problem with it for first-time buyers buying a house. So what we have is we have a succession of young people who are saving in the vehicle they have been encouraged to save in by the state, who are then using, trying to use their savings to buy a first-time property, but due to house price inflation, their property has just tripped above the £450,000 level. And then not only do they not get the £1,000 a year bonus they were intended to get, which I understand it's legitimate as a threshold, they are fined by the state effectively 6.25% of their own money in order to withdraw that money to get the cash out.

• 1:07:38Martin Lewis?

  And the problem with that is not just for the individuals who it affects. When I do television programmes on the lifetime ISA, I have to warn people about that. And when I warn them about that, because you have to have the caveat, you should only save in this if you are definitely going to buy a property under £450,000, instantly we have a huge dropout in the number of people who get it. So the sentiment that that does is very negative. Generally, in every other way, the lifetime ISA is potentially superior, but not in that way, and that needs to change. I later pointed out that for exactly that reason, there is also a social inequality in this form of the penalty, because the people who tend to be most put off by the

• 1:08:20Martin Lewis?

  concept of the being a fine are those who are most risk averse, who tend to come from the least financially educated backgrounds, which intuitively tends to be those who come from the least educated and the poorest backgrounds. So the fine in itself, while it may not affect them, tends to put off people who are risk averse. That wasn't the only thing I told them, it was a big evidence session, I also talked about the fact that I don't think the lifetime ISA should only be for those who are aged under 40. Why should someone who hasn't been able to buy a house yet for the first time, and they've hit the age of 40 because they've been waiting, suddenly be penalised from opening a lifetime ISA? And there was also a big conversation about the fact that it's this rather weird hybrid product, where you can save for a first time property, you can save for retirement.

• 1:09:02Martin Lewis?

  But the problem with the fact that it's saving for retirement is many of the big banks are scared to offer lifetime ISAs because they're worried there will be done for mis-selling if people use it for retirement savings. Because, you know, an employee saving in a pension because of the employee contribution and the tax breaks is so much better off than using a lifetime ISA, which is why none of the big providers offer them, which has not helped communicate it, and we need to fix that disjoint too. But if you want to, you can go to the Parliament website and listen to the entire evidence session, it was a bit spicy at times too, I'll leave that up to you.

• 1:09:40Martin Lewis?

  Okay, you lucky, lucky podcast listeners, it's that time of the show where I give you tips that are just for you, I should cocoa, I know how exciting. Now, this week it's all about, woo woo, yeah, there are a couple of train tips. Unfortunately, it's because of prices rising. Now, the first one's universal. Railcard prices rise this Sunday, the 1st of March, I hope you're not listening after that, I'm sorry if you are, there's not much we can do. A one-year railcard is rising from £30 to £35, a three-year railcard from £70 to £80. But currently, if you go on the MyTrainPal website and you use the code RAILCARD25, you can get 25% off. The current price before it goes up.

• 1:10:23Martin Lewis?

  So that's a one-year rail card for 22 quid and a three-year rail card for 55 quid. Well worth bagging if you don't have one. If you're not new to that site, then you get 10% off, not 25% off, but that's still 10% off the current price, not the after the rise price, as long as you do it in time. Now, this applies to the friends and family card, which is good if you've got kids, the two-together card, if you regularly travel with someone, could be your partner, could be whoever you go to a football match with each Saturday or whenever it's on. Could be it's the network rail card, the senior rail card and the 16 to 30 card worth doing. My second tip, also on, woo woo, is for regular rail users in England. Consider buying a season ticket now if you, a season ticket's going to work for you.

• 1:11:05Martin Lewis?

  I mean, you need to do your maths on that as prices are rising 3.8% on the 2nd of March and the difference could be hundreds of pounds. So if you're going to buy a season ticket, you're nearly running out of your other one. It's worth checking your price and seeing if you can buy it now before the prices go up and that is in England. So that's a couple of train tips to try and keep you on track.

• 1:11:29Martin Lewis?

  That's it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. We tend to put out a new episode every Thursday. Do subscribe to keep up to date, then your pockets will be pleased with you. If you've not enjoyed it, ugh, you know, I mean, what do you want me to do? Slap my guts out, we can reach out, sitting in this dangerous radio studio, seriously, the microphone in front of me and never know what's going to happen. Sometimes it gets loose at the tilt. It's even bashed me on the nose once. I do all of that. You've listened to the end and you haven't enjoyed it. Sometimes I just don't understand you lot.

• 1:12:03Martin Lewis?

  Bye.

• 1:12:42Speaker 07

  Worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

• 1:13:07Speaker 02

  Welcome to The Haunted Library. Join me, Colin Morgan, as I read Frankenstein by Mary Shelley.

• 1:13:17Speaker 02

  A story of science and ambition, loneliness and longing, and what it truly means to be human.

• 1:13:27Speaker 02

  Listen to The Haunted Library wherever you get your podcasts, or find us on YouTube.