Pod Insights The Martin Lewis Podcast Ofgem special: Why are UK energy prices so high? We ask the regulator’s boss that and more! About this episode Martin interviews Jonathan Brearley - the CEO of Great Britain's energy regulator OFGEM.
Tell Us is all about your pocket money rules.
Mastermind this week looks at your right to return gifts.
Plus advice on the best tactics for Scrabble and tips on train ticket refunds and car finance.
Transcript 14,299 words · 8 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:12 Martin 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. Included in today's pod, the big topic is energy, because we have the chief exec of the energy regulator Ofgem on the show, taking your questions, including on what's happening to standing charges. We'll talk through the big changes just announced. Why are prices in the UK so high? Can you be forced to have a smart meter? We'll talk renewables, prepayment meters, time of use tariffs and more. Plus, as some of your questions
1:55 Martin Lewis? were a bit tasty, does he take bungs? What's the point of Ofgem anyway? You're just in big companies' pockets. I put those to him, too.
2:04 Martin Lewis? Moving on, this week's tellers is all about pocket money. How much do you give and do they have to work for it? The Money Mastermind is on Christmas gift return consumer rights.
2:16 Martin Lewis? Then to finish, we'll talk Scrabble. No, not about buying Scrabble sets, we're just talking Scrabble and why it's really a numbers, not a letters game. Wait till the end for that one. Play the theme tune.
2:45 Speaker 06 Well, I say good afternoon to Jonathan Brearley, head of Ofgem.
2:49 Martin Lewis? Good afternoon.
2:50 Speaker 06 We very rarely get any big, responsible adults in this studio with us.
2:55 Martin Lewis? Quite right. It's lovely to have Jonathan. I have a whole potpourri of questions for you. Some informative, some borderline abusive. I'm gonna go and we'll get to those in a moment.
3:07 Speaker 06 Okay. Let's start, because it affects a lot of people, energy bills, obviously. And talk us through where we are, as you see it.
3:14 Martin Lewis? Okay. So the energy price cap that dictates the price, 80% of homes in England, Scotland and Wales, went up by 10% in October. Now, how do you know if you are on a price cap tariff? The price cap tariff is your default tariff. It's a tariff you've on if you've done nothing. It's a tariff you move to if your fix is finished and you haven't changed again. If you're not sure, you almost invariably are on the price cap. Unless you're on a specific fix or you've chosen some form of specialist tariff, you are on a price cap tariff. And that means that the price you pay is dictated by the man sitting across the desk from me right now by Ofgem. Firms can't go above that and most of them tend to price it exactly that. It was originally meant to be a safety net tariff. It was meant to be there to protect people
3:58 Martin Lewis? who didn't switch. But since the energy crisis, very few people have switched. So we now have a quasi-price regulated energy market. We hope we will move away from that. That price went up 10% in October. It's going up 1% in January. It's predicted to go up 1% or 2% next April, but the further out you go, it more crystal ball gazing it is. And if you look at the average over the next year, if I were to graph it and factor in seasonal usage, I say if I were, I have, if I had to add seasonal usage and put all that in, over the next year, you would expect to pay slightly more than you are paying now. Now, the fact is, just a quick one, the cheapest fixes on the market where you can lock in the
4:39 Martin Lewis? cheapest price are 5% cheaper than what we're expecting, than the current price, probably 6% cheaper than we're expecting to see over the next year, which is why I call the price cap a pants cap. It is not one you should be on right now. Jonathan, the head of Ofgem, is nodding. Most people, we want you off the price cap, yeah? Absolutely. This is meant to be a backstop. So we'd like to see more people get back into the market and find better deals. And so go and get yourself a fix because on the huge balance of probabilities, I mean 80, 90% probability, you'd be better off getting yourself a fixed deal now than sticking on the price cap. But people have lost faith in switching. Then today, and the reason I suspect Jonathan is here, and it's great coincidence of timing, although I suspect it isn't a coincidence of timing, is that there was a big announcement on standing
5:24 Martin Lewis? charges. Now, I have been leading the cries against standing charges. Standing charges are those locked-in daily charges that you pay just for the facility of having gas and electricity. I consider them to be a poll tax on energy, 340 quid a year typically, that you pay whether you use any energy or whether you don't. Now, there are three big problems with the standing charges. Number one, it's a moral hazard. It disincentivizes lower users from cutting their bills because they can't save very much by it. Number two, it's unfair on those people especially who only have gas central heating and they only put it on in the winter, which is many elderly people, because in the summer when they're
6:05 Martin Lewis? not using it, their bill ticks, ticks, ticks with those standing charges every day being charged. Number three, it's unfair on people who have prepayment meters, because if they lose it, just think about this, you lose your credit, you haven't got any more money left, you've not put the energy bills on, you go and try and top it up three days later, well, you've got to pay the standing charges before you can get any energy. So the money you're putting in might not even cover you to get energy on it. So I have a problem with it. I'm going to preempt where we go on this because it's quicker if I do it. Ofgem has not been able to do what I wanted it to do, but I'm not, for once, going to blame them. What we needed to do to fix standing charges, the big problem is, I'm saying they should be brought down and the price should be put on the unit rate, but many charities legitimately
6:50 Martin Lewis? who look after disabled or ill people have been coming to you, haven't they, yeah? Absolutely right, yes. Yeah, yeah, they've been coming to you and they've been saying, hold on, we've got someone who's got an oxygen tent, they've got really high energy usage, we've got someone with charging an electric wheelchair for their children or a dialysis machine, we've got high energy usage. If you move the cost of the standing charge onto the unit rate, the amount that you pay for gas and electricity, you're penalizing these people, they need to be protected. I think they need to be protected. He doesn't have the power to do that, only government does, and government hasn't done it. So he, Jonathan, had to make a decision within
7:26 Martin Lewis? Off Gem's unilateral realm, so it's actually followed a suggestion that was I submitted in our submission to standing charges, which from next year, there's going to effectively be two price caps from firms. You have the normal one, and then you'll have one which has got no standing charges and a higher unit rate. Lower users will be better off on the no standing charges, higher unit rate tariff. Higher users will be better off on the existing price cap if you're on the price cap. But my question to Jonathan, and I asked him this privately, so I'll ask him publicly. This is the problem. The price cap is designed to be that safety net tariff for those people who do not switch. But when we have two price caps, therefore, we are giving people a choice. And the whole point is, it was meant to be
8:09 Martin Lewis? there for those people who don't make a choice, who can't, or are scared, or don't want to make a choice. So which price cap will they be on?
8:18 Speaker 06 So look, and I just want to talk a bit about how we've got to where we've got to as well, as well as answer that question. Because as you know, I talk to customers a lot directly. You know, the sorts of customers you mentioned, so customers who have disabled children within their family, or frankly, customers who are still on, believe it or not, old fashioned electric heating, whose bills are hugely expensive, would be affected badly unless we made this choice that we made, that we laid out today. Now, I think there's a debate about how you get on to the right tariff for you. So the fundamentals are, we think you should be able to choose. So first of all, anybody who wants to actively choose should choose. But we're very open to the idea that actually, some people might need some help from, for example, from their energy company to do so. So the big debate
9:00 Speaker 06 is, do we do that for everybody? Do we do that for vulnerable customers? How does that work? And how do you, if you want to override that, make a choice? And all of that's through the consultation.
9:09 Martin Lewis? Well, you know, I've told you what my view on this is. If you're on a price cap, you should be automatically defaulted to whichever one of the two price caps is cheapest for you. I suspect we won't get there because the energy firms would fight that, and it might change the maths. So my minimum is vulnerable customers and those on the priority services register should have that default choice made for them.
9:29 Speaker 06 And there is such a register. Tell me about that. So look, we have
9:34 Speaker 06 Many, many reasons why the energy industry should be identifying vulnerable customers. I mean, for example, you know, we have power cuts still today from some of the storms that we saw earlier in the week. We need those companies to know, out of everyone who's left, who really needs the most help. So we've. I understand that. So who puts the register together? How do you make sure you're on it if you need?
9:53 Martin Lewis? So if you think you are vulnerable, call up your energy company and tell them and they will go through their vulnerability checklist. And there are very special rules for people who are on the priority service register about, you know, it's rules both on payment and on service level. You know, if clearly we've got an oxygen tent that you need, you need electricity to, to power, then continuity of service is pretty damn important for you.
10:14 Speaker 06 Well, just to add, particularly in, in situations like that, it's vital, it's life saving.
10:18 Martin Lewis? Yeah, yeah, exactly.
10:19 Speaker 06 So, I mean, anybody out there who feels they've got kids under five, they've got any health conditions or, or they have elderly people within their home. Get on this register because it makes a massive difference, not only in the extreme, but also on things like this.
10:33 Martin Lewis? It's the big focus and the big news of the day. So let's start to talk a bit more about standing charges. I'm going to do something I've got here. This is from National Energy Action, a charity you'll know well and I know well that we work with. That they're, I'm pretty sanguine about what you've done because you followed a proposal I suggested.
10:49 Speaker 06 Sure.
10:50 Martin Lewis? Right? They're much less happy. They are very worried about some of the more vulnerable people who are for the next year. Because this new dual standing charge option won't come in for next year. What's going to happen to them? So I'm going to read out a question from National Energy Action.
11:02 Speaker 06 Sure.
11:03 Martin Lewis? Prepayment households are especially affected by high standing charges. When their credit has been used up, standing charges accrue as a debt on the meter that must be cleared in full before accessing energy again. We know that the highest standing charges are the longer households are needlessly left without being able to use energy. What will of Gem June now to make it easier for prepayment households to access energy when they need it most? So you, you understand the question?
11:29 Speaker 06 Sure, I do. I mean, let's talk about the rules we have in place right now. So I encourage anybody who feels that they can't top up their meter to make sure they get in touch with their supplier. We have something called additional support credit, which is basically a form of a loan the company must give you to make sure you can get energy over that period whereby. Perhaps you can't afford it for a few days until a benefits payment comes in or your next sort of your wages come in. So there are mechanisms already in place to make sure that you are looked after through that. Second thing we ask companies to do, particularly for those who have smart prepayment meters. And if I could just spend a minute on why we think smart prepayment meters are much better than the old system. Companies should be noticing if you're coming off supply often. And they should be offering you the sort of help and support you'd expect for anybody who's struggling to pay their bills.
12:14 Speaker 06 So there's a number of things in place already. The reason why we want to take a bit of time over this is exactly the questions you're raising, Martin. How do we make sure that people are put on the right tariff? People don't feel forced into a place they don't want to be. And how do you make sure that if you're a high user, you're on a low, a high standing charge and if you're a low user, you're on a low standing charge?
12:33 Martin Lewis? What have the firms, how have the firms reacted to this dual price cap?
12:36 Speaker 06 So I think, you know, they're open to it. I think there's a lot of detail to work through. I think we heard Energy UK this morning worrying a bit about.
12:42 Martin Lewis? Which is the trade body that represents energy firms?
12:44 Speaker 06 Yes, so the trade body that represents those firms worrying a bit about, well, the same question. How do we manage in a world where people don't engage? And that I think is going to be the critical part of our consultation. But I think they'll work with us. And remember, many of those companies called for low or no standing charges before this. We found a way to deliver, as you say, within the constraints that we have. Peter, as.
13:06 Martin Lewis? And I should just say, I have, I have chatted with the Secretary of State for Energy, Ed Miliband, on this about that. You know, will you support vulnerable customers, which would enable you to bring the standing charge down for the main price cap too? I don't think that's off the cards. I just don't think it's been done yet. So I think there is still a chance that by this time next year, things may have changed. You've got a sense of that?
13:28 Speaker 06 Well, I mean, I can't talk about what we, what we say to the Secretary of State, but I can tell you, we've been saying for a long time now, we think we need more targeted support for the vulnerable. We're working with government and I'm.
13:38 Martin Lewis? And we both want a social tariff, don't we?
13:40 Speaker 07 Well, I would like to see that seriously examined.
13:42 Martin Lewis? So, yes, that's, that's.
13:43 Speaker 07 That's regulator speak.
13:44 Martin Lewis? That's regulator speak, but yes, a social tariff would say that vulnerable customers should automatically be put on a cheap tariff, that they don't have to activate, that would protect them from being inadvertent victims of a market mechanism.
13:56 Speaker 07 Can I just explain a bit about why, why we might think something like that might work? And the two things we've seen in the last.
14:02 Martin Lewis? I'm going to agree because I've been championing it for a decade, but yes, go on.
14:05 Speaker 07 Two things in the last couple of years is, well, the argument against this is that, you know, that's what benefits are for. You pay it through the welfare system and that's it. But there are two things I think with energy. One is the same families can have very, very different energy needs. If you are one family in a well insulated home and you're another family, exactly the same circumstances in a home that's poorly insulated, you have very different bills. And also, as we've seen over the last few years, the energy market moves much faster than the benefit system can respond to. So I think in whatever.
14:34 Martin Lewis? And then the regulator responds to.
14:36 Speaker 07 Of course, but I think that in a sense, we want to make sure we have a tariff that manages that much better for customers.
14:42 Speaker 06 I just, I just want to go back a bit, just to explain, I know it's a very basic question and I hope you'll both forgive me. But what, what is the regulator for? And I say that neutrally. Some people are saying it, you know, with, you know, and putting it as a barbed question. So if the regulator didn't exist, right, you'd have a load of, a load of, a load of companies.
15:08 Speaker 07 Yes.
15:08 Speaker 06 Selling you, selling you fuel, selling you energy and they could charge what they liked and, you know.
15:15 Martin Lewis? Quite.
15:16 Speaker 06 So the liberal economists might say, free market economists would say, well, and it'll find its level. And the, and the best and the cheapest will win out.
15:24 Martin Lewis? I think you're being very nice and I, I think we have a responsibility, you forgive me. We ask people for questions.
15:30 Speaker 07 Sure.
15:30 Martin Lewis? And there were a substantial number of aggressive ones.
15:33 Speaker 07 Okay.
15:33 Martin Lewis? I have discussed that with, with Jonathan beforehand, that I'm going to port some of those more aggressive ones to him because I think we have to reflect that feeling. So I'm going to ask the same questions as Adrian, but from Ash. Why does Ofgem exist? They clearly only have big business interests at heart.
15:49 Speaker 07 I need to start off by saying, given the last few years, I completely understand why people are frustrated. You know, we've seen a market that without the government intervention would have gone up, made bills on average, got about four and a half thousand pounds a year. And it's important for me to try and explain what Ofgem can do and what it can't do as part of that. So when I look at what's happened, and we look at where those changes came from, they come from a massively changing international gas market. Now, I think, Martin, if you look at our energy history over the last 15 years, something we did not get right collectively, government, the regulator, the industry, all of us, was the fact that as a country like Europe, we became dependent on a market where
16:29 Speaker 07 40% of that market was owned by one player from one country that was aggressive towards us. Now, that has meant we have drifted into
16:37 Martin Lewis? Which is Russia.
16:38 Speaker 07 Which is Russia. We have drifted into this situation, which, quite frankly, in some ways, it's surprising it didn't happen sooner. That country became aggressive towards us, and that market power became a weapon to challenge what we were doing elsewhere over the war in Ukraine. Now, that created a huge amount of disturbance. Now, we can't control that. Come back to your question, Adrian. The regulator's here for three things. First of all, on price, we need to make sure, although we can't control the costs that go into that cost stack, we want to make sure they're fairly reflected in the price that's charged. Secondly, we want to make sure the standards of service are improving. And thirdly, and really importantly, given what I've just said about Russia and the way that has impacted on a market, we need to make sure the infrastructure is built to make sure we get out of the situation we're in. Can I just come back on that third
17:23 Speaker 07 point, then we'll talk about price and standards. I am really passionate about the government's approach to getting to 2030 and getting to net zero electricity in that timeframe. And I'm passionate because I'm afraid I've got to be open. My background was in climate change before I came into energy. I'm passionate from a kind of global perspective. But more importantly, if we are going to avoid what we saw in the last three years, we need to get away from that international gas market driving our bills. And that's the way we're going to do it.
17:51 Martin Lewis? Well, we had, I mean, I had a question on exactly that from one of our listeners. Why is the cost of electricity generated from renewable sources still linked to the price of gas?
18:01 Speaker 07 So for most new renewables, it's basically a fixed price for those, for the new offshore wind farms, we pay a fixed price. So during the crisis, those wind farms were actually paying money back to customers that they were getting from the market. There's an older set of renewables which are based on basically the market price plus a subsidy. Those we hope will go away over time, but the new model is we don't do that, we give them a fixed price.
18:21 Martin Lewis? What proportion of the market is on that newer model?
18:24 Speaker 07 So the newer model is since 2017, so I haven't got the percentage figures, but it'll be about, I say about a third to a half.
18:29 Martin Lewis? So, so still the majority is still based on?
18:32 Speaker 07 There's a lot based on the.
18:33 Martin Lewis? There's a legacy. Can we, I just want to check, one other thing, I think it's important because I get this about you a lot, so I'm going to, because I think this is. Who do you regulate and who don't you regulate?
18:45 Speaker 07 Well, let's, let's talk about, let's be frank, let's talk about where the profits are in the market. So you would, we've seen over the last few years that companies like Shell and BP, for example, the companies that dig the gas up out of the ground and sell it. They were making very, very large profits at that time.
19:00 Martin Lewis? The producers and the distributors.
19:02 Speaker 07 So the people that get the gas and bring it to our house, we don't regulate those, those are part of an international market. Now, to respond to that, government did introduce a windfall tax and that's for them, that's not for us. We regulate in different ways, three parts of the market. So first of all, the retailers, those are the energy companies that all of us see directly. So EDF, E.ON, Octopus, OVO, those sorts of companies. We also make sure the market works for the generators and we regulate directly the people who build the networks. And make sure that all our energy is connected up, both in terms of gas pipes and in terms of wires.
19:35 Speaker 06 When you regulate them, there's a question here which gets, I think this is from Liam in Manchester, where he said, what's off Jim for? There's a feeling that you're there to protect the consumer, but in some sense you're there to protect the companies as well. Are you, are you protecting them from the downside? So, okay, we all suffer because of the Russia situation and so on. But are the companies suffering? Are the dividends they're paying coming down? Are, are their executives getting paid less? Are they sharing the pain? Or are they just, are their, do their profits and their pay and their dividends remain where they were?
20:09 Martin Lewis? I just want, I just want to be clear because that last answer was quite deliberate by me because. The ones who went bust, who are making losses, are the ones he regulates. Right? The ones who are making over, I think it's over 10 trillion or some ridiculous number, I probably got that wrong. Worldwide profits are the ones that we don't regulate. Now, clearly, that sounds a bit crackers. Why aren't we regulate? But to be fair to this man, who is, he only regulates the ones who were making a loss. Now, the problem is quite a lot of those companies have arms that are also making huge profits. Right? But you can't regulate both sides. If a company like Shell has retail energy, you can't regulate the other side, can you?
20:49 Speaker 07 No, we can't. We focus on the company that buys and sells energy. And that's, that's the bit that we focus on in there. I have to say, we have a balance to strike. And I think to be open, we agonize over some of our price cap decisions. You can imagine as the price cap was drifting up. We'd be looking very hard at, you know, what is a fair reflection of cost? That's not a simple.
21:08 Martin Lewis? Because you have a fixed percentage of profit they're allowed to make. So if I, so if you double, if you double the price of energy, their profits go up.
21:14 Speaker 07 And that is partly because they're buying and selling in a market where their costs are going up and the risk around those costs are going up. But the point is, you know, if you take today's price cap.
21:22 Speaker 06 But their margins stay the same, though.
21:24 Speaker 07 That, that, well, their percentage margins stay the same. But if you look at today.
21:28 Martin Lewis? But if you, if you're charging £2,000 and £1,000, your percent might be the same, but the amount of profits doubled.
21:33 Speaker 07 It does. But, but, but when you look at, when, you know, and I, I come back to the point that when we try and make these decisions, we, we've got two things we're thinking about. First of all. How do you minimize the cost to a customer, both in terms of estimating the costs of energy? But also in terms of the margins that the companies make. But we've got to balance that.
21:50 Martin Lewis? How much profit can they make?
21:51 Speaker 07 So roughly, if you take that, our price cap in January was 17.38, about 40 to 45 pounds of that, about £3.50 a month is the profit that they're able to make. Now, out of that, and this is the balance.
22:04 Martin Lewis? So I was actually, my ranker was actually different. It's, you know, I hate the typical use figure. I really wish you wouldn't use it. Nobody pays the typical use.
22:10 Speaker 07 I know, but just to give you, just to give you a proportionate use, there's two and a half percent is another way of putting that. Now, the reason why the companies need some profit is because, as you saw in 2021, Martin, 30 companies went bust and those costs when companies go bust, go back. Customers. Second reason is we have got to continue to improve standards for people today. So the mission for twenty twenty five is to build on some of the things we've done this year to make sure companies are treating their customers better. And I'll take you back to twenty twenty two when I was faced with one company, so Eon, it's all public. Who fifty percent of their customers were jumping off of their calls before they even got answered. Now imagine out of that fifty percent of customers, imagine how many of those are vulnerable customers? How many of those are prepayment meter customers who are trying to get help?
22:56 Speaker 07 That wasn't acceptable. We find them and that now is in a very, very different position, as is the sector.
23:00 Martin Lewis? But but I want to go underlying here.
23:02 Speaker 07 Yep.
23:03 Martin Lewis? Because, I mean, quite famously, I had a bust up in an internal meeting with you guys and I used inappropriate language to someone and I've apologised for that. But it was because I was so annoyed, I I said something selling consumers down the river was my phrase, but you can work out what the something was for yourself. And that was over something called the market stabilisation charge, which is effectively a charge that says if somebody switches to another company. Then the company that's been switched to has had to pay a huge whack of compensation to the one who's lost the business, which effectively just killed any form of switching in the marketplace. Now, you do do some protection of companies profits beyond more than just margins because
23:44 Martin Lewis? you force them to hedge for energy security. I I'm actually trying not to be relatively neutral on this, but I think that's worth explaining.
23:51 Speaker 07 Sure.
23:51 Martin Lewis? When people look at the wholesale prices and they go, hold on, wholesale prices are so cheap, but energy prices are so high. That's partly because you mandate companies to buy ahead rather than to buy more short term and that puts all our prices up. Why are you doing that?
24:06 Speaker 07 Well, if you look at our job, our job is to make sure that things are best for customers today, but also best for customers tomorrow and in the years to come. Now, the thing we learned from the crisis was those companies who hedged, who bought ahead were much, much more stable. The ones that went, thirty one of them went, so over four million customers got moved in that time and ended up costing us two point seven billion in total as a result. Those companies were the ones that bought day to day, so their customers were better off. In August twenty twenty one, but all of us, including those customers, were worse off when they moved. So the the challenge we face is not really between company profits or customers. It's making sure that customers are looked after in the long term as well as the short term. And by the way, that comes back to infrastructure.
24:51 Speaker 07 So we know in the next five or six years, we are going to have to build a lot more networks. That's controversial in terms of cost, that's controversial for communities who are going to have to be engaged to get through that. But if we don't do that, we could end up in a situation that we saw in the last two years, another price spike in the gas market. And that's not something that I think we should stand by and let happen. So we have to make decisions that are about keeping costs down today, but also about looking after customers tomorrow, and that's what we do.
25:17 Martin Lewis? I I want to throw one of those more aggressive questions at you before we go to the news, though. Because this was said quite a lot, so this is Scotty. How many backhanders and freebies has Jonathan taken to keep the price cap so high, protecting profits? Who pays your bills? Who pays off Gem's bills? And do you have links to energy companies?
25:35 Speaker 07 So look, we um we're funded by a levy which goes to everyone's bill, so part of your bill pays for it, which is compulsory. Energy companies have no control over that, they simply have to collect that as part of the general collection for the bills. As you can imagine, as a public servant, I get no payments from energy companies, I get no freebies. And I am very, very careful about that, because we know our integrity is massively important.
25:57 Martin Lewis? Who's your boss?
25:58 Speaker 07 So my boss, well, I report to a board Gemma, and the Chair of Gemma is Mark McAllister.
26:03 Martin Lewis? And who oversees and appoints that board?
26:05 Speaker 07 So that board is appointed by the Secretary of State, so it's ultimately appointed by the Secretary of State, but we are independent. So once we're in, our job is to be a bit distant from government, because we have to make these decisions independently.
26:17 Speaker 06 Irene says, I mean, takes the point on the geopolitical issues which caused the rise of gas after the the rise of the price of gas. It rose rapidly when Ukraine was evaded, but Irene makes a simple point, she gets that, but why are our prices much higher than elsewhere in Europe? Well, the same thing surely applies there.
26:36 Speaker 07 So so we look regularly at our prices versus other countries, there are other countries who have higher prices, Germany does, for example, Denmark does, for example. But but a lot of it is down to how much you depend on gas. So when we had lower prices than the rest of Europe, it's because we had low gas prices. But as gas prices go up, we will find our bills will be higher until we diversify away from that. And that's why we need to build renewables as fast as we can.
27:01 Martin Lewis? Now, we're going to have a quick break from talking about energy, but don't worry, we've got lots more questions we put to the chief executive of Ofgem coming for you in a moment. But let's talk a bit about the tellers for this week, which was your pocket money rules. How old are the children? How much do you give? Do they have to work for it? And does that include tidying their room? Of course, though, Adrian has his own view.
27:23 Speaker 06 Pocket money policies, it's very, it's very difficult, I think, to work out properly because there's not just the amount of pocket money, is that? What that money is for and what you as a parent will buy, like you'll buy school books, for example.
27:37 Martin Lewis? By necessities for them, yes.
27:38 Speaker 06 Yeah, or, you know, if you've got some, who's going to deny a child outside pocket money, said, "Look, I really want to get into Tolstoy, Daddy." So obviously, you're not going to, you know, you're not going to make them pay for their own war and peace.
27:50 Martin Lewis? Whereas I, I think you're right, but I look at pocket money from exactly the diametrically opposed angle. So I think pocket money is about, should be a reward for chores and for work.
28:03 Speaker 06 Performance-related pocket money.
28:04 Martin Lewis? Well, yeah, and the reason is, you have, that's what we all do. All of us are paid for the work that we do. We're paid for going to work, we're paid for putting something out there. It's starting to teach an idea that money isn't just this thing that you're entitled to, it's a thing that you have to graft for.
28:21 Speaker 06 So no standing charge, in other words.
28:22 Martin Lewis? Exactly. No standing charges on, yeah, there isn't a standing charge pocket money. You're not given two quid a week just for doing nothing, you're given it for doing something. And I would go further, personally, I wouldn't pay pocket money for tidying, the child tidying their own bedroom, because that's their responsibility. That's already their job.
28:40 Speaker 06 So maybe deductions if they don't tidy it.
28:42 Martin Lewis? Well, you could do that. I think that gets into a slight, that gets into a penal system, and I'm not sure I'm so in favour of that. I think this is about reward and saying, "Hey, you want more money? You can do with what you like, we'll give you what you need." So therefore, the clothes debate, clothes is difficult, you know, they're going to need clothes, it's a necessity. You can then argue what is a new piece of fashion that isn't needed or isn't needed? So what, this is about giving a child discretionary money that they can use on what they like. But for me, the meat of it, and I'm not talking about for four-year-olds don't need to do. Stuff, but the meat of it for older children is saying, as in everything, you will get more if you do more and if you contribute more to our household society.
29:20 Speaker 07 I've got to chip in on this because that's exactly what we do with our two children, six and eight, Robin and Dylan. We basically, they have to do work to get their pocket money. But also then you give them the choice. So when we're get coming out of a zoo and they're seeing all the plastic toys for £10 each, they choose that a lot less when it's their money as opposed to if you're just doing it for.
29:37 Martin Lewis? And that delayed gratification, making you understand that you can have, you can have the sweets and the instant things now, or if you save it up for five or six weeks, all of this. That's why. So for me, pocket money is an educative and a life skill tool. That's its primary purpose. So the actual realm of what you spend it's on is less interesting. But we do have, people have got in touch. Have you got one?
29:55 Speaker 06 Yeah. And Matt says his son gets £15 a month into a Monzo account, £100 into a SNSJ, I say, he will have access when he buys his first house. Then a good school report comes, say £15 added. It's along the spirit of what you said, Martin, no rewards for chores as they are a given. And they need to steer him in the right direction. Not everything you do is rewarded.
30:17 Martin Lewis? Well, you could have, you can have necessary chores and voluntary additional chores, couldn't you? It's overtime, if you like, you could get paid for it. Tracy, we have marble money. So for every chore they do around the house, dishwasher, washing up, et cetera, they earn a pound. Once they've done the chore, they put a marble in their pot and then cash it in when they need the money. My daughter has ASD, so it's a very visual way of doing it for her, but works well for all.
30:41 Speaker 06 Catherine says a pound for every year with an annual rise on your birthday. So £10 when you're a 10 and so on. Rise subject to appraisal and performance review.
30:51 Martin Lewis? Joanne, I'm liking these. Joanne, from being about 13 years old, I gave my daughter all the family allowance and she had to pay for all her extras with it. School trips, going out with friends, extra clothes and toiletries. She's now 24 years old and better at managing finances than I am. Of course, it's called child benefit now.
31:11 Martin Lewis? Now, back to questions for Jonathan Brearley, the chief executive of the energy regulator Ofgem.
31:18 Speaker 06 Question for Jonathan, somebody says, could I ask for your view on how resilient the energy supply chain is to cyber attack from nation states and other bad actors and what steps are being placed to improve our energy cyber resilience? Now, is this something you're responsible for or something you're just no more entitled to worry about than the rest of us?
31:43 Speaker 07 No, we are responsible for that. We work with the government on this. I mean, it's worth saying, just in terms of security of supply overall, we have one of the most resilient systems in the world, actually. And, you know, compared to many, many countries, we are very comfortable in that sense. But I think we had the head of the National Cyber Security Centre only say only a couple of weeks ago that this is a risk for the country. Now, we work very closely with the companies to make sure they do everything they practically can to protect against an attack. But I think as a country, we are going to have to be much more vigilant against cyber attacks, almost in the same way I'm saying 10 or 15 years ago, we should have been a bit more careful about who we were buying our gas from.
32:18 Martin Lewis? I've got one from Karen, flipping subject here, talking about standing charges. The complete con of the regional disparities. Scotland producing all these renewables and yet paying premium standing charges. This needs fixing as well as the general drift to higher standing charges. So of course, when we talk about the price cap, the price cap is regional and it also depends on how you pay. So there are different standing charges and unit rates in different regional areas or national areas, in the case of Scotland of the country. Why and why do they pay so much more in Scotland than the north of England?
32:50 Speaker 07 So I'll tell you why they are now and I'll tell you what we want to do about it. So they are different between different areas because they reflect the costs of the networks in those different areas.
32:59 Martin Lewis? What does that mean?
33:00 Speaker 07 So what that means, if you can imagine somewhere like Scotland, the number of wires you need per household that are there are higher, for example, than if you live in somewhere like London. So that's what happens today. Now, we're in a process with the government where we're thinking about whether actually we need to unify prices across the country a bit more. That's linked to the question of, well, how do we make sure that we get the best value for places like Scotland that have loads of renewables and in fact that can drive the price down? And as part of that, we want to look at whether we should unify those costs.
33:29 Martin Lewis? I'm going to do a poll this afternoon on social media, whether people think it should be unified. I think that's fascinating.
33:34 Speaker 07 And just to say, we've prioritised, first of all, the biggest question, which is whether to have a zero standing charge or not, but that is part of it.
33:40 Martin Lewis? Yeah.
33:40 Speaker 06 Regarding the electricity priority register, Jill says she's on the register, but during the two long power cuts in the recent storms, I had no contact, also could not contact anyone from the numbers I was given to phone. Every time I ended up on a long waiting list, when I went on the register, I was told I would be contacted to ensure I was okay, but that didn't happen. That is, that would drive me mad if I was Jill, and then the regulators there are supposed to regulate, and, you know, how are those firms brought to account that didn't respect the fact that she was on the priority register?
34:15 Speaker 07 Well, we have engineers who've been regularly visiting the sites where those power cuts are happening right now, so we are working very closely with the companies and we put a huge amount of pressure for them to do three things. First of all, they should have contacted Jill, so I think she should go back to the company that she's been trying to contact and we should be having a conversation about that. Secondly, they need-
34:35 Martin Lewis? Shall we get Jill to get a note and we'll get that sent to your office?
34:37 Speaker 07 That would be pretty helpful.
34:38 Martin Lewis? So we have a last Simon, producer Simon, can you get that to me and we'll get that to Jonathan? And we've done exactly that. Since the programme, we've put Jill's in touch with Ofgem. Fingers crossed something comes of it.
34:48 Speaker 07 The second thing is, you know, all engineers available need to fix a problem. And the third thing is, if you've been off power for a certain amount of time, you should get compensation. We raised the maximum of that compensation from £700 to £2,000 after the last set of storms, we might remember Storm Arwin. Now, what we will do, and we do this with every big storm, is we will examine really closely the behaviour of the companies, and if that is common practice, we'll do what we did last time, we'll find them and we'll work with them to try and-
35:13 Speaker 06 But why has she got to go to the company to complain, where by definition she can't pick, as you've already said, she can't get anyone to pick up the phone or answer an email? Surely there should be an Ofgem telltale complaints line, whatever, to say, look, I want to report this company for not getting in touch with me?
35:30 Speaker 07 Well, three things you can do. So go to the company, you can go to the Ombudsman if your complaint isn't resolved.
35:34 Martin Lewis? You have to go to the company first-
35:36 Speaker 07 Yes.
35:37 Martin Lewis? To do that, that's the problem, she can't do this because the company won't respond to her.
35:40 Speaker 07 And then, and then do come to us now.
35:41 Speaker 06 Where's the Ombudsman fitting?
35:42 Speaker 07 So if a company's not- Resolving your complaint. So if they're ignoring you, then you can go to the
35:46 Martin Lewis? Are you asking a bigger question? What's the difference between the ombudsman and the regulator? Is that sort of your point?
35:50 Speaker 07 Yes.
35:51 Martin Lewis? Well, that, I mean, let me just do that structure because people get this in the financial as well.
35:54 Speaker 07 Yes.
35:55 Martin Lewis? The regulator is looking over companies in the markets to see how they work, what the rules should be. And are they, big picture, systemically operating them? The ombudsman is a bit like, it's bad phrasing. It's a dispute resolution process between the individual and the customer on the back of the rules set up by the regulator. So he, Jonathan, doesn't deal with individuals' complaints. Right, he might see a whole, there's 500 people complaining about this, oh, that looks like a systemic problem we should investigate. But he's not going to look after the 500 people. They need to complain to the firm, this is where it's set up, and then the ombudsman can make an adjudication. So it's a bit like a mini court within a sector, if you like. That's the difference between the two.
36:37 Speaker 07 Yeah, brilliant. And look, on Jill, please do get in touch with us, though. It is frustrating to hear those companies haven't reached out.
36:42 Martin Lewis? But with you or the ombudsman, I don't know. No, in this case, could, yeah, yeah, but that's a, that's a the head of the regulator sitting here, we're going, we're going to pervert the process because he can go in touch with the firm to do it. And but, and also hopefully when that call goes in, they might say, I hope you're not doing this with other people. Rather than a, you can't just go to Jonathan, he can't sort out individual problems, he'd have nothing else to do.
37:02 Speaker 07 That's exactly right.
37:03 Martin Lewis? And I understand that because I get, I get, so I have, I have a couple of things I want to do, Adrian, before we go on to smart meters, which you want to do. So, quick one. Do, Paul, do you anticipate that renewable energy and grid storage prices will continue to drop significantly over the coming decades? If so, do you see a combination of energy independence and cheaper bills for the UK in the long term?
37:23 Speaker 07 So I think the short answer is, is, is yes, I think we will see that. Now, you know, you, this is going to take a long time. So we've looked at how you get to 2030. We think the costs of the system are roughly the same as the cost today. But I mean, we have always been genuinely surprised by how quickly costs have come down in renewables. And when I look at batteries, there are new technologies now, which means batteries are becoming much more cheap to produce. And if you look at electric vehicles, the range of an electric vehicle is getting higher and higher. So over time, I think without a doubt, we're going to see electric vehicle market. Take over the petrol market, not because government wants it, but because people are going to move to a cheaper way to move around the country. And I expect that of a lot of renewables. It'll take time though.
38:03 Martin Lewis? So this is something I'm starting to lobby on, and it's good for me to say that publicly. I have a concern about time of use tariffs. I've spoken to the Secretary of State about this. So time of use tariffs, which I think we're going to see more and more of, that's where the amount that you pay changes every 30 minutes. They are potentially a very good thing, because if you make it very cheap at night, people will shift their energy use tonight. And the nirvana is your smart meter will do it automatically. You'll tell it when it's below this price, turn me washing machine on. You know, that's how it will work. And when we do that, because we won't need such high levels to cope with peak demand, everybody's prices should drop. So that's the sort of the nirvana in a decade's time type thing.
38:43 Speaker 07 Absolutely.
38:43 Martin Lewis? This is my problem with it, that I don't think is being considered enough. And it's almost a problem for me. People are going to ask me in the future, what's the best time of use tariff? The prices are changing every 30 minutes. You cannot rely on the past price to be an indicator of the future price. So while we will gain from it societal wise, in terms of consumer transparency, it is very dangerous. I have ideas on what we need to do. But what are your thoughts? How in the future, when we have 30 minute rapidly changing time of use tariffs, is a consumer meant to know which the best one for them is?
39:18 Speaker 07 So I think this is an area we're going to need to work on together, actually, because it is complex and you can't perfectly predict the future, a bit like you can't perfectly predict what's going to happen to the price cap in a year's time. I think what we've got, though, is the opportunity of now more than ever, rich data and algorithms that will allow us to be able to make calculations, to be able to compare those two things. But I think it's a new area. We're going to have to find a way to see how customers are going to evolve. And we're going to have to do that with you on our own.
39:45 Martin Lewis? I just deliberately threw the ball in the air, hoping you would hit it that way, so I could catch it and reply with this. My view is you will need to mandate companies to publish their pricing algorithms. If the pricing algorithm was published, even if it was one that consumers can't understand, but it's one that someone like me with a team of data analysts that we can therefore plug them all into a machine and plug everyone's algorithm into a machine and then say, what's your usage? Okay, if looking at your usage, this one would be cheapest for you. But it's that transparency that I'm concerned about. There has to be, they obviously have a pricing algorithm and they're going to need to open that up. Otherwise, we're just going to be, you're just going to be plucking, you know, a nose hair out of the nose to find out which is cheapest.
40:26 Speaker 07 And on that, however we do it, that transparency is going to be vital.
40:31 Martin Lewis? Okay, let's move on to the subject of smart meters now.
40:36 Speaker 06 On smart meters, Alex asked something which I would also ask, is why on earth were the, was the supplier banging our doors down, giving us no piece to put a smart meter in? When even the fellow that fitted it saying, oh, it won't work here because you haven't got the right phone signal. So to, well, actually through Martin, I know why, because the firms were incentivized to say, you've got to fit a certain number of smart meters. And I think that, did that come from you? Did that come from off?
41:03 Speaker 07 Comes from the government, but I think.
41:04 Speaker 06 But they, no one said they had to be working. It's mad.
41:07 Speaker 07 So look, first of all, just stepping back from this, we think smart meters are a really good thing for customers. There's two reasons for that. One is that they automatically send your usage, so you're not having to report your own usage, or someone's not having to come around your house to check what you're using. Secondly, it does help people understand how their energy patterns are across the house, and it should help you try and make savings, and we've seen that. But there are problems with the network, et cetera. And more importantly, there are smart meters that are going back into the old mode, and we don't think the numbers that we're seeing in the market.
41:40 Martin Lewis? The radio transmitters are being switched off, aren't they, next June, I think it is?
41:43 Speaker 07 There is, and there's a particular issue with the radio transmitter.
41:46 Martin Lewis? 450,000 people are going to, basically their smart meters will go dumb. But, so we go back to Adrian's point, you're right. People are forced to have, you know, companies are fitting meters that they know won't work. I have written to the Secretary of State for Energy saying you need to change the targets to working meters rather than install meters. I would say I'm I'm warm to hopeful on that one over the next year. John probably doesn't know, but I'm warm to hopeful. That's all I can say. I don't know. It will happen. Would you think that's likely to change?
42:12 Speaker 07 Well, I think we've I think we've got to continue to to put smart meters into people's homes. And I think
42:17 Martin Lewis? They need to work. They need, I mean, not just put them in, put working ones in.
42:22 Speaker 07 But let me say this, I agree with you. And also, there's a job for the industry to do it to make sure that where they can, they're fixing them. So all of that needs to happen.
42:30 Martin Lewis? So people often ask me this question. I know the answer, but I'm going to ask you because I think it's important. Can you be forced to have a smart meter? Can they force you to have a smart meter for a specific tariff? Can they force you to have a smart meter overall?
42:42 Speaker 07 So companies can say if you have a tariff, then that needs to be on a smart meter. And some companies do, but no one can force you to put one on your home if you don't want to.
42:48 Martin Lewis? Unless your old smart old meter comes out of date, can they then do it if you have a past used by date on your old smart meter?
42:54 Speaker 07 So I think you're still mandated. Sorry, you can still make the choice, but I think you're encouraged at that point to get a smart meter.
43:00 Martin Lewis? My point on those people who don't want a smart meter, and again, I think this is a vicious circle here, until we get the smart meter rules right.
43:06 Speaker 06 And Tina was saying, why do we get charged a higher rate if we don't have a smart meter?
43:10 Martin Lewis? Okay, I don't think that's as true as people think it is. So many of the competitive fixed tariffs, and this is what I study, that we've had over the last six months, normally about 80% of them don't require you to have a smart meter. So actually, do a comparison and go for the best deal that doesn't require you to have a smart meter if you don't want one. As an aside, because someone I saw this question, I haven't got it in my list in front of me. Someone said to me, we can't have a smart meter fitted. This is unfair because I can't get the tariffs. If you have been told it is not practicable, let's say practical, it's a simpler word, but practicable is the right word. It's not practicable to have a smart meter, then you should be able to access a smart meter tariff without a smart meter. Because if you can't have one fitted, you shouldn't be disenfranchised for that reason. That's correct. Yeah.
43:57 Martin Lewis? Why don't you tell us what the price cap's going to be when all these other energy firms are predicting it? Why don't you come out and say, you've got the algorithm, you know where it is. This is what we predict for the price cap every six weeks.
44:08 Speaker 07 And we've talked about this and we are definitely open to being transparent about it. I mean, to be blunt though, those companies use the same model we use and so they're not far wrong. The reason why we're a bit hesitant.
44:19 Martin Lewis? You've heard that here. When I do those predictions, those predictions are pretty on the ball.
44:23 Speaker 07 Yes, and there's plenty of firms.
44:25 Martin Lewis? Because they're coming from those firms.
44:26 Speaker 07 Who supply those. Now, the problem with them is those, if you look at the price cap example for April, you mentioned that in your opening, that number, by the time we get there, could be very, very different from the number that we gave out today.
44:36 Martin Lewis? Because we're two weeks of 12 weeks through that process, or maybe three weeks of 12. But the further along we go, the more right it gets. Once you get to halfway through, for it to be very wrong, prices would have to shift, you know, you'd need a new war somewhere or something.
44:50 Speaker 07 You would, and I think we're open to doing that ourselves. All we don't want to do is mislead people. We don't want the regulator saying it's going to be this price and then people find us.
44:57 Martin Lewis? But the problem with you not doing it, and the reason is, energy firms, we've had this before, we know the price cap, people like me know the price cap's going to drop 10%. So an energy firm offers a fix that's 2% cheaper than the current price, saying, you're going to save money by switching to this, but we know the price is going to drop in three weeks' time and their savings figures are based on the wrong information. And that is a problem.
45:18 Speaker 07 Yeah, and we're very open to thinking about how we might help with that because I think that would help people calibrate what they're doing. We also just want to think in the future about what's the right structure for the price cap. So are there ways in which we can change it to make it more consumer friendly?
45:32 Martin Lewis? Shall we do a bit of Mastermind? We'll get Jonathan to play as well.
45:34 Speaker 06 Go on then.
45:38 Speaker 06 Just roll with it, Jonathan.
45:39 Martin Lewis? I'll do my best.
45:41 Speaker 07 All right, good. Well, we'll have two of us in the room for this.
45:43 Martin Lewis? For the rules of the contest, Adrian has to answer first so that he can't get any clues and then Jonathan can answer on the back. Right, so Mastermind, the current score, Adrian has got three right, because he got one right last week, and seven wrong. Still slightly worse than statistical random chance, but getting closer to it, mate. So Adrian, I've bought you a Christmas present.
46:04 Speaker 06 Right.
46:05 Martin Lewis? I haven't, it's just a setup for Mastermind.
46:06 Speaker 06 Okay.
46:07 Martin Lewis? I've put a lot of thought into it.
46:09 Speaker 06 As long as it wasn't a jelly cat.
46:10 Martin Lewis? No, it's not. Went round countless places to try and get it just right. I didn't.
46:14 Speaker 06 Yeah.
46:15 Martin Lewis? And finally, even though it was more than I wanted to spend, I've bought it you. I haven't. I've got you a personalised jigsaw puzzle of your own face. I thought whenever you needed to pull yourself together, you could do it both physically and metaphysically at the same time.
46:30 Speaker 06 Oh.
46:31 Martin Lewis? Now, when I gave you the jigsaw in person and you got it home, having opened it, unfortunately, you found out that it was faulty. There was an eyeball that actually belonged to Naga Monchetti.
46:44 Speaker 06 Right.
46:44 Martin Lewis? In the middle of it. I don't know why, but it probably involves some form of five live communication mix-up, which is very rare.
46:51 Speaker 06 Mm-hmm.
46:51 Martin Lewis? It's very rare. So here you go. It was faulty. The receipt was in there just in case, so you speedily take it back to the store to try and get a refund. What are your statutory, legal rights? Your legal rights? A, you're due to a full refund as it's faulty and you returned it within 30 days. B, you're entitled to simply a replacement of the missing piece. Or C, you're not entitled to anything. Talk us through it.
47:17 Speaker 06 I think you've got to be, you've got to be entitled to something. So I'm ruling C out, so it's between A and B. You've set the bar high in the question. Statu-, you've used words like statutory and legal.
47:28 Martin Lewis? Because it's not about the shop's policy. This is about-
47:30 Speaker 06 No, no, I under-
47:31 Martin Lewis? Your enforceable rights under the law.
47:33 Speaker 06 I understand that. I don't think they have to give me, even though it's plainly faulty, I don't think they have to... What did you, what was the first one? Refund?
47:45 Martin Lewis? Full refund as you return within 30 days.
47:47 Speaker 06 No, I think it's B. I think if they offer just to replace the missing piece, though in practice it probably wouldn't be worth the bother, so they'd probably do A. I think I'm probably only legally entitled to B.
48:01 Martin Lewis? Right, let's go for the head of a regulator now, but not the consumer, not the consumer rights regulator.
48:06 Speaker 07 Without my phone to Google it, I'm going for A.
48:09 Martin Lewis? You're going for A, full refund. So, I deliberately did a personalised item because there is a rule about personalised items. If it had been bought online and you changed your mind because it's a personalised item, you couldn't refund it under the normal rules that you can refund online. But this was bought, this doesn't matter because this is faulty. So we're under the Consumer Rights Act faulty regulations. Now, if you buy something faulty and you return it within 30 days, you are entitled to a full refund, as Jonathan said. But who bought it?
48:43 Speaker 06 You bought it.
48:45 Martin Lewis? Who didn't buy it?
48:46 Speaker 06 I didn't buy it.
48:48 Martin Lewis? So you didn't buy it. It was a gift. I have a legal right to return the faulty item. I can transfer my right to you via a gift receipt or via noting at the point of purchase on the receipt that they are keeping in their till that this is a gift for you. I didn't do that, you had a standard receipt, therefore you have no right to return the item even though it was faulty.
49:19 Speaker 06 Unbelievable.
49:20 Martin Lewis? And therefore, can we have a nuh-uh? And therefore that is not the correct answer.
49:25 Speaker 06 Well, the law is an ass. The law does.
49:28 Martin Lewis? No, I'm an ass because I should have got you a gift receipt. But my point in saying that is be very careful at the moment. First of all, faulty items, you have to take them back within 30 days if you buy them. So if you're buying someone a gift and you bought it two weeks ago and you're not giving it their Christmas present till New Year and they open it and it's faulty, you may well lose that right. Most shops won't enforce it, but you may well lose that right. And secondly, if you are buying someone a gift, try, and it's an expensive one, try and get a gift receipt because then it's them who has the consumer right to be able to return it under the law rather than them having to give it back to you if there were a case of a dispute. So there was, there was a purpose. As always, Mastermind has a, has an educative lesson in it, not just to say, Adrian, you've got three right and eight wrong. Although that's also a point, I do enjoy that as well.
50:12 Speaker 06 See, this Jonathan is the best in public service broadcasting. Where for the purposes of getting the message across, I'm just the foregone.
50:18 Martin Lewis? And we applaud you both for it.
50:25 Martin Lewis? Right, so that's the official energy bit done. We're in the actors for the podcast only now and we have loads more pocket money tellers that I want to do with you. So joining me is PPS podcast producer, Simon. You've got some, I've got some. Simon, you go first. Yeah, yeah, always delighted to be back. Harmsy has got in touch saying, paid weekly, £50 for every year old. So 10 year old gets £5, 14 year old gets £7. It teaches them the value of money and they understand things have to be saved up for. They also appreciate anything extra they get. I quite like your method because one of the problems you have when you have children of different ages who therefore have different needs and different spendings and different amount of going out is parents will often say, well, you get this much and you get
51:08 Martin Lewis? that much. And there's no rhyme or reason. Your method, while it is arbitrary, isn't discriminatory. You have a formula, you've got an algorithm. And I quite like that because it gives a level of consistency. Be interesting to know if you up it with inflation in future years. So you get a thumbs up from me for that method. Let me do Nicola. My only rules were if I ever found out they'd bought cigarettes out of their pocket money, then they would never have pocket money off me again. You may think it's harsh, but when you've seen the effects smoking has on your loved one's health, you'd understand. Thankfully, my children and their partners don't smoke. Well, there you go. I mean, let's be honest, the government uses tax and spending incentives to have behavioural change. It's called behavioural economics. Now, it's one of the reasons the
51:52 Martin Lewis? marriage tax allowance exists. It is an encouragement via the tax system for people to get married or civil partnerships and for people not to be cohabiting. So you've done behavioural economics with pocket money on your own kids? It's a stance. You didn't think I was going to go there, did you?
52:08 Martin Lewis? Natalie says, my children get pocket money, they also have the option to get extra pocket money for extra jobs or tasks they undertake. Well, we talked in the programme, I'm a big believer in tasks for pocket money. I think that works well. Let's do Heather. I don't give pocket money as such, single parent household and sometimes money is a little tight. But if they ever ask for money or want to do something or go somewhere, I always give it to them or buy it for them. They help around the house, alternate washing up in the evening, feed the dog and take recycling out. I pay for their phones and my son's gym membership too. Good kids mostly and don't want for anything, never ask for more to be honest. Look, I think everybody has their own way and what works for them. I like the pocket money as a reward as it gives them discretionary spending, but clearly
52:50 Martin Lewis? money is tight sometimes for you and if you need to not give them a legitimate expectation of pocket money, then that stops you having to tell them one week, sorry, we can't do it. I'm also a great believer, by the way, in if people do have finances that are struggling and you start to have tweens and teens who are capable of understanding that, a gentle conversation that's not scary for them about the fact that money is limited often can help change their attitude, make them supportive and make them understand. So I'm, you know, I'm a great supporter of being open with children about money, once they're old enough, that is. Let's do a couple more.
53:22 Speaker 03 One guy who wasn't on the, on the pocket money bandwagon, JP. When I was a child, I got nothing and plenty of it.
53:28 Martin Lewis? Yeah, fair enough. Karen, our daughter is 15, she gets a basic allowance of £7 a week, then she gets £1.50 for each positive point she gets in the school app. It's usually around the £23 to £25 she gets, but obviously the better she does in school, the more she can earn. Well, that's interesting because you're effectively subcontracting out your pocket money decisions to the school. The school gets to decide how much pocket money there is. But again, we talked about pocket money as pay before, as starting to teach children that you have to work for it. And if that's what you want to prioritise incentivising them, and absolutely a good education is important, I totally get why you're doing it. You're just very lucky you've got an app that scores them.
54:07 Speaker 03 But you're implying that the sort of the school could be compromised?
54:10 Martin Lewis? No, I'm not. I'm not applying that. I'm just applying it subcontractors can be very good, they're not always necessarily compromised at all. So I, but it is, it's a system where you're saying, I mean, what you don't want is sometimes she does something incredible and school says, here, have 10,000 points, then you'll be in trouble.
54:26 Speaker 03 Brad has got in touch saying he's got two girls, one and three, he's put In one pound a day into bank accounts for both, so 31 quid for January, 28 for February, et cetera. By the time they're 18, it'll be 6,570 pounds.
54:39 Martin Lewis? Yeah, good.
54:40 Speaker 03 You'd be excited about a leap year, wouldn't you, in his house?
54:41 Martin Lewis? Yeah, it all compounds up. Yeah, pound a day is very good. It's a bit similar. Another thing that you could do for your kids is the one penny saving challenge. So put a penny in on the first day of the year, two pence in on the second, three p on the third. You'll find it soon adds up by the end of the year. And the last one is someone has written in to say, my child is 11. She doesn't get pocket money as an amount given to her, but whatever she wants, usually money on Roblox, she gets. Okay, how do I feel about that? Totally understand why you do it and it's much easier. But whatever she wants, she gets. I'm not sure is the best message. Now, when I first had my daughter, I remember being interviewed on Radio 2 by Jeremy Vine about it. And I said, I'm going to give her everything that she needs, but
55:25 Martin Lewis? not necessarily everything that she wants. What I hadn't worked out at that point is her superpower of looking at me with those big daddy eyes, her eyes, not mine, looking at me, but she does it. And then I'm very thankful that my wife is far more disciplined than I am. But I do think we have to be careful about giving them everything that they want. An understanding that money is a scarce resource is an important lesson for life. I'm not criticizing your parenting at all. I'm just saying, as she gets older, you might want to think about starting to bring in some concepts that show it's limited funding and working for pay and all of those things are useful. And I think that is a good place for us to finish.
56:04 Martin Lewis? Okay, you lucky, lucky podcast listeners. It's that point in the show where I give you some tips that are just for you. I should cocoa. And a couple of important ones for you this week. The first is an update on car finance commission disclosure complaints. Back in October, the Court of Appeal ruled on all car finance commissions and that ruling caused shockwaves. It caused share prices to drop. It caused consternation at the regulator. It surprised me and other commentators on this issue. Its ruling effectively said, if you were not told all the facts when you signed up for a car finance deal, including the amount of commission, which very few people were, then they're unlawful. Now that's a huge precedent-setting decision.
56:47 Martin Lewis? And that actually means that is the law right now. Now, on the back of that, the regulator is putting a pause on all car finance complaints that go through it. It's just putting a hold and saying, we're going to wait. You can make the complaint, but firms don't have to decide. Because of what's going to happen next that we've just learnt. This was expected, but it's now been confirmed. The Supreme Court has said it will hear an appeal on that. And it hopes to do it in early 2025. So, spring 2025 is what I would assume by that. So that means there will be clarity once the Supreme Court rules on what that decision is and on who is entitled to compensation. As I say, you can make a complaint on that at the moment. And you can also make a complaint on the other car finance misselling,
57:31 Martin Lewis? which is discretionary commission arrangements. I've done programmes on that in the past. You can listen to the past podcasts. Although I will, I'm certain, be doing a podcast on this in the new year to explain it in detail. But for those people who are in the know and understand it, the Supreme Court is going to accept an appeal. So it will hear, it will re-decide the case. And it is perfectly possible it will disagree with the Court of Appeal. And it's perfectly possible it will agree. The Supreme Court is quite independent of the Court of Appeal when it comes to those type of decisions. And my second tip is for anyone who travelled with South West trains from London in 2015 to 2017, not to London, from London. The firm has agreed to pay out £25 million after an out-of-court settlement. So this is primarily for people, well, in fact,
58:16 Martin Lewis? this is only for people who had a TFL travel card. This is what was going on. Effectively, if you were travelling out of London, but you had a Zone 1 to 4 travel card, you didn't need to pay for the Zone 1 to 4 bit of your journey. But it didn't make clear enough, that was what was alleged in the court case anyway, although it has accepted no responsibility. It's an out-of-court settlement. It didn't make clear enough, is what they say, the fact that you could have therefore had a cheaper ticket. So it is giving out this up to £25 million of compensation. It could be worth to you between £30 and £100, depending on how much proof you have. And you can submit your claim really easily via this website, boundaryfares.com/claim. Though you've got to do it by the 10th of January.
58:59 Martin Lewis? That's boundaryfares, B-O-U-N-D-A-R-Y-F-A-R-E-S dot C-O-M forward slash C-L-A-I-M by the 10th of January.
59:14 Martin Lewis? And now, as they say, for something completely different. Earlier in the morning, I was on Radio 5 talking about static charges and energy bills. But they'd been talking about Scrabble. And as the presenter, Jeanette Quachy, is someone I know well because she's the co-presenter of my ITV show, she knows that I'm a bit of a Scrabble nerd myself. In fact, quite a lot of a Scrabble nerd. So to finish, let's mix things up a bit. In fact, let's swap a few letters around in your rack and talk Scrabble. Martin, before you go, we've been talking about board games this morning and I know you are a massive board games fan. In fact, you've got a show coming out next week, haven't you? All about board games. Let me think about it. ITV next, I might as well say ITV 8pm next Tuesday. It's called Martin Lewis, How to Win at Board Games.
59:58 Martin Lewis? You should have been on a bit earlier because we were speaking about how to win at Connect Four, how to win at Scrabble. But when it comes down to Scrabble, you are the guy. You even proposed to your wife using Scrabble. Am I right in saying that? I did. I proposed to Laura on the Scrabble board. Two seven-letter words, will you and marry me? I conjoin those words, you can't normally do that. Yeah, I have a, you'll know Jeanette, I have a Scrabble graph of 1200 games I've played against my wife. My Scrabble average is 409. For this show though, it was fascinating because I went and played to Scrabble world champion. I won't tell you exactly what happened. I am a good home player. Right, you know, an average of over 400 is a very good Scrabble score. I get my bingos, I know all my two-letter words, I know a lot of my three-letter power tile words, you know, I'm a proper Scrabble. And Scrabble, of course, Scrabble, of course, is a, people think it's a word game, it's
1:00:43 Martin Lewis? not, it's a numbers game. It is about which acceptable letter strings you can put in the place that earns you the highest score. And if you're maintaining letters in your rack, puts you in a position to earn a higher score in the next game. It's not what's the longest word I can make. If you play what's the longest word I make, you will be thrashed by a proper Scrabble player who is numerate because it's about which letters you put in the right place on the board that's within the allowable letter string.
1:01:09 Speaker 02 Well, Martin, sorry to interrupt, but we've got on the line...
1:01:12 Speaker 03 The man who you played on that show.
1:01:14 Martin Lewis? Oh no.
1:01:15 Speaker 03 Brett Smith-herem.
1:01:18 Speaker 03 Brett Smith-herem, former World Scrabble Champion and current UK number one is with us. Brett, you played Martin. What was he experienced?
1:01:25 Speaker 02 Talk to us Brett.
1:01:26 Speaker 03 Yeah, what was he like?
1:01:27 Speaker 02 Don't give it away, but just let us know.
1:01:29 Speaker 00 This isn't it. Hello.
1:01:33 Speaker 00 No, I have to say that playing Martin was a delight and it's very rare that I play someone so knowledgeable. Because often, well, often what happens is, you know, journalists, they're people of words. So they assume that Scrabble is just a word game. So they assume they're going to have a chance. But without blowing my temper too much, I say, you know, well, you might be able to run, but you're not going to rock up and try and beat Mo Farah in a marathon, are you? But it was really, really good. It was really good. And actually, I think we ended up getting about two hours worth of.
1:02:03 Speaker 02 Wow.
1:02:04 Speaker 00 Really delightful. So I'm really looking forward to the show on Tuesday to see, you know, what's been kept in.
1:02:10 Speaker 02 Amazing.
1:02:10 Speaker 00 It was such a pleasure.
1:02:11 Speaker 02 Oh Brett.
1:02:12 Martin Lewis? You'll like it, I think. I had so much fun, so much fun playing you. I mean, look, without giving too much away, I think it's fair to say I have a pretty decent word knowledge. I know my two letters. I know some of my three letter power tiles. Brett, how many words do you know?
1:02:29 Speaker 00 So between two and nine. So I know them all pretty much. It's 163,000.
1:02:33 Speaker 02 Okay.
1:02:34 Speaker 03 Good maths, Martin.
1:02:35 Speaker 02 Okay, there's the maths. Martin.
1:02:36 Martin Lewis? There's an arsenal there that I didn't have.
1:02:38 Speaker 02 Okay. Martin, thank you. We'll say goodbye to you. We'll speak to you at one o'clock. You'll be Adrian Charles and of course the CEO of Off Gym. That's Martin Lewis, their money saving expert. And on to Brett. I mean, the coincidence was canny, but we do well on radio, don't we? To make sure that we get all joined up at the, joined up at the dots.
1:02:58 Speaker 03 No Brett, the reason we're talking to you, we've got lots of texts in, people talking about Scrabble days, but because the Spanish World Scrabble Champion was won by a man called Nigel who can't speak Spanish. So does that mean that Scrabble is a good game or a bad game? Does that make sense?
1:03:12 Speaker 00 It's, yeah, it's really interesting. I mean, I know Nigel pretty well. He's a lovely guy. But my argument is always, okay, well, everyone goes, oh, you should know the meaning, you should know. But I say, well, if you can't afford to buy a house on Park Lane, that doesn't mean you can't play Monopoly. You know, it's, you're there and you have the equipment to play it and that's the game. So all nine. Nigel has done, I say all, it's an amazing feat.
1:03:34 Speaker 07 Yeah.
1:03:35 Speaker 00 Is is learn a list of of weapons, of tools to play the game. And and he approached it, I mean, he's quite unique. And he approaches language like a like an engineer would. So he looks at how many base words are there in the language? So, you know, like, like verbs and and adjectives and things like that. And then he learns all the inflections. So he kind of makes it as efficient as possible to learn. But I mean, it's still incredible.
1:04:01 Speaker 07 Yeah, no, it's it's an achievement. But Brett, is playing Scrabble against someone like Nigel, someone like you at Christmas fun? Do you make it fun? Or do you just, you know, are you just such in a different league to everybody else? Or, you know, is it like, I don't know, Messi coming to play five aside with with your mates on a Wednesday, playing Scrabble against you?
1:04:20 Speaker 00 It all depends what people's idea of fun is. Like, I have had people go, oh, I'd love to play you. And then three, three moves later, they they wish they hadn't. And they start asking if we've got the rummey cubs tucked away anywhere. But the, yeah, I mean, it's it's not, it's not brilliant if you want to have, if you want to win. But if you want to learn, if you, you know, you want to absorb, then absolutely it is. I mean, personally, I always used to enjoy playing the very, very top players when I was learning to play.
1:04:44 Speaker 07 Yeah.
1:04:45 Speaker 00 But I don't play at home. I, you know.
1:04:47 Speaker 07 It's all business with you, Brett. You're playing to win and that's it. Brett, thank you very much for being with us. That was Brett Smith, I'm there, former world Scrabble champion.
1:04:57 Martin Lewis? That's it. I hope you enjoyed it. I hope you enjoyed the change of format, interviewing a big name from the world of money, especially a regulator, to see what's really going on. If you did, please tell your friends they may like to listen to it too. And make sure they know they're listening to the Martin Lewis podcast. They can subscribe and keep updated because we tend to do a new show every Thursday. So, yeah, press that button. Your pockets may be pleased with you. If you didn't enjoy it, just tell them you were listening to the Scrabble podcast. I accidentally swallowed a bunch of Scrabble tiles earlier. My next trip to the loo could spell disaster.
1:05:46 Speaker 02 Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected] . The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.
1:06:20 Speaker 04 BBC Sounds, music, radio, podcasts.
1:06:26 Speaker 02 This week on The Interface, why Meta's banking on you watching movie-length videos on Instagram. Would you do it?
1:06:33 Speaker 03 Ninety minutes, just how Christopher Nolan intended. Plus, some troubling signs that the AI bubble may be bursting. And we'll be talking about some of the consequences, like the fact that tech companies might start selling your deepest, darkest secrets if they go bankrupt.
1:06:48 Speaker 02 Join me, Jess Maddox.
1:06:50 Speaker 03 And me, Thomas Germain, for The Interface.
1:06:52 Speaker 02 Listen wherever you get your podcasts, or find us on YouTube.
Previous Top Children's Savings | Urgent free cash bank switching | Best ever blags Next A Tell-Us your to need knows special: Inheritance tax, Pension savings, debt pecking order, life insurance, compound interest. Page updated November 5, 2026 · transcript and summary are machine-generated