The UK government was accused of sending incorrect advice to millions of energy customers this week, which could cost those who act on it hundreds of pounds.
Letters sent out by the Department for Work and Pensions to people who might be eligible for winter fuel payments were in envelopes that carried a message saying that switching energy tariffs could save them “an extra £290”.
However, the figures were based on deals available last year, and the recent collapse of smaller firms, and the rise in wholesale energy costs, means that most households are better off if they do not switch.
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The MoneySavingExpert website, which highlighted the mistake, says the wording was “financially damaging” and that many of those receiving the letters were vulnerable customers.
Martin Lewis, the founder of MoneySavingExpert.com, says: “We are in an extreme crisis. The logic of how to manage bills has been turned on its head. There has never been a time when clarity of message and action is more important. That’s why the government, mailing out an incorrect message to millions, including many of the nation’s most vulnerable, is too big a risk to take.”
Lewis says the right thing for most people now is to do nothing because the regulator’s price cap means that variable tariffs are cheaper than the fixed-rate deals on the market.
“The price cap forces energy firms to sell energy at below its cost price – there is no meaningful cheaper option,” he says.
A spokesperson for the DWP sasy: “We are committed to supporting low-income and vulnerable households to keep warm during the colder months.
“We have encouraged people to switch energy tariffs for a number of years to help them save money.
“The message on these envelopes was simply a suggestion and no further [envelopes] will be issued.”
The energy crisis means that the cost of a deal offering a fixed price for your gas and electricity is likely to be much more than the charges you will face on a tariff that is subject to Ofgem’s price cap.
While the price cap means that the average dual-fuel user will pay £1,277 a year on direct debit, MoneySavingExpert says switchers could face paying up to 30% more. The cheap deals that existed a year ago have all been pulled because wholesale gas prices have risen so much in recent months.
The price cap is expected to rise in April, and analysts have suggested it could go up to an average of £1,660 a year.
Last week, the charity Electrical Safety First said it was concerned that rising energy prices were driving more people to use portable electric heaters and that this could lead to an increased fire risk in people’s homes.
Although not inherently dangerous to use, the charity said the heaters were often used by people to dry clothes, or left on at night.
Lesley Rudd, the chief executive of Electrical Safety First, said: “If you are buying a portable heater this year, make sure you buy from a retailer that you know and trust and always follow the manufacturer’s instructions.”