Ofgem announced last month that a 54 per cent rise in energy bills will come into effect from the start of April for millions of households across the UK, which will result in an annual increase of £693 to £1,791 for the average user while homes on prepayment meters will see costs go up by £708 to £2,017.
In an effort to help energy customers combat the upcoming hike in gas and electricity costs, Chancellor Rishi Sunak announced a series of financial support measures along with £290 million of funding for the Scottish Government.
The measures include a £200 bill credit 'loan' for all domestic electricity customers - some 28 million - including those using a prepayment meter in Scotland, England and Wales, which will automatically be added to their bills in October. They will then repay £40 per year from April 2023 for the next five years.
Many people voiced concern over the £200 ‘loan’ on social media following the announcement and reached out to consumer champion, Martin Lewis, for advice on how to reject the money.
The founder of MoneySavingExpert.com shared a video explaining to people how the £200 loan is “not optional” and “is going to happen automatically on every single bill”.
And a few days later, the consumer champion called on the Chancellor Rishi Sunak to "urgently rethink his energy bills £200 discount and clawback scheme”.
Research commissioned by his MoneySavingExpert showed that a majority of adults in the UK would opt out if they have the choice.
He said: "I would ask the Chancellor to urgently rethink his energy bills £200 discount and clawback scheme.
“Bills are already sky-high, and on 1 April we now know most will rise by a previously unthinkable, and for many unaffordable, 54%. And sadly, when that ends in October, it currently looks possible the price cap will rise by another 20%. That will leave most people paying double what they were a year ago.”
He continued: “With this scheme, the Chancellor is effectively taking a worrying gamble with people’s finances. He is following the market’s view that rates will finally start falling later this year, meaning the price cap will fall in April 2023. Therefore, he hopes the impact of this scheme will mean lower bills now and in the future as the extra costs then will be covered by the drop in bills.
“That is far from certain, especially with the escalating conflict between Russia and Ukraine. And crucially, if rates don’t drop - or don’t drop a lot - people will be left in a lose-lose situation, with far higher bills than now and an additional levy on top.”
But Martin Lewis isn’t the only champion campaigning for change as a new petition asking for consumers to be given the right to refuse the £200 energy rebate has nearly reached the 10,000 signature threshold which will trigger an official response from the UK Government.
Created by Sharron Espin: “ Allow consumers the right to refuse the £200 energy rebate ” has gathered more than 7,000 signatures of support on the petition-parliament website.
The petition reads: “Stop forcing people to accept a loan for energy without the right of refusal. This will put more strain on many financially and mentally.
“Make it fair for people and research a better payment plan that doesn't discriminate against children leaving home and relationship breakdown.”
It continues: “They [energy firms] will make a lot of money by charging £40 per annum to every consumer even if that consumer didn't have this £200 loan, eg- child at home goes to uni and now owes £200 they didn't borrow as they were not the billed consumer at the time the loan was issued, ditto to relationship breakdown, both parties will be paying the whole amount even though they live apart ergo £200 borrowed £400 repaid.”
The petition can be found here and is due to close in August.
To keep up to date with developments with this petition, join our Money Saving Scotland Facebook group here, follow Record Money on Twitter here, or subscribe to our twice weekly newsletter here.
