Why the Price Cap rise is voluntary! £87bn of lost pensions & accounts. Reclaim student loans

18:53Martin Lewis:You know what? Let's be really accurate. Unlucky next time you get closer. No, no. I think you'll find that 13.4 % rounds down to 13 % and I was just doing it to the nearest percent. I'm still scoring that up as an absolute win. So it's probably worth explaining to people how I knew. It's because I'm really, really clever. No, it's not. It's because, well, first of all, I rely on analyst predictions. But it's actually important to understand how we know what's going to happen in the price cap, because it's important for where we go in future. Energy prices under the price cap, which, of course, only applies to those default standard tariffs people are on in England, Scotland and Wales, the do nothing tariff, the I haven't switched tariff, the my fix ended and I didn't do anything again.

19:35Martin Lewis:The energy price cap is set based on a mix of policy costs, which is about 60 % of it, policy costs, admin costs, profit for the companies, etc. And 40 % of it is the underlying wholesale rates, the sort of world markets in gas and electricity. But that 40 % is the main delta, the main changeable factor in the energy price cap. So it's by monitoring what's happening to those wholesale prices that you can predict the price cap. What's important to understand is the price cap works on a time lag. So the July price cap, the wholesale rates that matter are mid-February to mid-May. So it's actually looking two to five months back and is working on a big time delay.

20:25Martin Lewis:So when we did that show, which was two weeks ago, the assessment period had closed the day before. So we had all the data of wholesale rates in the three-month assessment period. So once you plug that into the algorithm, that is a published algorithm by the regulator Ofgem to set the price cap, the only variables left are are there going to be any policy changes. And we do see, though, there was a£10 policy change in there, £10 a year added on annual bills within that. But that's relatively trivial this time round. The previous price cap, the April, the main change came from taking policy costs off bills, £150 policy costs off bills.

21:03Martin Lewis:So this time, as there'd been no pre-announced policy changes, and it's sort of those of us who talk to Offgem relatively frequently, you know when something big is going to come. You could assume that the main change was going to come from the wholesale rate change. We already knew that. So 13 % was a pretty safe prediction. I mean, and the reason I said it could be 12, it could be 14 is because of potential policy changes. Yeah, of course. So this is also crucially why, if I go on, and I often do, it's also crucially why we're now looking at the October price cap. See, the truth about the July price cap is the July price cap lasts until the end of September.

21:43Martin Lewis:That's three months, but it's the lowest use period of the year. We only use about 15 % of our energy in that 25%. It's a quarter of a year, that 25 % of the year. So the actual impact of a 13 % rise on a typical bill, slightly nonsense, it's an average figure, let's call it an average bill, is about£12 to£15 a month. So about 45 quid over the three months. Not good, nobody wants it, but not catastrophic. The real issue is the October and the January price caps, the high use period. Now, it's important for people to understand. Remember I said that time lag? Yeah. That time lag means we are already in the assessment period for the October price cap.

22:30Martin Lewis:Now, which seems really weird because we haven't even got to the start of the July price cap. And we're already, I'm now talking about October. and we're getting on for two and a half weeks through the 13-week assessment period. And it works based on an average. So literally, if you think about it, every day matters. Even if prices dropped, I should make the big point, the last two and a half weeks, prices, the wholesale rates have been really high. They've been really high. And that doesn't go away. If prices drop now, you've still got, even if they dropped like a stone today, two and a half of the 13 week period has been high.

23:09Martin Lewis:The problem is we don't think they are going to drop, certainly not without any substantial change in the Middle East. So the current prediction for October, and it is somewhat crystal ball gazing, as you can understand hopefully by the time period I'm talking about, but the current prediction coming from the analysts for October is another two to three percent rise on top of the July rise. Right. And that's for everything, and I know what questions we've got coming through, for everything is really important to understand. We've got the current price cap rising 13.4 % in July, predicted to rise 2 % to 3 % in October.

23:46Martin Lewis:And I should note, even if the Middle East conflict ended today, because it will take time for gas to come through, it is almost inconceivable, unless there's some major worldwide issue that we haven't predicted, that the October price cap will be less than the current price cap. So even if it doesn't go up from the July price cap, it's inconceivable it'll be less than the current price cap. So it's going to be higher. And the likely predictions, it's going to go up. And then the January price cap, which is even more crystal ball gazing, is likely to stay the same. So prices, if you're on the price cap, the default tariff, you are going to likely pay substantially more than now until at least next March.

24:25Yeah. Well, let's stay with that sort of crystal ball gazing theme a little bit with Dave's question here. He says that the price cap always seems to rise, as you've been explaining there. Will there be a time where it will be reduced, asks Steve.

24:38Martin Lewis:So I think I just need to be really factual here. The price cap does not always rise. I know it feels like it does. In fact, I'm going to try and do an audio graph if I can, because I've just scrolled and I've got it in front of me. Let's go back to winter 2020, 2021, because the price cap currently changes every three months. It used to change every six months. The companies pushed the regulator to change it every three months. I opposed it. I think it was a mistake. You know, people want, if you've got a price cap, they want to see it locked in for longer. I still think it's a mistake. Now moves every three months.

25:11Martin Lewis:Let me just try and give you the numbers based on the typical use as now, not the new typical use figure coming in July, of what the price cap was. So we'll try and do the pattern. So this is for 2020-21, 990. Then it moved, 1 ,080. Then it moved, 1 ,220. So we're now in winter 21-22. Then it moved, and this was the start of Ukraine, 1 ,880. Now we're in the midst of Ukraine, 3 ,370. But this is when the energy price guarantee was put in that actually capped it, subsidised bills so people only pay 2 ,500. This is all on typical use, which is, of course, totally meaningless, but it gives you scale of magnitude.

25:56Martin Lewis:then it moved 4 ,060, then in spring 2023, 3 ,120, now it's moving every three months, then 1 ,980, 1 ,830, 1 ,930, 1 ,690, 1 ,570, that's the cheapest we've had it, which was in summer 2024, back up 1 ,720, 1 ,740, 1 ,850, back down in summer 2025, 1 ,720, then in autumn 1 ,760, 1.760. Then in April this year, down 1.640. And now for the summer, up 1.860. So it does go up and down. It does go up and down. The idea it only goes up isn't correct. And, you know, if you contrast where it is right now, 1.640, of course, it's going to be going up. With the highest at 4.060, it does move down. And I think the trajectory until the Middle East conflict was actually downwards.

26:49Martin Lewis:So the Middle East conflict has changed that. My hope is by next spring we will go back to where we were. I mean, it's not, I'm not great shakes. 1 ,600 quid, typical bill, even if we go back to where we were, is still very expensive when it used to be 990. I don't see us getting below the 1 ,500 pounds mark though. Yeah, okay. Not in the moment. Did that make sense? Did that graphic, could you hopefully follow it? Yeah, yeah, absolutely. It was a big so I didn't realise there was actually quite that much of a spike actually. Obviously you remember that it spiked around know that time of the Ukraine war and have you, but when you hear the numbers like that.

27:22Martin Lewis:It didn't actually spike. So that's the complexity. So I was giving you the price cap, but the price cap was capped by this energy price guarantee. So the basic rule was, if the price cap is above£2 ,500 on typical use, then we're going to keep the unit rates of what£2 ,500 on typical use would be and the states subsidise the difference. But had we not had that, the price would have gone up to£4 ,060. And we've got lots more of your energy questions to answer later on in the pod.

28:18a post office account that she opened. And when she died, my dad found that the account book was there and it was worth£17 ,000. Goodness me. £17 ,000.

28:30Martin Lewis:That's a lot of change. It's a lot of change. It's domestic nudge economics, that. Soft economics trying to get people to be in. I like this one from Basil. Basil. Once bought a coat in a car boot sale for£5 and I found£9 in the pocket. Instant profit. Look at that. What's not to like? That is win-win there, Basil. That is literally money creation. That's a magic money coat right there. And I'm assuming it was a nice coat as well, Basil, because you made the choice. We bought it, yeah. Yeah, in a car boot. And we've got Polly on the line from Yorville. Hi, Polly, you all right? Hi. Hi, Polly. Where did you find your stash of cash, Polly?

29:11Well, I was changing scented draw liners in my underwear drawer. and I lifted it up the old liners. I thought it's about time I changed them. And I found a white envelope and it was stuffed full of cash. And it had my handwriting on the front and my husband's handwriting. It had things like£40 petrol,£35 school trip. And I thought, where on earth does this come from? And we'd moved house over a year before and then we sat and thought about it. We'd sold some large bits of furniture that wasn't going to fit in the new house. sold a big sofa big four seater and a guy came and paid cash we put the cash in the envelope and forgot about it and we were just about to go on holiday so this is so has been known now with knicker draw cash so we spent we spent the knicker draw cash on my husband was playing a lot of golf when we were away and I got new headphones so I could listen to podcasts on the beach including the Martin Lewis Money podcast absolutely and now when we go away we say how much have we got for knicker draw cash People don't know what we're talking about, but it's now known, your holiday spend is now known as knicker draw cash.

30:22Martin Lewis:So I think there's a few things we need to interrogate here. I'm very tempted to go into the scented drawer things, right? Yeah. Do the scented drawer, I'm probably going a little bit too intimate here, but do the scented drawer things only go in the knicker drawer or do they go in all drawers? Oh, God, no, they only go in the knicker drawer. OK. A bit too much, wouldn't it, Paul? It'd be too much work otherwise. Well, it's a big old wooden tall boy. So, you know, they're not the smoothest of surfaces. So you put liners in there and they're often scented. And I thought, God, they've been in there for years and years.

30:53If I hadn't lifted it up, I might have sold that piece of furniture and lost my necker drawer cash as well. But I haven't.

31:01Martin Lewis:No, I mean, it's literally the smell of money, wasn't it? I mean, it's absolutely. But let's be plain here. Yeah. You're talking obviously quite a lot of money. How did you forget? Oh, well, I'll tell you how we forgot. This house move was when we moved into the Somerset Levels. And we moved in on the day that the levels were closed for flooding, back in the bad floods of 2013. We moved in on Christmas Eve and we were the last vehicle across the flooded land before they shut the gates at Mutchinley. You know where Prince Charles came and there was a white car underwater and it was all horrible flooding.

31:41So we moved house. We had a house and we had a business to reopen. We had a lot going on. So we were, you know, for us to forget something like that is perfectly forgivable. It was a very stressful time, but it was great and we enjoyed living there. We've actually just moved house again. And I checked all the drawers this time before we moved house. before we got rid of any furniture or anything, I checked all the drawers in case I've done it again.

32:06Martin Lewis:I know, and I just like it being, yes, your knickers were in drawers. It all seems to work, doesn't it? Absolutely, yeah. Knicker drawer cash is the way to go. Well, Polly, we now have hundreds of listeners, thousands of listeners across the country checking their knicker drawers instantly to make sure there's no spare cash down there. Polly, thank you very much for sharing your story with us and letting us hear all about your knicker drawer on national radio. And there are obviously so many jokes we could do relating to that. So listeners, if you come up with those jokes, please feel free to write them down and keep them to yourselves.

32:37Martin Lewis:Yes. We're rising above it here on five. Keeping the decorum high. Right, shall we return to some of those? I'm going to do one more. I just want to do Ash. Oh yeah, that's a good one. That's a good one. Found£300 walking up a farm track as a kid. Went to the post office to spend my riches on sweets. to find a distressed older lady crying about losing her pension money she had just drawn out. So I found it, but I lost it very quickly. Think I ended up with a fiver or a tenner as a finder's rewards. But you ended up being a good person, Ash. Yes, and you can sleep well at night. Well done, you.

33:12Yeah, good man, Ash. You might not have won in cash terms, but you definitely won in moral terms, didn't you?

33:17Martin Lewis:Exactly. Yeah, sleeping well at night.

33:22Lords more energy, Bill, questions, Martin. Should we go with Shane then? He's talking about the price cap rising again. What are the key factors people should consider before deciding whether to fix or stay on the standard variable tariff?

33:36Martin Lewis:The only key factor I would be considering right now is whether you can get off the price cap. So if you can, I would get off it. Let's just go very plain. Let's go back to what I said earlier. The energy price cap where it is now is going to rise 13.4 % on average in July. and just worth noting by the way when I'm talking about those averages that we're going into it's actually the gas unit rate the standing charge is saying about the same the gas unit rate is going up 28 percent the electricity unit rate is going up six percent so the more you use and the more you use gas the even bigger your rise will be 13 percent is an average of the two so anyway it's going up 13 percent in July it's predicted to go up further in October but it is almost unthinkable.

34:20Martin Lewis:It won't at least be higher than it is now, even if the Middle East conflict changes. And then much further out, it's going to stay pretty high in January based on current predictions. But that is a crystal ball. You can currently lock in. There are three companies offering fixes cheaper than the current price cap. So if you are on the price cap, and I need to be very plain, this only applies to people on the price cap. I also need to be plain. If you're not on a fix if you're not on a special deal, you are on the price cap. When I do this question, when I do talks, I ask people who's on the price cap, they don't know.

34:53Martin Lewis:The answer is, unless you know you're on a fix or a special deal, you are on the price cap, 60 % of you. So you can do a fix right now that locks in your rate for the next year at up to, depending exactly how you go and get it, up to 4 % cheaper than the current price cap. Now, that's not a huge saving, but once the price cap goes up 13%, then think of the difference. and it's going to stay that rate. So I need to be plain. The rise in July only applies to firms bog standard tariffs. Fixes are not price capped. They will not rise. So if you are on the price cap and you can get off it, get off it.

35:33Martin Lewis:Now, the reason I say if you are is people on prepayment meters and payment in receipt of bills, I'm afraid there are no cheap fixes you will be able to get to. The cheap fix is available. Some need smart meters, some don't need smart meters. Very important, don't just go to your own energy company's fix. There is a huge difference between the amount that energy companies are charging for the cheapest fixes at the moment. When I say lock in a cheap fix, I want it to be a cheap one. I want it to be one that's cheaper than the current price cap, which if you're on the price cap and you do a comparison, you'll be able to see.

36:03Martin Lewis:Even if it saves you one quid, it's cheaper. So you want to lock into one of those and you have to do it via a comparison site because your cheapest depends on where you live and how much you use. There's no point me listing tariffs for you. And you preferably want to go to a whole of market comparison site by default. But if you don't, because there's only one of those and I'm not allowed to mention it, if you don't, the really important thing to understand is many of the cheapest deals at the moment do not pay comparison sites. And most comparison sites, those that aren't whole of market, hide the tariffs that don't pay.

36:34Martin Lewis:So if you go on a comparison site, Check somewhere, check on the menu or check on the bottom. If there's a button that says, and it will say it with this level of volume and intensity and aggression so you find it, show all tariffs. So there's a button that says show all tariffs and tick the button that says show all tariffs. So you're actually getting a whole market comparison because otherwise right now, especially some of those cheapest fixes will be missing. Martin, have you ever thought about doing the SMR? Yeah, I was quite in there. Because that was very soothing. That was very nice. I think it could be a market in that.

37:10It could be. I mean, it'd be a very, very strange market. I mean, a perverse market, but it would be a market. Now, sadly for me, the mastermind is coming up soon, but let's see if we can squeeze in Anya's question first. I'm on a variable with a utility warehouse. And last week asked them to switch me to fixed, but they say they can only do this if I agree to have a smart meter installed. Is it legal for them to ask me to do that? I don't want a smart meter. but I want to switch off variable.

37:38Martin Lewis:Yes, it is legal. You can make having a smart meter a requirement of a specific tariff. You can't do it on the price cap, but it can be a requirement of having a specific tariff. And if Utility Warehouse are doing that, then it is legal for them to do so. I should note Utility Warehouse are a multi-utility provider that in normal times tend to offer their cheapest rate if you also get their other products. so you tend to have to have your phone with them or your mobile with them or something like that in order to get their cheapest rates. They're not coming up particularly cheaply in the comparison sites at the moment.

38:14Martin Lewis:They are not one of the three companies that have the cheapest fix. You know, Ecotricity, Outfox, Eon are the ones I'm talking about. Both Outfox and Eon will let you get a fix cheaper than the price cap without needing a smart meter. I should say I'm not anti-smart meter. I think smart meters can be pretty useful. You can see what you're using. so you're able to monitor your electricity yourself. You don't have to do meter readings for yourself, which makes the system on monthly direct debit much easier. There is a problem that too many smart meters are broken and I've been pushing the government to try and change the way that it incentivizes companies instead of to stop incentivizing them just to install them, but incentivize them to actually make them work as well.

38:52Martin Lewis:But I'm far less anti-smart meters than the caller sounds. But if you don't want a smart meter, there are fixes where you don't need them. we will do more energy questions in the pod I know there's about lots lots more and many more subjects people talking about I'm fixed longer away if I'm on a fix should I get off that fix and fix again I'll do all that in the pod but Stefan now play that music

39:20Martin Lewis:I don't like it it's going to be fine I don't like it it's not going to be fine Stefan welcome you're a money mastermind virgin but don't worry It's just a simple three-option multiple-choice quiz. Let's see how you do. Now, everybody, I want you to picture a man with, let's say, a regular job on Fridays. He's incredibly excited as he's sitting in for a colleague and has a sexy new temporary assignment. Yet jeopardy awaits. He will be running his reputation up a flagpole to be machine-gun fired at. The outcome could be career carnage. Do you hear that, Stefan? Career carnage. Oh, gosh, I do hear it.

39:59Martin Lewis:Luckily, in order to do it, he gets a huge danger money bonus. Not really. This is the BBC. It's not actually happening. But let's go with it because it helps the question. So imagine this man is 38 years old, went to university, let's say, to study law, maybe to Welsh uni, let's say Cardiff. That means he'd almost certainly be on a Plan 1 student loan. If it's not clear yet, I think we know who we're talking about. Now, plan one, just to say, the annual repayment threshold of plan one is£26 ,900. Write that down. Is it down? £26 ,000, yeah. And as with all undergraduate plans, you repay 9 % of everything earned above that.

40:40Yeah?

40:41Martin Lewis:Yeah. So here is the question. This man, he's a fictional man. Any resemblance to characters who I may be talking to are totally coincidental. He earns a steady£18 ,000 a year, which is£1 ,500 a month, which is below the Plan 1 threshold. But because of the danger money, he gets a one-off£12 ,000 bonus in one monthly pay packet, taking his total annual earnings to£30 ,000. My question is how much of that bonus would be taken for his student loan? Are you with me? Yes. I'm going to give you multiple choice, but let's just check you've got it. Yeah. So basically, thanks to the£12 ,000 bonus, his annual income would have been£30 ,000, but all that£12 ,000 came in one month.

41:33Martin Lewis:Correct. And the threshold is£26 ,900. £26 ,000 is the threshold. So here are your options. A, as it's based on the yearly income and he earns£30 ,000 total, he will pay 9 % of the£3 ,100 above the threshold, which is£279. B, it is taken on the monthly amount, not the annual amount. The monthly threshold is a twelfth of£26 ,900, so it's£2 ,240. he earned£13 ,500 that month. 9 % of the extra is£1 ,013. C, it's taken on the monthly amount, but at the tax year end, he can ask for a refund of the difference so that he only paid 9 % above the annual amount. So he is due, therefore, a£734 refund. So in the simple terms, in A, it's based on the annual amount.

42:27Martin Lewis:In B, it's based on the monthly amount. In C, it's taken on the monthly amount, but refunded based on the annual amount? Here's my logic for the answer. So you're with it? You're with the question? I've got the question. I've got the options. My sense is that it's going to be the most complex option possible. So I'm going to say C, that it is on the annual amount, but it takes it on the monthly amount and you can claim a refund. Are you locking that in? Can we have the tension back? It is locked. I'm locking that in, please. So, Stefan, you've locked your answer in. And you're saying, Steve, it's taken on the monthly amount, but you can get a refund based on the annual amount.

43:04Martin Lewis:So the first thing to say is when you pay your student loan, the amount that's taken through PAYE is based on the monthly threshold. How much you earn above a 12th of the annual threshold is what is taken. So the answer could be B or it could be C. But I'm afraid, unfortunately for you, and unfortunately for many people repaying their student loans, in this case, you would not be due a refund. You would have to pay it on the monthly annouc. Give him an uh-uh.

43:37Martin Lewis:Fred, you got it wrong. You're naught for one. But actually, this is really important. There is a nuance in here that people need to understand. There are 5 million people, I would estimate, who've overpaid their student loans in the last five years. One million, according to the Freedom of Information, over a million who've overpaid it in the last year alone. And the biggest category by far is almost the scenario I gave you. The biggest category by far is you repaid the loan in some months despite not earning enough in the tax year. So if we change the question slightly and say that the bonus was£7 ,000, not£12 ,000.

44:21Martin Lewis:So your total earnings were£25 ,000, which is less than the annual threshold. But you would have still in the month you got the bonus, because you had that freaky one-month income, they would have taken£563 off you, which is 9 % above the monthly threshold once you have the£7 ,000 added on to your normal typical£1 ,500 of earning. You with me? Yeah, I've got you. You would have been able to reclaim it. Yeah. Because your total earnings are under the threshold. But we have this bizarre cliffhanger that even if you earned only£1 above the annual threshold, but you'd had all that income in one month, then you would have been paying on the monthly proportion and pay way too much.

45:02Martin Lewis:So that is unfortunately for you and unfortunately for people listening how it works. but really, really big this. 1 ,074 ,521 people in 2024-25 tax year, the most recent year I have the data for, overpaid the loan in some months despite not earning enough in the tax year. If that is you, you can go back and reclaim it. And you can reclaim it online for all the past years that this happened with, although you could only do it for a tax year that has now ended. So you can be doing this up to the most recent tax year. They might just be in for the 6th of April 2025. It might not. It just depends on your account.

45:41Martin Lewis:A couple of other reasons you may have overpaid your student loan. They put you on the wrong student loan payment plan. So by default, they put you on plan one, which is your student loan, even though far more people are on plan two, which is for anyone who started university between 2012 and 2023. It's podcast producer Simon here. Martin sent me a note to say he should have specified plan two is for those who started between 2012 and 2023. in England and Wales, the other UK nations are on different plans. Back to it then. The plan one threshold is you repay 9 % above£26 ,900. The plan two is you repay 9 % above £29 ,385.

46:23Martin Lewis:So if you were wrongly on plan one and earning£29 ,000, you should not have repaid your student loan, but the money would have been taken. Reason number three, you started repaying your student loan too early, you're usually only eligible to start repaying in the April after you left your course. Most people leave in July, next April, so it's nine months. But if your employer didn't have the right information about when you left university, they could start taking money too soon. That happened to 37 ,000 people in the last tax year we know. And the last one, which is quite common but less of a problem, is you had money deducted after the loan was fully repaid.

46:55Martin Lewis:You will get that money back automatically, but for anyone in the last couple of years of their student loan and they're going to pay it off, you're allowed to shift to direct debit. But really important people understand that. You can get that money back, whether you should get the money back or not. Generally, if you're one of those people who won't clear the loan in full in the 30 or 40 years before it wipes, depending on the system, then you want to reclaim the money. If you're a higher earner who's likely to repay it in full, then it's less important that you take the money back. But it's always worth thinking, even if you are going to earn enough to clear the loan in full, could you have better use of that money in the short term?

47:31Martin Lewis:In other words, say, to pay off expensive debts or not. I've done that relatively quickly, but hopefully it made some sense. No, absolutely. And I think it's affecting loads of people. Because if you work in something like sales or whatever, and you get a percentage of a commission-based system, you might get a month where you get a bit of a windfall or whatever. So it's definitely going to affect loads of people out there. Loads of people on PAYE. If you're self-employed, you'll be doing it through a self-assessment tax return, which just looks at the total annual amount. But this is a PAYE issue, and yet it affects millions.

47:56Martin Lewis:Yeah, Martin, even though I got the question wrong, It's been a joy spending an hour in your company. I've enjoyed it, thank you. Thank you very much, Martin. So we're in the podcast extra bit and that means I am joined by PPS podcast producer Simon. How are you, Simon? I'm excellent. I'm having one of those perfect days at work where it is somebody's birthday and they've brought in chocolate cake. Oh, very nice indeed. We're not in the same place. I won't be getting any chocolate cake. We are both fans of the cricket. We were expecting the recording on Five Live to be disrupted by the cricket, which is annoying from a podcast perspective, but we do like the cricket.

48:35Martin Lewis:However, it was rained off during the hour that we were recording. So I can't work out whether that was a good or bad thing. It's good because it meant we didn't have the sort of lots of, and there's been a wicket, which we wouldn't have wanted anyway because England were batting, but it's also bad because the cricket was rained off. Where do we stand on this? Well, so I think it increases the chances of them playing a bit later tonight. ideal scenario for me I get home there's still half an hour of the cricket to go fair well yeah because I mean you're probably in the studio in my minute there isn't a screen with it on you know I can't listen to 5 Live Sports Extra while I'm doing it so we're slightly lost anyway we need to talk about energy bills we should get off that we've got lots more energy questions that I want to get through so you've got a whole host in front of them how about Division of Labour you ask them I'll answer them we can do it that way round or the other way round no no let's definitely stick with that way round it's for the best we got one from From Annie, she asks, what about when your fix expires mid-July?

49:32So it's currently the 4th of June.

49:35Martin Lewis:There's the most important rule to understand on any fix is they're not allowed to charge you early exit penalties in the last 50 days of your fix. So from day 49 onwards, early exit penalties don't exist. So if your fix ends mid-July, I think we're probably depending exactly when, we're probably within that period. It is very tricky. if you can get yourself a cheap fix at a decent price right now, you can get, you know, at 4 % less than the current price cap. There is a small risk that if things got even worse in the Middle East, those fixes may disappear. I mean, a few weeks ago, the cheapest fix was about 6 % more than the April price cap.

50:13Martin Lewis:So fixed prices have come down slightly, but wholesale rates are not looking very good right now. So this just is a, I don't know how cheap your existing fix is. When you go on to a comparison, you're probably going to find that it tells you the cheapest fix is more expensive than you're paying right now. Now, I'd say if the difference is a trivial amount over 50 days, you know, if it's a percent or two, you might just want to lock in right now. Then you've got surety for the next year of what you're going to pay. If you're on a very cheap fix and you're going to end up paying, you know, a substantial amount of money because you're having to have a more expensive fix for the next 50 days.

50:49Martin Lewis:because once you lock in, you lock in, and you're on a really cheap deal right now and you're getting rid of that, then there is a bit of a gamble to say, I might wait a few more weeks and hope that the prices stay roughly where they are or get cheaper than they do right now. Craig, we're fixed until December currently on Octopus. Is it worth changing? Okay, so that is a very different decision. Let's just make sure you're on Octopus, which might change it slightly. Octopus sometimes does have and sometimes doesn't have early exit penalties if you leave your fix. If you've got a December fix, I'm presuming it was one year long, therefore you got that fix last December when wholesale rates were substantially cheaper than they are right now.

51:29Martin Lewis:The rate at which companies set fixes primarily depends on wholesale rates on that day. So while the price gap has a time lag, the rate you can get a new fix at is much more immediate. So my suspicion is you are on a fix far cheaper than you would be able to get a fix today. So to come off that fix, you may potentially have to pay early exit penalties and you may have to pay substantially more until December. While I don't have a crystal ball, and you would need a crystal ball to answer this accurately, my instinct does not like that. So I would stick on your cheap fix with a bird in the hand till December.

52:10Martin Lewis:The thing to understand here is that I have this duality of message, which is confusing. My message is if you're on the price cap, get off the price cap because you can fix cheaper than the current price cap and the price cap is going to get more expensive. But you're not on the price cap. You're already on a cheap fix. And fixes right now are not particularly cheap. They're cheaper than they were a few weeks ago, but the wholesale rates are particularly high. Now, unless the whole Middle East situation escalates to an even more horrendous level than it is right now, there is no reason that fixes are going to get prohibitively more expensive than they are right now between now and December.

52:49Martin Lewis:In fact, there's a decent chance that you're going to be able to fix far cheaper later on in the year. Hopefully the Middle East conflict will have ended. In which case, there's no call to arms for you to fix right now. I think it's a confusion of the messaging. Because I'm shouting about get off the price cap before the price cap rises, People go, I should probably get off my fix. No, it's a totally separate system. In the ecosystem you're in, there is nothing pushing you to get off a cheap fix to go to a more expensive fix, apart from the idea that things would be catastrophic and even worse.

53:18Martin Lewis:Well, we're already in the bad time. You know, we're in the bad time and things could always get worse in terms of wholesale rates. So I wouldn't be getting off my cheap December fix now. I'd be sticking with a bird in hand till there. But I do need to do the caveat. I literally don't know what's going to happen because a lot of it depends on a big orange fella in the White House. And he is not particularly consistent in the decisions that he makes. Bev actually asked a question that kind of follows a little bit on something you just mentioned. She asked, why are Octopus introducing exit fees on their new fixed deals?

53:48Martin Lewis:That is interesting because this is something I called out. Octopus, unlike most companies, doesn't normally charge early exit penalties if you leave a fix. But over recent months, it has started to introduce that. And I actually called it out on social media and got a response from Greg Jackson, who is the founder of Octopus and the chief exec of Octopus. He's been on the podcast, actually. So give me a second. By the magic of podcast, I will find that tweet.

54:18Right.

54:18Martin Lewis:I found the tweet. He sent me this on the 5th of March, but it's a pretty similar situation to the one that we have right now. He said, hey, Martin, we had to do the same temporarily during the gas crisis a few years ago. We removed early exit penalties as things calmed down, and I will do the same again here. With wholesale gas prices doubling and wholesale electricity up 60 % for the next quarter at least, we need to move fast. But many companies have simply stopped offering fixes altogether. Also, of course, existing fixes are not affected. Which, subtext, it's a commercial decision. They're looking at their prices at the moment, realising that they're going to offer a fix.

54:55Martin Lewis:They don't want people leaving them if prices drop substantially in future when the Middle East crisis, if and when the Middle East crisis ends. And therefore, they put them on to lock customers in a bit in the same way that other firms do. So that is your answer. It's a commercial decision. Chris has got in touch with a question. He's and quite a lot of people are asking questions on this topic, really. He's saying, hopefully we're moving in the next three months. Currently, I have dual fuel with British gas. New home is electric only. Will I be able to move my British gas new fix rate from dual to just electric?

55:27Oh, no, that is an interesting question.

55:30Martin Lewis:So lots of people ask me about fixing when they're going to be moving house. Most companies do have portable tariffs. Their fixes are portable, i.e. you can take your fix with you to the new property. The three general exceptions are, doing it off the top of my head, OVO, Scottish Power and Outfox. They just say you can leave with no early exit penalties if you're moving house, but you can't port it with you. British Gas tends to allow portability when you're doing the comparison. They should tell you whether it's portable or not. What I don't know, because you're having a change of status, is if you were moving dual fuel to dual fuel, I'm almost certain British gas tariffs you'd be able to take with you to your new house.

56:16Martin Lewis:Because you're moving dual fuel to electricity only, if the fix you got was one where they didn't just offer it to dual fuel customers, they also offered it to single fuel or electricity only customers, my suspicion is they will allow the portability. If it was one that was only for dual fuel customers, which they can do, My suspicion is they won't allow the portability. So as you're on an existing tariff, you can't change it. I mean, if you were looking to get a new fix at this point, I would probably be looking in that circumstance to do separate fix for electricity and gas. And therefore, hopefully the electricity fix would be portable, depending on which firm that you went with.

56:55Martin Lewis:So I'm sorry I can't give you a firm answer. I don't know their exact policy on portability of fixes to single fuel. I would hope it'd be OK. Just call them, speak to them. Matthew's got a question about how things are communicated. He's saying, why is the energy price cap presented as an average? Who exactly is average and how many people can genuinely relate to that figure? It's a complete and utter nonsense. It's not actually, they don't say average, they say typical use. And the way they do typical use is they calculate units of gas and units of electricity. Now, interestingly, when they announced the price cap, as I had mentioned on the previous show that I suspected they would, They are dropping the definition of gas usage down 17 % and electricity down 7%.

57:36Martin Lewis:They do this by surveying exactly the amount that people are using and talking to the energy firms about usage, which does change therefore the figure. To be fair to them, they have been very clear in communicating that while the usage is dropping, they're using a like-for-like figure when they're talking about what's going on. Now, what I am pleased to say with Off Gem has done, and I've been nagging them for years, and they've told me in meetings that they are following my lead on this. I always talk about the energy price cap as a percentage change because I think that is the most accurate way to communicate it.

58:06Martin Lewis:They now are leading on the percentage change in their press release. But I'm afraid many of the reporting out there is leading on ridiculous figures. I mean, that number of times, including, I need to say, the BBC and the BBC News website reported on the July price cap is a£222 a year increase. That is utter nonsense. It's a completely fabricated figure for two reasons. One, the£222 is based on typical use. So if you use less, it would be smaller. If you use more, it would be bigger. And two, you have to include the fact for a typical user when you're saying that. But far more importantly, the July price cap only lasts until October.

58:49Martin Lewis:So to quote an annualised cost increase for something that only lasts three months is utterly misleading. In fact, the July rise, as I mentioned earlier, is going to, because it's low usage, it's going to add about 45 quid to the actual amount people pay over those three months for someone on the price cap on typical use. So I totally agree with you. I mean, the typical use figure, though, bizarrely, the fact that the typical use figure is dropping is actually going to increase all our bills. they have to use the typical use figure to calculate how much they are allowing energy firms to charge on the unit rate the rate for each unit of gas and electricity you use in order to recoup some fixed costs and because they're lowering the typical use figure because people are using less energy to allow them to recoup those fixed costs they actually have to put the unit rate up that was that£10 a year policy change I mentioned earlier which is settling in it so Simon just Just read to me again the last bit about what they'd like to see, because I think I remember what they said, but I'm not actually sure I agree.

59:51Yeah, so they went on to, Matthew was wanting to know about, I'd love to see a much simpler, more transparent messaging. For example, electricity is going up or down by X pence per kilowatt hour.

1:00:03Martin Lewis:Yeah, I mean, and that is generally how I communicate it. There is a but, though. The but is, this is regional, and prices are not uniform across the regions. so you could do it by up and down per kilowatt hour and I will break that down and I absolutely accept that the sophisticated listeners to this podcast would be able to work with that you know if I were to say I mean I said it early I said what's really happening is the standing charge is saying the same but the gas unit rate is going up an average 28 percent whereas the electricity unit rate is going up an average six percent but we have seen times for example where we've seen on the price cap, the standing charge go up and the unit rate go down.

1:00:49Martin Lewis:So to actually try and communicate that to a mass audience in a short space of time is incredibly tricky. It's the type of thing I do on my show and I do when we're doing the podcast or I do when I'm writing something for my website. But if you're doing a quick clip for news, to start talking about the gas standing charges going up, the gas unit rate is going down by this much. People just don't get it, which is why I go for a uniform average percent. While it isn't that representative, you know, if you were a very high gas user, it all changes and low users. It at least gives a direction of travel.

1:01:28Martin Lewis:It's an imperfect system. But I think giving a percent is better than using a typical use figure, which is meaningless because so many people hear this, it's going up£222 a year. And it just has no relevance to them. At least saying an average 13%, you can get an idea that if you pay£1 ,000 a year, you're probably going to be paying somewhere over£1 ,100 a year. I think that's probably where we should end, Simon. I think we did quite a lot there, didn't we? Perfect. We summed it all up. And Stefan did well on his first appearance on the podcast. Although he'll be gutted because obviously he really likes his board games, as he was saying.

1:02:00Martin Lewis:He'll be gutted to have lost Mastermind. Well, he'll have to just roll the dice of Five Live Presenter Roadsters and hope he comes up with you again. And Adrian doesn't have a monopoly on getting it wrong. OK, enough puns. Let's leave it there.

1:02:18Martin Lewis:So, yes, that's it for this week. We tend to put out a new episode every Thursday and Monday. The Mondays is our Question Time podcast where you can ask me absolutely anything and everything, open brackets within reason, close brackets. If you've enjoyed it today, please do tell your friends you've been listening to the Martin Lewis podcast. And why don't you and they subscribe? Then everyone's pockets will be pleased with them. And if you haven't enjoyed it and you've been listening this long, it's your own fault.

1:03:02Martin 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 martinlewispodcast at bbc.co.uk. 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. I gotta pay.