Government sent energy customers ‘damaging message’ about switching tariffs

The Department for Work and Pensions posted letters to people about Winter Fuel Payments with the switching suggestion on the envelopes.

Martin Lewis, founder of MoneySavingExpert.com, said ‘the right move for most people right now is to do nothing – don’t switch’ (Lauren Hurley/PA) (PA Archive)

Energy customers have been sent a “damaging message” by the UK Government to switch their energy tariff at a time when this could cost them hundreds of pounds, according to MoneySavingExpert (MSE).

The Department for Work and Pensions (DWP) posted out letters to people likely to be eligible for Winter Fuel Payments, featuring wording on the reverse of the envelopes that encouraged switching energy tariffs to potentially save “an extra £290”, the website reported.

The messaging said: “What would you do with an extra £290?”

The amount was the average saving being made in 2020 by switching to the cheapest tariff on the market at that time.

But with the current crisis in the energy market and prices surging, cheap deals have vanished. Customers sitting on default deals are protected by the energy price cap.

The envelopes were created before the energy price hikes.

Martin Lewis founder of MoneySavingExpert.com, said: “We are in an extreme energy bill 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 of people, including many of the nation’s most vulnerable, is too big a risk to take.

“The right move for most people right now is to do nothing – don’t switch. That’s because if you do nothing, you’ll either be on, or automatically moved to your provider’s default standard variable tariff, which is price capped. The price cap forces energy firms to sell energy at below its cost price – there is no meaningfully cheaper option.

“Due to the obvious hit to their finances, many big energy providers are trying to persuade people to move off those tariffs to fixed deals at premiums often far higher than 30%. They are using all the marketing tricks in the book to do it, and playing on the fact that until now that has been the right option.

This is an initiative that has been in place for a number of years to encourage switching and the latest batch of 10 million envelopes was created before the rise in energy prices. The message is simply a suggestion

DWP comment to MSE

“This is why this back-of-the envelope message, which seems to confirm that switching is the right move, is so dangerous – it adds a halo to the message from the energy firms to get people to switch.”

A DWP spokesperson told the PA news agency: “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 will be issued.”