Household energy debt surges to £4.43 billion

Household energy debt has surged to £4.43 billion – three quarters of a billion pounds more than this time last year, latest Ofgem figures show.

According to Ofgem data, household debt and arrears have risen from £1.45 billion at the end of 2020 to £3.69 billion in the second quarter of last year and to £4.43 billion a year later.

The regulator also reported that 1,133,683 electricity customers and 926,545 gas customers are in debt without any repayment arrangement in place.

The collective debt is leaving households facing up to an extra £145 a year on their bills to cover the shortfall.

An Ofgem spokeswoman said: “The current levels of energy debt are unsustainable, and this is a challenge that requires action from everyone – the regulator, government and industry alike.

“We’re working at pace on plans to introduce a debt relief scheme that could help struggling households get back on track and rectify some of the debt that built up during the energy crisis.

“It’s important we target support at the customers that need it most while ensuring people who are able to pay are supported to. We know allowing households to build up unsustainable debt isn’t the right thing to do, and it’s vital that people pay for the energy they use as increasing levels of debt drive up costs for everyone.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Energy debt is now driving people into dangerous financial positions as we approach the fifth winter of the energy bills crisis.

“Previous research has found that almost one in five households in energy debt have turned to illegal money lenders, with households waking each morning fearful of what using electricity or gas might cost them.

“We must urgently write off arrears and reform the system so fewer households are powerless to pay off their debts.”

Independent Age policy manager David Southgate said: “Older people on low incomes are increasingly bed-bound by the cold – forced to turn in early in hats, gloves, scarves and extra blankets during the winter to stay warm.

“Many have fallen into debt in a bid to keep the heating on. With yet another difficult winter just around the corner, they need immediate support.

“We are calling on the UK Government to tackle this mountain of debt with a properly funded and targeted debt relief scheme, alongside wider affordability reform, including a national energy social tariff, to ensure everyone can afford to heat and power their homes.”

A government spokesman said: “We are working urgently with Ofgem to drive debt out of the system and help people with the cost of living, such as expanding the Warm Home Discount to over six million households this winter.
“We are also delivering an energy system that puts people first, with stronger customer protections including automatic compensation for when companies mistreat consumers.”