A quarter of customers cannot repay energy debt

Almost a quarter (24%) of indebted energy customers are unable to repay their supplier, new research commissioned by National Debtline has found.

National Debtline provides free, impartial debt advice and is run by the Money Advice Trust. It recently commissioned a nationally representative survey by Opinium and found that an estimated 6.4 million UK adults (12%) are behind on their energy bills heading into this winter – an increase of more than 824,000 since April.

More than one in five (22%) say they have cut back on food and other essentials in order to keep up with energy bills (an estimated 11.6 million people). Two thirds (66%) say they will reduce how much they use the heating this winter.

Other measures being taken by those struggling include selling personal possessions (9%), as well as using their overdraft (7%).

The research additionally revealed the difficulties facing people in resolving their situation.

Of those currently behind with their energy bill, 21% said their supplier had not accepted an affordable offer of repayment, while 18% had been unable to get through to their supplier when they tried to contact them to discuss the debt.

One in four (24%) say they are regularly losing sleep worrying about their energy debt.

It comes amid renewed calls for the chancellor to introduce a Help to Repay scheme at the upcoming Autumn Statement.

David Cheadle, acting chief executive of the Money Advice Trust, said: “High energy costs have left millions trapped in energy debt – and these households urgently need support this winter.  The government now has only a limited window of opportunity to act, which is why we are calling on the chancellor to use the Autumn Statement to step in with the help people need.

“Our Help to Repay proposal would help bring down the record £2.6 billion energy debt in the market – and offer a lifeline to people whose incomes simply will not stretch to pay off their energy arrears.  It would also have the support of the general public – with 73% backing this kind of government help.

“National Debtline advisers hear every day of the toll that energy debts are taking on people’s lives and health, and the urgency of the situation cannot be underestimated.”

Matt Copeland, head of policy and public affairs at National Energy Action, said: “Ofgem’s proposal to raise the price cap as a way of dealing with the increased debt only exacerbates the problem. Failure to provide support to reduce energy bills and energy debt would be catastrophic, leaving millions of households unable to stay warm and healthy this winter.

“A ‘Help to Repay’ scheme would accelerate debt payments, ease the burden on household budgets, and help create a more sustainable energy market.”

An Energy UK spokesperson said: “As highlighted by the recent Debt Commitments, suppliers have invested in additional resources and continue to provide a range of support to customers, including partnering with third parties and debt charities to offer advice and support. However, there is a limit to what both suppliers and charities can do alone.

“We continue to call for urgent action to be taken to minimise the wider affordability crisis customers are facing – as well as preventing further debt building up over the longer term by bringing in permanent targeted support for those customers most in need.”

Responding to the news, a Department for Energy Security and Net Zero spokesperson said: “We would encourage anyone worried about their energy bill to speak to their supplier.”

They added that the government was supporting up to 3 million families with £150 off energy bills through the Warm Home Discount. There is also £900 cost of living support for those in need, as well as the nearly £40 billion provided last winter to cover around half a typical household’s energy bill.

“We continue to keep all options under review, while ensuring competition can return to the market to offer best value for all,” they added.

This topic will be explored in more detail at Utility Week’s Consumer Vulnerability and Debt conference in Birmingham this November. For more information and to book your place, click here.