Rising number of customers unable to pay utility bills

Utilities providers must do more to help consumers, with over a quarter (26 per cent) unable to pay a household bill, according to a new report.

The study from outsourced customer contact firm Echo Managed Services shows that this figure has increased by 10 per cent since a similar poll in 2016.

According to the report, ongoing price hikes across a range of sectors – including gas and electricity– in addition to a particularly harsh winter and rising inflation may have contributed to these unforeseen bill amounts.

The report questioned 1,000 UK residents on their experiences, knowledge and attitudes to household debt, and found some troubling comparisons with regards to the state of consumer finances.

When asked why their household’s payments may have been late in the past, respondents highlighted a steep increase in the cost of living: 35 per cent of people stated that their monthly income was not enough to cover their outgoings, so some bills had to wait. This is compared to 28 per cent of people who stated this reason in 2016.

The report also found a significant 8 per cent drop in the amount of people who forgot to pay their bill (41 per cent in 2016 compared to 33 per cent in 2018). According to the report, this could be due to consumers’ heightened awareness of their finances, given the impact of growing affordability concerns.

Consumers are also taking longer to clear their debt, with a general shift towards later payment taking place across the board. In 2016, almost half (49 per cent) of repayments were made immediately after receiving a first reminder, but this has dropped to 41 per cent. In 2016, just 19 per cent of people said they would only make payment following receipt of a final reminder letter, but this has increased to 27 per cent.

“Times are hard for consumers, and the economic backdrop of rising inflation and wage stagnation is clearly having a more pronounced impact on the affordability of everyday bills,” said Monica Mackintosh, customer services director at Echo Managed Services. “Particularly concerning is the increase in households struggling to make bill payments because they simply can’t make ends meet.

“Although price increases may have contributed to this picture, it does highlight that suppliers must do more to alert customers to unusually high bills pre bill issue, and to model the impact of any price increase against regular usage.

“Clearly, as household budgets become increasingly squeezed, many people could be taking steps to more strictly control their cash flow and only settle bills when they absolutely need to, rather than immediately. Providers need to be mindful of this and be understanding – not pushy or aggressive – in their communication.”

The report comes as Ofgem highlighted concerns for vulnerable energy consumers in its annual vulnerability report. The regulator has called for additional focus and adequate investment in support for vulnerable customers.