UK Household Energy Debt Continues to Rise

On the cusp of winter and impending higher energy bills, a total of 3 million UK households (11%) are already in debt to their energy supplier, a figure that has risen by 12%, or 300,000 homes, from October last year.

 These 3 million households owe, on average, £134 to their supplier, or £393m collectively—up £75m from 2017, according to a survey from price comparison website uSwitch.

 Households are expected to be in credit to their suppliers this time of year, following warm summer temperatures. But even the UK’s record breaking heatwave couldn’t offset rising fuel prices this year, as suppliers responded to elevated wholesale prices by hiking the costs they pass onto consumers—sometimes twice in the last calendar year. Since the beginning of 2018, 32 energy suppliers have levied 55 price increases, adding £900m to the UK’s collective energy bill.

 The increased levels of energy debt found by uSwitch confirm predictions made by the Department of Business, Energy and Industrial Strategy in June. The government forecast that elevated energy prices would swell the fuel poverty gap—the difference between households’ energy bills and what they can actually afford to pay—by 9%, from £326 in 2016 to £357 in 2018.

 The number of homes living in fuel poverty, with fuel costs pushing them below the official poverty line, was 2.55 million, or 11.1%, in 2016, the last year for which data was available, having increased for two successive years.

 Under instruction of the government, Ofgem is expected to introduce an energy price gap that will limit the bills of 11 million customers by the end of the year. However, Labour has said the government isn’t doing enough to help customers facing rising energy bills.

 ‘‘It is a national scandal that ripoff energy price rises are increasing the number of people forced to live in fuel poverty,” Rebecca Long-Bailey, the shadow business secretary, said in June.

 Now, in November 2018, price hikes have left 3 million customers indebted and anxious about their bills, and fuel poverty campaigners have warned that many may pause before turning on their heating during the cold winter months.

 “Millions of people are approaching this winter with dread and will face unmanageable situations. Those who are repaying large or growing energy debts often don’t turn the heating on at all, despite knowing it could badly damage their or their families’ health,” said Peter Smith, director of policy and research at National Energy Action.

When asked how they intended to pay off their debt to the supplier, 34% of customers said they intend to raise their monthly direct debit and 20% said they aimed to clear the balance with a single payment. However, others hoped the debt would “go down naturally over time,” as they try to use less energy in the future, and 3% said they didn’t think they could pay back what they owe.

While uSwitch urged customers struggling to keep up with their energy bills to switch supplier, saying they could save up to £482 by doing so, credit meter customers will need to clear any debt before arranging a switch. Prepayment customers will be able to switch supplier as long as their debt is less than £500.  

Industry body Energy UK urged customers facing debt to contact their supplier. “If customers are struggling, the most important thing is to get in touch with their energy supplier as soon as possible so they can provide help and support,” a spokesperson said

Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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