New figures released by the End Fuel Poverty Coalition reveal that UK households are already struggling to cope with the weight of energy debt ahead of upcoming price rises.
The research reveals that three in ten (31%) UK adults are currently in debt to their energy company or worried about falling behind, increasing to over four in ten (45%) parents with a child under 18 and 35% of disabled people. Among those in energy debt, the median amount owed to an energy supplier was £750.
Worryingly, the research indicates that people may be turning to risky borrowing practices in order to stay afloat. One in eight (13%) of those in energy debt or worried about missing payments say they owe money to someone who makes them feel scared, rising to a quarter (24%) of those who are already in arrears.
According to the research, over the last 12 months, people already in energy debt have resorted to a range of drastic measures to reduce their spending, including using less energy by turning the heating off or taking shorter showers (32%), keeping the home colder or warmer than is comfortable (25%) and missing rent or mortgage payments (21%).
More than one in five of those in energy debt have needed to skip meals (21%), while a similar proportion (18%) have turned to a foodbank for support to help cope with energy costs or arrears.
As the energy industry has profited, experiences of supplier support for struggling households has been mixed. While 15% of those in arrears had been referred to a hardship fund and 15% were on a repayment plan, more than one in ten (13%) reported having no contact from their supplier in the past 12 months. Less than one in five (18%) of those in arrears felt that they had been treated fairly and only one in twelve (8%) had been referred to debt advice.
Simon Francis, Coordinator of the End Fuel Poverty Coalition, said:
“These figures lay bare the true cost of years of failure to fix energy debt caused by the sharp increases in bills. Millions of people are in debt to their energy company or worried about falling behind, and yet the price shock profiteers are posting billions in profits.
“The figures also show that this is a can’t pay crisis, not a won’t pay one. Very few people who are in energy debt are also in high-earning households. Instead it is ordinary people who are skipping meals, visiting foodbanks and, most alarmingly, resorting to risky forms of borrowing just to keep the lights on.
“With energy prices rising by another 13.5% next month, the mental and physical health consequences of energy debt will only deepen. The energy industry which has caused this debt through its profiteering, must be made to contribute to clearing this debt mountain.”
Frazer Scott, CEO, Energy Action Scotland commented:
“Far too many households are saddled with debt to their energy suppliers which they simply cannot repay. Government, industry and its regulator have provided no effective plan to reduce this debt and help to keep people warm and safe in their homes.
“Persistently high energy costs means that basic levels of comfort are unaffordable for those on the lowest incomes or for people who have unavoidably high consumption needs because of age or disability or medical condition. This level of energy should never be out of reach.
“The energy industry continues to line the pockets of investors, shareholders and executives through exceptional profits generated, not by good business practices or technological advance by political and military conflicts around the globe. These profits should be enriching the lives of people who need help the most and who are paying the highest price through declining health and wellbeing.”
Campaigners have written [pdf] to Ofgem to demand mandatory debt collection standards introduced without delay, including a requirement to refer customers in energy debt to debt advice within a defined timeframe, alongside a publicly accessible supplier performance dashboard.
A letter to new Ofgem boss Tim Jarvis also calls for the Debt Relief Scheme to be properly funded through energy company windfall profits and general taxation rather than a levy on consumer bills, and for Ofgem to use its existing powers to require the higher standards of debt management that the better-performing suppliers have already demonstrated are achievable.
Janine Michael, Chief Executive, Centre for Sustainable Energy, added:
“We speak to people every day who are struggling to keep up with their energy bills – not because they won’t pay, but because they can’t. The long-awaited energy debt relief scheme must be brought forward urgently, and people in debt need access to proper debt advice, not just a letter from their supplier.
“But debt relief alone is a sticking plaster. The real fix is reducing the amount of energy households use in the first place through proper investment in energy efficiency and phasing out gas. Until we address that, we’ll be having this same conversation next winter.”