With energy prices set to rise by 13.5% next month and another energy debt crisis predicted to hit next winter, new figures reveal that UK households are already struggling to cope with the weight of energy debt.

The research by Opinium for the End Fuel Poverty Coalition 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.

Energy debt has risen dramatically since the Russian invasion of Ukraine caused a spike in energy costs and the profits generated by the industry. Profits have increased further since the attacks on Iran with UK energy industry profits reported to have reached £3 billion in the first three months of this year alone, which equates to £102 per household.

But 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.”

Eva Watkinson, Head of Campaigns at Debt Justice, commented: “The Government cannot continue to ignore the energy debt crisis and must prioritise the launch of its long-promised debt relief scheme. Crucially, it should be fully funded through a windfall tax on industry profits, not added to consumer bills. People should not be forced to pay twice for a crisis they did not create.”

The research highlights the detrimental health effects of energy debt, with one in five (22%) of those in energy debt saying energy bills or arrears had impacted their mental health, 19% reporting physical health impacts, 21% experiencing sleepless nights and 14% saying it had affected their children’s health and wellbeing.

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 are writing 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.

One in five (20%) consumers polled by Opinium say any scheme to reduce or clear energy debt should be funded mainly by energy companies. Just 13% think it should be mainly added to customers’ bills, with others unsure or supporting a mixed approach.

Uplift Deputy Director, Robert Palmer, said: “This research shows the grim reality of a system that puts profits before people. It’s outrageous that around 30% of people in the UK are either worried about or are in debt to energy companies, and even skipping meals. To rub salt into the wounds, companies like Shell and BP are celebrating their ‘war bonus’ profits. People are fed up with an energy system that sees oil and gas companies rake in billions while the rest of us are saddled with higher bills.

“This is not the first time we have seen the gas price soar off the back of conflict and it won’t be the last. While we remain dependent on gas, a handful of oil giants will continue to get rich at our expense.

“Politicians need to learn the lesson of the last five years – that the only way to insulate ourselves from these risks is by doubling down on renewables and helping households and businesses make the switch to clean electricity. This is just common sense in today’s world.” 

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.”

New drilling not the answer

Earlier this week, Wes Streeting said he would remove the ability of local communities to object to controversial energy and big tech projects and allow new drilling for oil and gas in the Jackdaw and Rosebank fields in the North Sea.

Tessa Khan, executive director of Uplift, responded: “Wes Streeting is misjudged if he thinks that new North Sea projects like Rosebank and Jackdaw will make a material difference to this picture. Rosebank is overwhelmingly oil for export. It contains minimal gas – in the best case, it would provide just 1% of UK gas demand. The fact is the UK, after 50 years of drilling, has burned most of its gas. Worse, these developments would do nothing to lower energy bills and instead, just see the UK locked into an unfair, unaffordable energy system for longer.

“A field on the scale of Rosebank is also wholly incompatible with safe climate limits and our climate obligations. Already, extreme weather is driving up our food prices, straining water supplies, flooding homes and disrupting lives. Any aspiring Prime Minister needs to show a lot more responsibility to those of us facing these costs now as well as generations to come.

“Politicians need to learn the lesson of the last five years – the UK’s dependence on fossil fuels is making a handful of oil and gas companies obscenely rich and the rest of us poorer, while driving inflation, harming the economy and altering our climate.

“Streeting would do better to listen to the millions who are sick of the energy giants loading costs onto the rest of us, and pay less attention to this profiteering industry and its proxies, like Tony Blair and Donald Trump.”

Action

With the biggest energy price rise in four years due in two weeks, Fuel Poverty Action will be protesting at 10am on Wednesday 1st July outside the Department of Energy Security and Net Zero, 55 Whitehall, SW1A 2EG. They will be joined by allies from Energy Embargo For Palestine to Green New Deal Rising.

Sign the Make Green Fair petition,  supported by50 organisations including End Fuel Poverty Coalition, Greenpeace and trade unions here.

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