About one million households in the UK are behind on their gas and electricity bills with no repayment plan, according to a new report from the Resolution Foundation. The thinktank found that energy debts have more than doubled over the past 12 years, with the average gas debt rising to £1,400 and electricity debt to £1,600, up from around £500 each in 2012.
The number of customers in arrears on electricity bills without a repayment plan has more than tripled from 300,000 in 2012 to over one million by the end of last year. Similarly, those behind on gas bills tripled from 300,000 to 900,000 over the same period. The rise in debt follows a surge in energy market prices driven by reduced Russian gas supplies to Europe, which began before the invasion of Ukraine in 2022.
Energy bills in the UK remain about £600 a year higher than before the invasion, with households paying 50% more per unit of gas. The financial strain is compounded by reduced council tax support and higher council tax bills, the report noted. However, consumer debt for higher-income households has fallen by 21% between 2006-2008 and 2020-2022, and by 14% for lower-income households in real terms.
Felicia Odamtten, an economist at the Resolution Foundation, said: “Families’ financial resilience has been tested in recent decades by a series of financial shocks along with stagnating incomes. While families have impressively still managed to reduce their credit card debt and save a bit more, new financial worries have emerged with arrears on priority bills skyrocketing.” She called for additional help with priority bills, such as improved council tax support and a social tariff on energy.
Meanwhile, energy regulator Ofgem has signalled it will raise the price cap by 2% from October, bringing a typical annual dual-fuel bill to £1,755, despite falling wholesale prices. Simon Trevethick of debt charity StepChange said four in ten UK adults could not meet an unexpected £1,000 expense without increasing debt, and over two in five of their clients are in energy arrears averaging over £2,300. He urged a debt relief scheme and overhaul of council tax regulations.
A government spokesperson said: “We are delivering an energy system that puts people first, with stronger customer protections including automatic compensation for when companies mistreat consumers. We are also working to drive debt out of the system and help people with the cost of living, such as expanding the warm homes discount to over 6 million households this winter.”
