Energy debt hits record £5bn as experts issue winter warning

Energy debt in the UK has reached a record £5bn, new official figures have revealed, as household bills are set to rise further in the coming months.

Data from Ofgem shows that domestic customer debt and arrears outstanding for 91 days hit £5.02bn by the end of June, up 4.8 per cent from the previous quarter and 13 per cent year-on-year.

The increase during the summer months comes despite the back-to-back heatwaves experienced across Europe this year, which brought temperatures to record highs.

Experts have warned that winter threatens to continue pushing the UK’s energy debt levels, as rising fuel costs and lower temperatures drive up household bills.

Nearly a third (29 per cent) of UK adults are now concerned about their ability to pay their energy bills over the next six months, a poll from debt charity StepChange has found. The charity adds that the average energy arrears for its clients now stands at £2,676.

Peter Tutton, director of policy, research and public affairs at StepChange, said the latest figures show “yet more evidence of sustained pressure on household budgets and an inability to pay regular costs”.

“With further price rises expected in the new year, things stand sadly only to worsen,” he added.

"What is most alarming is the 5 per cent increase in total arrears during a period where people tend to use less energy in the warmer spring and early summer months. With winter still to come and the price cap set to rise, financial pressures are highly likely to intensify in the coming months.”

StepChange has urged the government to introduce a new social energy tariff, means-tested to support the most vulnerable, alongside implementing Ofgem’s debt relief scheme.

Last year, the regulator announced a consultation on a scheme to tackle debt built up between 2022 and 2024 to help 195,000 customers write off up to £500m. However, the scheme has not yet received a fixed launch date.

The debt figures come as energy bills are set to increase by £60 on average from October, when Ofgem’s energy price cap rises to £1,723. This will partially offset by Andy Burnham’s move to cut VAT from electricity bills, saving £45 on average.

Ahead of the increase, Cornwall Insight has predicted that bills will rise another £276 from January, up to an average £1,999 a year.

The trusted forecaster says its figure is based on the ongoing US-Iran conflict, which has hit energy prices worldwide.

Responding to the latest debt figures, TUC General Secretary Paul Nowak said: “Energy costs are crushing households up and down the country – with many getting into debt just to keep the lights on.

“The government are rightly prioritising help for households with the cost of living. But with energy prices set to rise in October as a result of Trump’s reckless warmongering – and no end in sight to war in the Middle East – ministers will need to go further and faster to protect households. 

“That's why the government should cut household energy bills with a social tariff – paid for by taxing banks' enormous profits.”