Proposals to increase energy bills further in response to surging levels of household energy debt have been criticised by campaigners.
While energy suppliers made more than £2bn in profits in the first half of 2023 alone, new figures from Ofgem found energy debt reached a record £2.6 billion due to soaring wholesale prices and cost-of-living pressures on households.
A one-off increase to customers’ energy bills of up to £17 a year is now being considered by Ofgem, which the regulator argues will protect firms from customers running up large debts.
But charities and campaigners have called for the introduction of a “Help To Repay” scheme instead of passing the cost of debt onto all households.
The coordinator of the End Fuel Poverty Coalition, commented:
“Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.
“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.
“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back onto an even keel.
“Given that the Government is due to hand Norwegian oil giant Equinor a massive tax break for the controversial Rosebank fossil fuel field, there’s an obvious source of money for this support plan.”
Adam Scorer, chief executive of National Energy Action, said:
“This is the highest level of energy debt we have seen, it is growing quickly and concentrated in the poorest households.”
In June, a range of organisations including the End Fuel Poverty Coalition, Money Advice Trust, StepChange Debt Charity, Scope and National Energy Action wrote to the Secretary of State for Energy Security and Net Zero [pdf] with proposals to set up a ‘Help To Repay’ repayment-matching scheme.
David Cheadle, acting chief executive of the Money Advice Trust, the charity that runs National Debtline, told Press Association:
“With energy debt at a record high, now is the worst possible time to increase bills further, as Ofgem is proposing.
“Instead, the Government must step in and act now to help households facing unaffordable debt repayments by introducing a Help to Repay scheme to offer payment matching and write-off.
“Doing so would help tackle the record levels of energy debt we are now seeing, without the need to increase energy bills for all customers.”
Fiona Waters, spokesperson for the Warm This Winter campaign, said:
“The fact Ofgem is considering a £17 additional bill on all households is appalling. They say it’s to cover £2.6 billion of energy debt, but that enormous debt just proves ordinary people cannot keep footing the bill for our broken energy system.
“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants.
“Why not use the billions that its giving in tax breaks to Norwegian oil giant Equinor for the Rosebank oil field, which will do nothing to lower fuel costs, to write off this debt that people have through no fault of their own. ”