Households already owe £1.3bn to energy suppliers – even before winter bill hikes set in

UK

Millions of UK homes are already in debt over their energy bills – with £1.3 billion owed, even before bills are set to soar by more than 80%.

The overall debt bill is already three times higher than it was a year ago, according to analysts at Uswitch, and it seems likely it will grow further over the winter.

Six million homes across the UK owe an average of £206 to their energy provider, according to a survey from the company. In April, the same average debt was £188.

Normally at this time of year, bill payers have accrued a ‘float’ over the warmer months, to help even out the increased bills during the winter.

Regulator Ofgem is expected to raise the price cap on energy bills to £3,582 per year for the average household in Great Britain from the beginning of October, according to a new forecast.

Analysts at Cornwall Insight have predicted further rises, to £4,266 in January and then £4,427 from the start of April.

“Energy debt has hit an all-time high with the worst possible timing, turning this winter’s energy price hike into a deeply precarious situation for many households,” said Justina Miltienyte, head of policy at Uswitch.

More on Cost Of Living

“This is an alarming situation, as summer is traditionally a time when households are using less power for heating, which helps bill payers to build up energy credit ahead of the winter.”

Energy bills have become the major focus of the Tory leadership campaign.

Candidates Rishi Sunak and Liz Truss take part in the BBC Conservative party leadership debate at Victoria Hall in Hanley, Stoke-on-Trent, Britain, July 25, 2022. Jacob King/Pool via REUTERS
Image:
Sunak and Truss have been told to cooperate over dealing with the energy bill crisis

On Tuesday, Money Saving Expert’s Martin Lewis called on Liz Truss and Rishi Sunak to bury their differences to tackle the problem together, warning the country was facing a “national cataclysm”.

He said the “zombie government needs to wake up sooner than 5 September”, when the new Tory leader and prime minister will be announced, as the new bill predictions are “unaffordable for millions”.

Tony Danker, head of the CBI, also called for both to get in a room together to sort the issue out.

Uswitch’s survey showed eight million households have no credit balances, meaning they have no cushion against the winter misery.

Nearly one in five people (18%) said they are worried about their supplier forcing them to take a prepayment meter if they fall behind on bills, although 38% said they did not know their supplier could do this.

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Read more:
The four simple changes you can make to save £400 on your energy bills
The UK’s cost of living crisis
Can I be evicted and will it affect my credit score? What happens if you can’t pay your energy bills

“If you are behind on your bill payments, or your energy account is going into debt, speak to your provider as soon as possible,” Ms Miltienyte said.

“They should be able to help you find a solution, such as working out a more affordable payment plan. You may also find you are eligible for additional support, such as hardship funds and other energy help schemes.

“The government also needs to take energy debt seriously ahead of the winter – and a greater support package for vulnerable households needs to be agreed as a priority.”

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