A new report by Energy UK has revealed the scale of household energy debt, which has more than doubled over the last three years to reach £5.5 billion.
Arrears now represent around 75% of all unpaid energy bills, meaning there are no repayment plans in place for the majority of this debt, while over one million households currently have no registered details with suppliers, increasing the risk of unmanaged debt.
A spokesperson for the End Fuel Poverty Coalition, said:
“Energy debt has risen for one simple reason: energy bills have remained far higher than household incomes can sustain. This is not a story of widespread ‘won’t pay’ behaviour, it is overwhelmingly about people who simply cannot afford the bills landing on their doormats.
“The real level of financial stress in households in energy debt is likely to be even higher when you factor in people juggling credit cards, borrowing from family, or self-disconnecting on prepayment meters to avoid falling into formal arrears.
“We know from our research in 2024 that households in energy debt also turn to loan sharks due to the cost of energy.
“The human impact is severe. If debts continue on their current trajectory towards £7bn by 2027, we risk locking millions of families into a permanent cycle of fuel poverty.
“It is also increasingly hard to justify a system where the costs of unrecoverable debt are routinely added onto the bills of those who do pay. As Ofgem persists with a methodology that has failed, the energy industry keeps on reporting billions of pounds in profits.
“The priority should be preventing debt building up in the first place. That means urgent progress on debt relief, fairer standing charges, a social tariff for those on the lowest incomes, and a major programme of home energy upgrades to bring bills down for good.”