Over £3 billion energy debt wipes out price cap drop for millions of customers

Despite the price cap falling by 20% on Monday, 1 April, fuel poverty charity National Energy Action says millions of households will be paying their energy companies more than at the height of the crisis as they start to repay huge levels of debt built up because of sky-high prices.  

From 1 January to 31 March a typical annual bill was £1,928 and it will be £1,690 from Monday, a £238 fall.

But, according to Ofgem, there are currently 2.3 million households who owe over £1,200 on average and total energy debt is over £3 billion. 

Cost-of-living payments totalling £900 for households receiving means-tested benefits and £150 for those in receipt of disability benefits will soon end.

This cut to income is not offset by the slight reduction in energy bills. 

Further exacerbating the situation are the increases in the standing charge, which households pay regardless of how much energy they use and tends to make up a higher proportion of fuel poor households’ bills.  

According to National Energy Action’s research, 6 million UK households will be in fuel poverty from 1 April. 

 National Energy Action Chief Executive Adam Scorer says, ‘Any decrease in prices is to be welcomed.

But households are not just paying for their current usage – millions are still paying for last winter too. The lasting impacts of price shocks are yet to be dealt with. 

‘Two years of household budgets being whittled down to nothing, and an ever-expanding ocean of debt that the poorest are expected to pay off, simply isn’t sustainable and leading people to desperate measures like going without clean clothes, without warm food and without heating.  

‘The energy crisis is not over, especially for the poorest, who remain exposed to the greatest jeopardy. There are levers this government and the next can pull to help those in fuel poverty now and ending it in the long-term – this crisis cannot be the new normal.’ 

 Polling shows households remain in crisis over energy bills 

New YouGov polling, commissioned by National Energy Action this week, finds that 34% of GB adults say they have found it difficult to afford paying their energy bills over the last three months.  

The high prices, which reached £3,000 a year for a typical user, has led to some drastic ‘not’ coping tactics. Our polling found, over the last three months: 

·59% of GB adults say they had rationed their heating, turning their thermostat down lower than they wanted. 16% say they had done so every day, with those in debt to their energy supplier more than twice as likely to say this than those in credit. 

·49% of GB adults say they had gone to bed to stay warm. 19% say that they had done so most days. Those in debt to their energy supplier were more than three times as likely to say this than those in credit. 

·15% of GB adults say they had used an improvised heater at home. Those in debt to their energy supplier were more than twice times as likely to say this than those in credit. 

 Government statistics show how pervasive poverty has become 

All this comes as new Department for Work and Pensions statistics show that: 

·600,000 more people, half of them children, are living in absolute poverty, the government’s preferred measure of poverty. 

·In comparison to 2020-21, 900,000 more people are living in absolute poverty, 400,000 of them children. 

·Food insecurity has risen dramatically, increasing from 4.7 million people (7%) in 2021-22 to 7.2 million (11%) in 2022-23. 

 In light of high debts, National Energy Action is calling for a social tariff, energy debt repayment schemes and investment in energy efficiency schemes to keep bill costs down.