Energy costs falling but fuel debt continues to climb, figures reveal

Energy costs falling but fuel debt continues to climb, figures reveal

With energy costs receding from their historic highs, there now remains a damaging debt problem according to fuel poverty champions Energy Action Scotland.

Latest figures from Ofgem, the government’s energy regulator, show energy debt growing at 10% per quarter across 2023-24 as opposed to just 3% per quarter from 2018-22. Total gas and electricity debt and arrears across the UK now stands at nearly £3.3 billion.

According to Ofgem, for households in energy debt or arrears, the average stands at more than £1200 for gas and nearly £1500 for electricity. Ofgem data says 2.5 million households are currently in energy debt.

Figures show that fuel poverty rates have fallen across Scotland from 37% in 2023 of households to 31% in 2024, although this is still well above the 2019 figure of 24%.

Energy Action Scotland highlighted the latest Ofgem data to show that although bills are falling, the financial position for many families is very far from easing.

Energy Action Scotland chief executive, Frazer Scott, said: “Although energy costs are easing, they still remain about 50% higher than in 2021, the impact of the drastic increases in costs seen recently will be felt by many families for years to come. Many on low fixed incomes will be highly unlikely to have the money to clear the fuel debts they have accrued. This will lead to years of stress and worry over debts they simply had no choice in running up if they were to keep their families warm. Enduring and unrepayable debt further reducing their ability to heat and power their homes.

“Scotland’s share of the overall UK debt is likely to be over £350 million, disproportionate due to poorer quality of our homes and the colder climate we have requiring more energy to achieve the same level of comfort as in other parts of Britain.’

“The level of debt is now so great that it is unlikely to be ever paid off, and a government-led debt reduction strategy is urgently needed to ensure the most vulnerable stay connected.”

In some cases households are having to take even more drastic action, Ofgem data found that in the first quarter of this year more than one million customers self-disconnected their electricity supply because they could not afford their bills.

Simon Francis, coordinator of the End Fuel Poverty Coalition, added: “Tackling energy debt should have been a major issue during the General Election campaign, as it is taking a major toll on households. However, it was ignored by every political party.

“The average household has had to find £2,500 in the last few years just to keep their energy usage where it was. When combined with the wider cost of living crisis, this is a figure well beyond people’s means and it is no wonder that people are now getting deeper into debt.

“The UK Government must introduce a universal, consistent, nationwide, energy debt matching programme.”

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