Energy Bill Defaults Hit Record High Says ONS Households Struggle to Keep Up

A record number of households in Britain have been unable to pay their energy bills via direct debit, as per new data from the Office for National Statistics (ONS). Figures from April reveal that over 2.7% of direct debit payments for electricity and gas failed due to insufficient funds. This marks the highest default rate since records began in 2019, tripling the pre-crisis rate of 0.9%, highlighting widespread financial struggles among consumers.

Missed loan payments have also surged, hitting their highest point since the ONS began tracking such data. Nearly 3.9% of households defaulted on direct debit loan repayments in April. This represents a sharp increase from the 2.1% level recorded during the summer of 2020, when Covid-19 restrictions offered many households some financial relief.

Experts have warned that this trend will likely deepen existing energy debt issues, with arrears reaching a record-breaking £3.8 billion by September 2024. According to Citizens Advice, nearly 7 million people are currently living in households indebted to their energy supplier. Gillian Cooper, Director at Citizens Advice, emphasised the urgent need for targeted financial support, urging the government to accelerate plans to improve energy efficiency by upgrading 5 million homes within the current parliamentary term.

Despite falling energy costs under the government’s price cap, following the record highs of 2022 and 2023, many households are still struggling. The UK’s reliance on gas to generate electricity and for heating has contributed to some of the highest energy prices globally. Simon Francis, Coordinator at the End Fuel Poverty Coalition, expressed concern over the growing crisis, adding that consumer debt was approaching unsustainable levels. He urged both the Treasury and regulator Ofgem to introduce a debt relief scheme to alleviate the mounting burden on households.

Ofgem has already introduced stricter rules to aid struggling households, requiring energy suppliers to detect signs of financial hardship earlier and provide swift support. Measures include affordable payment plans and emergency credit to prevent self-disconnection. However, further action is needed, with Ofgem expected to publish its response to a recent debt relief consultation soon. The regulator aims to propose a statutory consultation to implement long-term solutions to the growing issue of energy debt.

As energy bills remain a significant challenge for millions across the country, consumer groups and regulators alike stress the importance of immediate intervention to prevent further escalation of an already critical financial crisis.