Many households are struggling to keep up with their energy bills as prices are set to rise in July. According to new data from Money Wellness, the amount owed to energy suppliers has increased by 23% over the past three years, with arrears rising from an average of £1,848 to £2,270. The number of people seeking debt advice who are behind on their energy payments has also surged from one in three to almost half during the same period.
With Ofgem set to announce an increase in the price cap for households on July 1, industry experts predict a jump of over £200 a year, raising the annual bill from £1,641 to £1,850. Despite some relief in energy prices, many households are still grappling with arrears accumulated during previous financial shocks, such as the Covid pandemic and subsequent cost of living crisis, leaving little room in their monthly budgets even as prices stabilize.
Money Wellness emphasizes that while energy prices have slightly decreased, energy debt remains a significant burden for many households. The organization is advocating for a national social tariff for energy, similar to existing water support schemes, citing the fragmented and challenging nature of current support systems. Based on their analysis, up to 87% of customers in energy arrears could qualify for a social tariff, including those receiving means-tested benefits, disability benefits, or facing high essential energy costs.
As the higher energy price cap looms, there are growing calls for targeted government assistance. Suggestions include establishing a publicly owned energy retailer to offer low-cost options for households, relying on renewable energy sources and reinvesting profits to reduce bills. Additionally, there are appeals to reconsider private ownership of the energy grid, with proposals to redirect profits back into cutting bills and alleviating fuel poverty.