Thursday, 4 August 2022 — Open Democracy
Official Ofgem data shows millions of electricity and gas users in arrears for the first quarter of 2022
New official figures show nearly 3.5 million gas and electricity accounts are in arrears
A record 3.4 million gas and electricity accounts were in debt even before the April price hike, new figures quietly released by Ofgem reveal.
That figure is nearly a third higher than it was a year earlier, when the figure stood a little below 2.6 million. The energy regulator, which has been collecting comparable data since 2012, admits it is “the largest year on year increase in arrears” that it has seen.
This is the first official energy arrears data to be published in nearly a year, after the turmoil caused by the collapse of several energy suppliers resulted in a significant delay in releasing the data, Ofgem previously told openDemocracy.
Joe Cox of the Debt Justice Campaign told openDemocracy: “These shocking new figures show beyond any doubt that millions of households are being pushed into debt just to heat and power their homes.”
He added: “This crisis is now so severe that we should be looking at writing off these energy debts to help these households get through the winter.”
The new figures show that, in the first quarter of this year, nearly two million households (1,910,833) were in electricity arrears – a record high. Nearly 1.5 million households (1,458,200) were similarly behind with their gas bills. It is not known how much overlap exists between the two figures.
The amounts owed have also hit new records. Those who don’t have active repayment plans in place – around half of those in debt, typically the households that owe the most – now owe a record average of £855 on their gas bill, an increase of 25% in the last three months alone. For electricity, too, the recent figures show these arrears at record average levels of around £900.
What’s more, the figures do not yet fully reflect energy debts incurred over the winter, when energy bills are typically higher. Although the latest data relates to the first quarter of this year, there is a lag because a bill must go unpaid for three months before it shows up in the official debt statistics.
According to Ofgem, the rising debts have “presumably been driven by higher retail prices and increasingly difficult financial circumstances faced by some households”.
As Ofgem today confirmed its intention to adjust the price cap more frequently in future – meaning households face a further rise in January – these figures will add to the mounting pressure on government and prime ministerial candidates to do more to help those who have already been struggling for months. Rishi Sunak has pledged to cut VAT on fuel bills for a year, which would save the average household about £180 on bills well over £3,000, while Liz Truss has rejected calls for a fresh windfall tax and vowed to suspend green levies on bills, despite warnings that such a “nonsensical” plan would “increase bills” rather than reduce them. These levies currently fund energy diversification, insulation schemes and support for the poorest.
Debt charity StepChange warned last week that the average energy arrears of its callers have risen by almost a third in two years to £1,399. Citizens Advice said it was supporting people making “stark choices”: “Some are turning off fridges and freezers because they can’t afford the running costs; others are washing their kids’ clothes at their grandparents’ because they’re already in the red.”
The charities are calling for energy companies – some of whom have been criticised for making huge profits – to treat indebted households fairly. One concern is the forced installation of traditional pre-pay meters, which can currently lead to people effectively being disconnected almost immediately when money runs out.
Opposition MPs and environment groups are also calling for a bigger windfall tax on soaring north sea oil and gas profits to help fund measures such as a mass energy efficiency programme.
A committee of MPs said last week that the government should “stop announcing short-term policies and moving existing budgets around and instead fully fund a national retrofit programme” of home insulation. It warned that without such action, and other urgent financial support for poorer households, millions more people faced being plunged into “unmanageable” debt by energy bills this winter, calling the existing package announced by Rishi Sunak “obsolete” and “inadequate”.
Industry analysts have this week again increased predictions for the energy price cap that now sets the bills of most households. Ofgem is due to announce the October price rise at the end of August, but Cornwall Insight – whose past predictions have been highly accurate – is now predicting that a typical household will pay the equivalent of £3,358 a year from October, and £3,615 a year from January, a 163% rise in bills since last winter. It has also warned that energy bills will remain at “devastatingly” high levels until “at least 2024”.