£2.92 Billion

That’s the level of domestic energy debt in Great Britain as at the end of 2023. 5 years ago, the figure was £1.2 billion, and in the past 12 months alone, household energy debt has increased by almost 50%. No wonder debt advice is busy.

The rapidity of this increasing debt in the past 18 months or so is clear in this graph:

The flatter orange line running along the bottom of the graph represents the energy debt level of customers who are in formal arrangements with their suppliers to repay that debt — the purple line represents those who — worryingly - have no arrangement in place. Of these, the average debt is also on the rise — £1214 for electricity (an increase of 31% compared to the end of 2022) and £1037 for gas (up 51%).

Ofgem classes debt as non-payment of energy bills for more than 91 days or 13 weeks.

How does this affect prepayment meter customers, who basically have to repay their debts as they go if they are to maintain a supply?

As graphs go, the above is dramatic. What looks to be a rocket of debt launching at the beginning of 2022, when there were just over a quarter of customers paying debts back via prepayment meters. Now it’s over half — the highest it’s been since Ofgem started keeping records.

How many households will this be affecting? Following a Freedom of Information request to Ofgem, they confirmed that — up to the end of 2023 — there were 4.1 million prepayment meters installed for electricity accounts and 3.2 million for gas (see table below); comparing these figures with 2020, it appears that the numbers have reduced by about 100,000 PPMs for each — but consider that 50% of these prepayment meters are deducting debt from top-ups. This puts approximately 2 million households with prepayment meters in a very difficult position regarding affordability — they simply have no choice but to keep topping up.

Notice also in the graph below, the sharp rise in smart meter installations over the past 3 years. This is important when considering figures for PPMs force-installed for debt after a warrant has been obtained — remember, smart meters can be converted to prepayment meter without a warrant.

So what happens when it gets cold? Look at quarters 3 and 4 — October 2022 through to March 2023 — in the graph below. Last winter saw 658,000 gas PPM customers self-disconnecting at least once, with over 534,000 customers remaining disconnected for at least 3 hours. Over 600,000 electricity PPM customers had also self-disconnected by June 2023, with 367,000 without electricity for over 3 hours.

Although energy prices are slowly coming down from their peak in June 2023, the price cap having increased again on 1st January 2024 means there is no respite for those struggling to afford the basics during the coldest months of the year and we don’t have the energy support scheme this winter to help us out. Even if the cap reduces in April 2024, as it is expected to, our bills remain higher than the average domestic bill in the heady days of summer 2021. Back then, an average dual fuel customer was paying between £850 and £1150 per year for energy, depending on the payment method. By the end of 2023, the average annual bill rose to between £1763 and £1931 — even when paying by direct debit - the cheapest method of paying - the bill has more than doubled.

Add to this, the cost of mortgages and rents, food and petrol, plus expected maximum increases in Council Tax (with Birmingham City Council proposing a 10% increase), together with the bafflingly high rise in motor and home insurance premiums, and I think it’s safe to assume that there will be increased pressure on debt advice services, which are already busting at the seams.

This poses a problem, because Councils are clawing back money to balance the books, and advice charities and organisations relying on local authority money to keep going are facing imminent funding cliff edges and closures. It’s a toxic mix which produces an ever-growing demand for advice, with a dwindling supply of advisers. And, of course, those that suffer the consequences of unmanagable debts — to their physical and mental health, their relationships, their livelihoods, etc — will be those in the deepest poverty and the most vulnerable of us.

The government is not currently proposing to extend the Household Support Fund — playing a tantalising game of ‘wait and see’ while tapping their noses and winking slyly at local authorities, practically on their knees, desperate to know if they will be thrown a lifeline at the 11th hour to ensure their residents can be assisted when they are in crisis.

There were quite a few jobs relying on this funding too — meetings are taking place right now to inform staff that they will be let go at the end of March 2024. It’s a rather bleak prospect for people who are suffering financial deprivation, and those that were in place to assist them. Perhaps the current crop of cabinet ministers are considering that this won’t be their problem for too much longer, but it’s a callous, heartless way to govern over the most vulnerable of us. There’s still time for them to do the right thing, but, given the past 14 years, we’ve no rational reason to think this will happen.