In April, more than 2.7% of direct debit gas and electricity payments bounced. This unfortunate trend underscores the challenges for British households dealing with burgeoning energy bills. Today, the Office for National Statistics (ONS) has published their new experimental figures. They reveal how a record number of consumers are unable to afford their energy bills due to their own bank accounts literally running dry.
This dramatic increase in defaults is happening at the same time that the UK is still grappling with some of the highest energy prices in the world. Each of these issues is magnified by the nation’s deep dependence on gas for both electric generation and residential heating. For context, last month only 3.9% of direct debit loan payments were defaulting. This trend points to the mounting financial pressures on consumers.
Simon Francis, coordinator at the End Fuel Poverty Coalition, said that these recent developments were alarming. It’s time that these numbers should be ringing alarm bells in the Treasury,” said Mr. Francis. He warned that the energy bill crisis is just beginning. This alarming trend would only increase the growing amounts of energy debt, which suppliers have already begun to report.
“The energy bill crisis is not over.” – Simon Francis
The current default rate is a far cry from record lows of roughly 2.1% seen in the summer of 2020. Simultaneously, a large number of households were sitting on piles of cash due to Covid-19 restrictions. This unexpected financial buffer let them focus on economic stability at home. The recent default numbers will result in increasing overall energy debt and arrears.
As of September, civil servant pay and non energy bills have hit record £3.8 billion. This was an incredible £2 billion jump since the beginning of 2022 alone. Francis highlighted the unsustainable nature of this growing debt, stating, “It is simply unsustainable for consumer energy debt to continue to grow unchecked.”
“This is a deeply worrying trend and will only add to the increasing levels of energy debt suppliers are reporting.” – Simon Francis
Energy costs have fallen substantially from the peaks of the government energy price cap in 2022 and 2023. Households are still struggling financially on a month-to-month basis, indicating that the recovery process is far from over. As the situation continues to unfold, experts are pushing for swift action. They do want to relieve burdens on consumers who aren’t able to pay sky high energy bills.