UK Energy Debt Crisis: Why Households Are Falling Behind

Why is UK energy debt in the spotlight?

The UK is seeing a bigger problem with energy debt. Over the past ten years, people now owe three times as much for household energy debt. A lot of families find it hard to pay their gas and electricity bills. The rise in energy costs, flat wages, and a series of financial shocks have come together. This mix has caused families to fall behind on their household bills, like council tax, mortgage interest, gas, and electricity bills.

In 2025, UK families are expected to owe more than £3 billion in total energy debt. Ten years ago, this number was less than £1 billion. The Resolution Foundation, which is a well-known think tank, says this problem shows Britain’s dire record on poverty and energy use over recent decades. A lot of people now do not have the financial resilience to handle the prices going up and down.

What is energy debt?

Energy debt is when people still have to pay money to an energy provider for their gas or electricity. This can happen in a few different ways.

• A direct debit payment might be missed or paid less than needed.
• You may fall behind on your gas bill or electricity bill when you use more energy at home in a period of very cold weather.
• There can be no income support or enough help from benefits to pay for your higher energy usage.
• Some people use prepayment meters and they may run out of money on their electricity key or gas card.

Debt can take the form of:

• Arrears on accounts that have been billed.
• Negative balances on meters that need prepayment.
• Payment plans with suppliers that help spread the size of their debts over time.

Because people need heating and power, money owed for these is seen as consumer debt. But these are also called priority bills. This means you should take care of them first, before you pay things like store cards or overdrafts.

How much has UK energy debt grown?

The scale of the crisis is stark:

The number of customers who are behind on their payments has gone up a lot. The consequence of lack of income and high energy costs means that many households now owe hundreds of pounds each.

Why is energy debt rising?

1. Rising cost of living

Energy is only one thing that makes household bills go up. A lot of families owe money for council tax. Some also have to pay late fees for rent and loans. If you do not get council tax support or help from household support funds, you can end up owing even more money fast.

2. High energy costs

Even though there is a price cap, the average dual-fuel bill will still be over £1,700 in 2025. This means people are paying more money for each unit of gas and electricity. In this way, gas customers are having to pay charges that many will find too high and not easy to manage.

3. Lack of financial resilience

The UK has the problem of lack of financial resilience. A lot of families do not have much money saved up. This means they find it hard to deal with things like a very cold winter or if they need to use central heating more than usual.

4. Stagnant incomes

Weak real wage growth in recent decades has made life hard for many families. A lot of people now depend on universal credit or get income support to help meet their needs. Some also need help from a food bank to have enough food for their house. Energy arrears are the consequence of lack of income. It is not because people spend too much.

5. Financial problems compound

Falling behind on just one bill can start more financial problems. Energy arrears might add up fast when you miss payments for rent, council tax, or mortgage interest. These things can get their own debt. This often turns into a cycle of consumer debt that is tough to get out of.

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Fuel poverty and energy debt

The crisis mixes with fuel poverty. This is when a home does not have enough money to heat the place to a safe average temperature.

• In England, about 3.5 million homes are struggling to pay for fuel.
• In Scotland, almost 25% of homes feel the push, which gets worse because winters are long there.
• In Wales and Northern Ireland, old homes and not much insulation cause people to use more fuel.

Fuel poverty happens when people cannot pay to heat their homes. This can make their homes cold and damp. A home that is cold and damp can make people feel unwell or sick. It can also cause health problems over time. Because of this, some people get more sick than others. This leads to health differences between people.

Health impacts of energy debt

Energy debt is not just about money. It hurts physical health too. When people live in cold homes, they get more breathing problems, heart disease, and feel down. The NHS has to use billions each year to treat illnesses caused by cold homes.

Households that have unpaid bills usually use less heating and electricity. This can cause:

• Not enough heating for people who have a health condition and need more warmth.
• More stress and worry happens. Sometimes, people need additional help to feel better.
• Bad eating happens because families go to food banks to get food. This is because they have to pay other household bills.

Who is most at risk?

• Low income households: They often have trouble paying several household bills at the same time.
• Gas customers: Higher costs can happen for them because the price of a unit of gas can change a lot.
• Private renters: Many live in homes that do not keep heat in well.
• Elderly households: It can be hard for them to pay for central heating when it gets cold.
• Universal credit recipients: There be few back-up options for them, so they rely on extra help.

The Resolution Foundation says that many families do not have enough financial resilience. A lot of people might not be able to deal with even small increases in their bills.

How energy suppliers handle debt

Energy companies have to treat people in a fair way. They use several tools to make sure they do this.

• Offering a payment plan can help people spread out their arrears over time. This way, you can pay in smaller amounts.
• If a household needs help, the company can add them to the priority services register. People on this list get priority services, like emergency top-ups if things go wrong.
• Payments can be made using fuel vouchers, Fuel Direct (where money comes straight from benefits), or the Household Support Fund. This gives people different ways to pay.
• Sometimes, collections can be paused if you qualify for the government’s Breathing Space scheme. This gives households 60 days’ relief so there is no pressure from creditors.

Ofgem says that suppliers need to show contact details in a clear way. Customers should be able to ask for extra help if they have problems. There must be a way for people to get more support when they need it.

Price comparison & switching when you’re in debt

One way to save money is to change suppliers. But the rules are not the same if you owe money.

• If you owe money that is less than 28 days old, you can go ahead and switch. The debt will be added to your final bill. You will have to pay it.
• If your debt is older than 28 days, the switch can be stopped until you pay what you owe.
• If you use a prepayment meter, you can switch if you owe up to £500 per fuel. This is part of the Debt Assignment Protocol (DAP).
• If you owe more than £500 for each fuel, you might not be able to switch until you pay down your debt.

Before you switch, you should check your energy usage and see your debt balance with your energy provider. If your account is blocked, look into a payment plan or a debt write-off. Do this before you start to compare tariffs.

Support available for households in energy debt

Households can access a range of schemes:

• Warm Home Discount Scheme: Each year, some homes that need help most can get money back on the cost of their energy bills.
• Household Support Fund: Families that feel the consequence of lack of income can get grants to help with bills and other needs.
• Council tax support from your local council is there if you owe more than just money for energy arrears or energy bills.
• Payments for energy arrears using your Universal Credit can be handled by Fuel Direct, so your bills get paid straight from your money.
• Emergency fuel vouchers are ready for people who use prepayment. If you run out of money on your gas card or electricity key, get these vouchers to keep your energy on.
• Some charities give extra help with things like food, clothes, and more, so you and your family can have what you need.

How to avoid energy debt

Households can take steps to avoid arrears:

• Ask your energy provider for their contact details. Talk with them about extra help you can get.
• Join the priority services register if you are elderly, disabled, or have a health condition.
• Plan how to pay your household bills, including council tax. This can help you not get into consumer debt.
• Look out for a social tariff. If there is one, apply so you may pay less over time.
• Try to save some money to build up good financial resilience.

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The role of the price cap

The price cap puts a limit on how much you pay with a standard variable tariff, but:

• Bills stay high for all, even when the cap is in place.
• Gas customers still have to pay a lot for each unit of gas.
• Direct debit customers get new payment amounts set every time the cap gets changed in April, July, October, and January.

The cap helps with the problem, but it does not fix the deep affordability crisis.

FAQs about the UK energy debt crisis