Indebted nation: almost four million households (14%) are currently in debt to their energy supplier
Rising debt: after a winter of price hikes, the average debt per household has risen by £5 to £128, despite the milder weather helping to cushion the blow
Red is the new black: collectively consumers owe an estimated £464 million to energy suppliers
Mounting pressure: a third of those in debt (33%) say they owe more now than they did a year ago – just 9% owe less
Decade of despair: the average household energy bill is now an eye-watering £1,265 a year – £53 more than a year ago and an astonishing £793 or 168% higher than in 2004.
After a winter of price hikes, almost four million households (14%) are in debt to their energy supplier, according to new research from Uswitch.com, the independent price comparison and switching service. Indebted consumers now owe £128 on average – £5 more than last year – and collectively have racked up an estimated £464 million in debt to energy companies.
The average household energy bill is £53 a year higher than at the beginning of last year. And while the relatively mild weather this winter will have cushioned consumers from the blow, still a third of those in debt (33%) owe more than they did a year ago – just 9% owe less than last year. But the pressure on consumers’ bills hasn’t just come from recent hikes. The average household energy bill now stands at a staggering £1,265 a year – £793 or 168% higher than a decade ago.
A quarter (25%) of households are choosing to turn a blind eye to their debt in the hope that the amount they owe will go down naturally over time. One in five households in debt or arrears (21%) intend to pay it off with a lump sum, while over four in ten (43%) plan to increase their direct debit. However, worry over mounting debt is leading almost one in ten (9%) to seek a repayment plan with their energy supplier.
Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “Millions of households are in debt to energy suppliers and the amount they each owe has risen. This is a clear indication of the extreme pressure families are under to meet the rising cost of energy. The average household energy bill is £53 a year dearer than a year ago. For many consumers, the only thing that has kept this particular wolf from the door is the fact that this winter has been exceptionally mild.
“Those in energy debt can face a catch-22. Despite knowing they could reduce their bills by moving to a cheaper energy plan, many see debt as a barrier to switching. With a difference of over £300 between the cheapest and most expensive tariff on the market, consumers cannot afford to have this avenue closed to them. This is why it’s so important to provide regular meter readings to suppliers as relying on estimated bills can be a shortcut to debt.
“I would also urge those who haven’t yet done so to start paying energy bills by direct debit. This spreads the cost evenly throughout the year so that you can avoid the burden of heavier bills in the winter. You will also earn a valuable direct debit discount. However, anyone who has got to the stage where they are concerned about their ability to pay should contact their supplier sooner rather than later to discuss their options.”
Research referred to in the notes below was conducted online by YouGov Plc on behalf of Uswitch.com. Fieldwork took place 3rd to 6th February 2014, amongst 2,138 adults with decision making involvement with energy suppliers. Data is weighted to be representative of GB adults. Previous research referred to in the notes below was also conducted through YouGov. Fieldwork took place from 13th to 15th February 2013 among 2,106 people with decision making involvement with energy suppliers. Data was weighted.
When asked: ‘Thinking about your most recent energy bill from your supplier, which of the following best applies to you?’ 14% of respondents answered that they were in debt. 14% of 26 million is 3,640,000 households. The mean amount of those in debt was £127.52. In 2013 the mean debt was £122.51.
See point above. 3,640,000 households in debt owing an average of £127.52 each equates to £464,172,800 in total.
When asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how does this compare with a year ago?’, 33% of respondents answered ‘My debt/arrears is higher’ and 9% responded ‘my debt/arrears is lower’
Based on a medium user customer using 3,200 kWh of electricity and 13,500 kWh of gas, on a standard dual fuel plan, paying quarterly by cash or cheque with bill sizes averaged across the big six suppliers and all regions.
When asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how are you going to pay it off?’ 43% answered ‘By increasing my monthly direct debit’, 25% answered ‘I’m hoping it will go down naturally over time’, 21% answered ‘By lump sum’, 9% answered ‘By agreeing a repayment plan with my energy supplier’, and 1% answered ‘Don’t know’.
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Uswitch is the UK’s top comparison website for home services switching. Launched in September 2000, we help consumers save money on their gas, electricity, broadband, mobile, TV, and financial services products and get more of what matters to them. Last year we saved consumers over £373 million on their energy bills alone.
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