2.3 million households (8%) owe £267 million to energy suppliers before winter begins – averaging £115 each
Energy debt £126 million (32%) lower than 2018
But 1.6 million households still forced to choose between heating and eating this winter
Drop in debt due to increased switching and greater savings – but Uswitch.com urges more targeted support for struggling energy customers
2.3 million households owe their energy suppliers a total of £267 million before winter has even begun, according to new research from Uswitch.com.
Averaging £115 per household, the debt level is £126 million less (32%) than last year, while the number of bill payers in arrears has also reduced by 610,000 (21%).
Record switching rates, greater savings being made through switching, and people moving away from poor value Standard Variable Tariffs (which are more expensive this year, on average), have all contributed to the reduction in the level of debt.
But behind the welcome headlines, harsh realities continue to affect many households. Well over a third (36%) are worried about paying their energy bills this winter.
To keep costs down four in ten people (41%) will wear extra layers, 30% will turn the thermostat down, and a staggering 4.6 million households (17%) won’t put the heating on even when it’s cold. Heartbreakingly, 1.6 million households say they will be forced to spend less on food to pay for their energy use.
Energy companies could be doing more to help when customers slip into the red. Over half the households in arrears (56%) said their supplier had not contacted them about the debt, nor offered advice about saving money or repaying the outstanding amount.
Almost six in ten (56%) were contemplating making sacrifices to clear their energy debt, including cutting back on food, Christmas presents, holidays, and socialising.
Switching supplier can help people spend less, with savings of up to £477 a year. Credit meter customers need to clear any debt before switching provider unless it is less than 28 days old, in which case it will be added to the final bill. If the debt cannot be paid off in one go, switching to the supplier’s cheapest deal will help bring costs down.
Prepayment meter customers in debt by less than £500 per fuel can usually switch provider, but should still organise a manageable repayment plan.
However, for many households in the most difficult situations, switching alone won’t be enough to solve the problem. Debt charities such as StepChange provide guidance for people experiencing financial difficulties. There is also extra help available for vulnerable consumers through schemes like the Winter Fuel Payment, Cold Weather Payment, and (http://Warm Home Discount). Energy customers can use this tool to find out whether they could be eligible.
Richard Neudegg, Head of Regulation at Uswitch.com, said:
“Thankfully, the number of people in energy debt this year has fallen as more and more people take control of their energy bills and shop around for savings.
“But sadly the good news doesn’t extend to everyone. Over one and a half million households still say they will have to choose between heating and eating in order to pay their energy bills this winter. That’s a terrifying prospect for anyone to have to face.
“Energy companies need to do more to make customers aware if they’re falling behind, and what their options for paying off the debt are, before people have to start making drastic decisions which could affect their health and wellbeing.
“Likewise, more needs to be done to reform Government support so that it’s targeted at the most vulnerable households, where it will have the most benefit.
“Anyone worried about debt should speak with their energy supplier to set up a repayment plan, get energy saving advice, and check if they are eligible for free insulation or grants to help keep costs down.”
Research conducted online by Opinium, 1-4 October 2019, among 2,033 adults responsible for energy bills, weighted to be nationally representative.
There are 27.6m households in the UK (Source: ONS). 8.4% of respondents said they were in debt, averaging £114.93. 8.4% of 27.6m = 2.3m households. £114.93 x 2.3m = £267m owed to suppliers in total (figures rounded).
In 2018, 2.9m households owed £393m, averaging £134.11. 2.9m - 2.3m = 610,000 fewer households (20.8%) in debt in 2019 compared to 2018 (figures rounded). Total debt reduced by £126,266,953 (32.1%) between 2018 and 2019 (£393,076,410 - £266,809,457).
When asked ‘Are you planning to do any of the following to keep your energy bills down this winter’:
41% said ‘Wear more layers to avoid putting the heating on’
30% said ‘Turn your thermostat down’
17% said ‘Not put the heating on even when it’s cold’
6% said ‘Spend less on food in order to be able to pay for my energy’
Source: Energy UK: In 2018, 5.8m electricity customers switched supplier. From Jan-Sept 2019, 4.7m electricity customers switched supplier, 11% more than Jan-Sept 2018.
Source: Uswitch data, correct as at 25/10/19: average savings per household are 6% higher in 2019 (year to date) than 2018.
Source: Uswitch data, correct as at 25/10/19: In 2019 to date, the median cost of Big Six SVTs is £1253.95 on average. In 2018, the median cost of Big Six SVTs cost £1173.78 on average. Assumes medium annual consumption, dual fuel, paying by monthly direct debit.
When asked “How worried are you about your energy bill this winter?”, 36% of respondents answered ‘Very worried’ or ‘A little worried’ in 2019, compared to 41% in 2018.
Of those in arrears, 56% said their supplier hadn’t contacted them about their debt.
56% of those intending to increase their payments to pay off the debt said they would sacrifice something to afford it.
Between 1 Jan - 30 June 2019, at least 10% of people who switched energy supplier for both gas & electricity with Uswitch saved £477 or more.
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