Energy suppliers urged to step up debt support ahead of £2.5bn relief scheme

Great Britain’s biggest energy suppliers have been urged to strengthen support for households struggling with unpaid bills this winter, ahead of a government scheme worth almost £2.5bn to help write off record energy debts. Energy consumers minister Polly Billington met industry leaders on Thursday to discuss assistance for about 2.4 million of the hardest-hit households.

The relief programme forms part of the chancellor’s broader strategy announced in last month’s annual budget. It aims to address household energy debt, which could reach £7bn by the end of the year. Billington is understood to have told executives from companies including Octopus Energy, British Gas and EDF Energy that suppliers would retain a central responsibility for addressing problem debt alongside government funding.

Companies are expected to seek out customers showing signs of financial difficulty and offer support, including repayment arrangements and referrals to debt advice services. Ministers also intend to work with the industry to improve the identification of households needing additional assistance and update payment systems. The government supports smart meters and smart prepayment meters as tools to help customers monitor spending and avoid arrears.

The online meeting brought together senior figures from the six largest suppliers, trade body Energy UK, fuel poverty charity National Energy Action and five consumer advice organisations, including Citizens Advice. An attendee said the government’s plans showed considerable ambition and that the minister wanted suppliers and consumer groups to work together on their delivery.

After the meeting, Billington said unpaid energy bills placed a burden on millions of families, while also increasing costs for other customers. Households currently pay about £50 a year on average through their energy bills to cover unpaid bills across the market. That amount would probably increase without efforts to reduce the debt. The government estimates that its one-off relief scheme, combined with measures to prevent further debt, could save households an average of about £130 over 10 years.

Billington said the measures would support vulnerable households whose energy debts dated back to the energy crisis several years ago. Gillian Cooper, director of energy at Citizens Advice, said that with typical annual bills forecast to rise again in January, the initiative needed both to address outstanding debt and protect households from falling into arrears.

Moving home is understood to account for the build-up of about 40% of unpaid bills. Proposed reforms would require landlords to give suppliers meter readings and moving dates when tenants enter or leave a property.

Rachel Fletcher, a director at Octopus Energy, the country’s largest supplier, welcomed the emphasis on improving companies’ efforts to prevent debt. She said the package should preserve suppliers’ incentives to develop and invest in ways of helping customers avoid and manage unpaid bills.