A window looks out onto Greenwich power station. Photograph by Iuliia Dutchak

Financial foundations for adult health

Supporting households in energy debt

The role of debt advice, the energy sector, and government.

Read the executive summary (PDF) View the full report on Clear Consultancy's website

Gas and electricity prices have increased rapidly over the past few years, driving consumer energy debt to record levels and exacerbating health inequalities.

Millions of people have been forced to live in cold, damp conditions, which can cause respiratory conditions, hypothermia, poor mental health, and problems with childhood development.

Against this backdrop, we commissioned Clear Consultancy Services to analyse the impact of higher energy debts on individuals, households, and the debt advice sector.

The resulting executive summary (PDF) outlines seven key recommendations for how Ofgem, government, and the energy sector can improve support for households in energy debt.

“

I’ve used less energy, gone without heating, electricity, food, and meals. I eat every 2 days. I don’t cook hot food to save on energy. I shower only 2 times a week.

Money and Mental Health Policy Institute Research Community member

Key findings

Energy debt:

  • Energy is the fastest growing type of debt being brought to debt advice services in Great Britain, both in terms of volume and value.
  • Debt advice agencies reported seeing an increase in people with energy debts, alongside increasingly complex circumstances.
  • There are no significant differences in the levels or causes of energy debt between the nations of Great Britain.

Accessing help and the standards of support:

  • Fewer than half (46%) of respondents to the Money and Mental Health survey who were struggling with their bills got in touch with their energy provider about their difficulties.
  • Of those who had contacted their supplier, nearly half (46%) said that they had not received any support as a result.
  • Debt advisers reported that energy suppliers are the worst, or one of the worst, categories of creditors that they deal with.
  • Debt advisers’ experience with the energy sector was negative overall, but especially amongst advisers in community-based services.
  • Consumer and adviser experiences suggest that support for people falling behind with bills is often inadequate and may exclude those who need it the most.
  • Excellent practice does exist in parts of the energy industry but is not consistent.
  • Ofgem’s priority and focus on improving service standards for people in debt is welcome.

Debt advice funding:

  • Debt advice is becoming harder and more expensive to deliver.
  • Household bill debts account for between 35% and 58% of the debts presenting at debt advice by number and between 25% and 38% of debts by value.
  • The debt advice funding framework is outdated and widely criticised as being ‘unfair’.

Recommendations

  1. Ofgem needs to spearhead a change in how the energy sector supports people in debt.
  2. A more constructive and effective relationship between the energy sector and debt advice sector should be developed.
  3. Ofgem should conduct a thematic review of the experiences that people in debt and debt advisers have when they interact with energy suppliers.
  4. Ofgem should undertake a consumer-centred review of the debt pathway.
  5. Government should introduce legislation to deliver a new funding model for debt advice. This should compel all significant creditor sectors to contribute via new levies or by expanding and adapting existing schemes.
  6. MaPS and the FCA should be instructed to work with the debt advice sector, the devolved administrations, and key creditor sector regulators to develop a new debt advice data strategy.
  7. The energy sector should be prioritised in implementing a new funding model.

The implementation of these recommendations would improve the financial, physical, and mental health of people trapped in spiralling energy debt.

“

Energy is one of the worst sectors we deal with, notably worse than water and local authorities. There is so much back and forth between us and energy firms, having to clarify things and complain about mistakes energy firms make.

Representative of a community-based debt advice charity

Read the report

Read the executive summary (PDF) View the full report on Clear Consultancy's website

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