Call for energy ‘help to repay’ scheme for 5.5m Brits in debt

A coalition of charities has called on the government to introduce a ‘help to repay’ scheme to write off energy bill debt for vulnerable customers, after research found an estimated 5.5 million UK adults are behind on their energy bills.

The findings, by Money Advice Trust, reveal that 2.1 million more people were in energy debt in April 2023 than in March last year.

As such the charity, along with Step Change, National Energy Action, Scope and 10 other organisations, have written to energy secretary Grant Shapps outlining plans to help struggling customers.

A government-funded help to repay scheme, they say, would offer vulnerable customers two different forms of support, depending on their individual circumstances.

One would be debt relief in the form of writing off eligible energy arrears, while the other would be a repayment matching scheme such as by matching each pound repaid with an equivalent amount of debt relief, or providing debt relief on remaining arrears after a certain period of ongoing payments.

The charities propose that standardised eligibility criteria could be used as a proxy to identify those who are likely to struggle to repay debts. This could include household income level, receipt of means-tested benefits or eligibility for existing support such as the Warm Home Discount.

They further propose additional routes to access support for those in need but who do not fit into standardised criteria.

They said: “This could be based on an individual’s income and expenditure, as calculated using the Standard Financial Statement – an agreed, objective tool for assessing affordability, run by the Money and Pensions Service and used by FCA-authorised debt advice providers and the Insolvency Service – or the Common Financial Statement, which is used in Scotland.

“Where this showed that people would struggle to afford to repay energy arrears, or to do so in a reasonable timeframe, they would become eligible for support from the scheme.”

It comes as research by the Money Advice Trust found that while energy retailers are providing support for vulnerable customers, an estimated 3.9 million consumers said they have not been able to access help for their bills after contacting their suppliers.

Furthermore, 3.2 million reported not being able to get through and contact their supplier for help when they had tried to do so.

A government spokesperson said in response: “We know this has been a difficult time for families, which is why the government has covered around half of the typical household’s energy bill over winter.

“We are providing additional support to the most vulnerable, with an extra £150 for disabled people and £900 for those on means-tested benefits.”

“We welcome the recent reduction in the price cap and will continue to monitor energy prices and keep support schemes under review.”

Meanwhile an Energy UK spokesperson said: “The Money Advice Trust report shows that energy customers need a joined-up strategy for this winter between consumer groups, suppliers, Ofgem and, in particular, the government to ensure customers are served effectively and given the bill support they need.

“The energy crisis has led to bills becoming unaffordable for a larger and growing group of customers who are consequently struggling with debt and with high prices set to persist. Energy UK and our members are clear that government support will be needed again to tackle bill affordability this winter. Help to Repay effectively builds on the options Citizens Advice set out earlier this year to tackle the growing debt and bill affordability challenge.”

Utility Week‘s Action on Bills campaign is calling for more support to be provided for vulnerable households this winter, while the government works out more targeted support such as a social tariff for next year. 

Affordability is one of the themes at Utility Week Forum this October. To find out more click here.