Figures show there has been an increase in people reporting utility bill debts since the financial crisis a decade ago.
National Debtline, a charity run by the Money Advice Trust, has published a new report, titled “A Decade in Debt”, which reveals how the “realities of debt problems” have changed in the decade since the financial crisis.
The charity says the proportion of callers with energy arrears has risen from 9 per cent to 17 per cent in the last 10 years.
Callers with water arrears have risen from 4 per cent to 16 per cent, while 14 per cent of calls were in relation to telecoms arrears, a rise of 10 per cent.
This year on average £972 was owed by those with energy debt, £646 was owed by those with water debt and £432 was owed by those in telecoms debt.
In response to these trends, the Money Advice Trust has set out recommendations for the government, regulators, utility providers and the advice sector, including:
- Ofgem should work with energy suppliers to ensure that payment and debt recovery processes take better account of customers with variable and irregular incomes
- Water companies should align their social tariff eligibility criteria and application processes to overcome the current complexity
- Ofcom should require communications providers to publish data on the number of accounts in arrears, levels of debt owed and customer disconnections.
The report added: “Ofwat should review and publish aggregate level measures from their ‘Delivering Water 2020 Strategy’, addressing affordability and vulnerability, covering the number of people finding water bills affordable, in debt, on repayment plans, applying for affordability assistance and awareness of affordability assistance.”
Joanna Elson, chief executive of the Money Advice Trust, said: “Ten years ago a typical caller to National Debtline was struggling to pay credit cards and personal loans. Today, callers are struggling with smaller but trickier debts, usually on everyday household bills such as council tax, rent and utilities.
“During this time the proportion of callers with energy, water and telecoms arrears has increased significantly.
“We are calling for more to be done by government, regulators, utility providers and the advice sector to work together to further support people in these types of debt.
“We look forward to working with stakeholders in this area to take forward the findings and recommendations in our report.”
Ofgem said those repaying an energy debt has decreased to the “lowest level on record”, with 650,000 electricity and 540,000 gas consumers in debt.
“However, more consumers owe money without a repayment plan set up yet, including 600,000 electricity customers and 460,000 gas customers,” a spokesperson said.
They added: “As part of social obligations reporting, we routinely monitor suppliers’ performance on how they manage customers in or at risk of payment difficulties through our social obligations reporting. Protecting vulnerable customers is a non-negotiable for suppliers and if they fail to respond to their customers’ needs, we will take tough action.”
Meanwhile an Ofwat spokesperson said: “Affordability and support for vulnerable customers are at the heart of our 2019 price review.
“Over the coming months, we will carefully scrutinise each company’s plan, including whether bills are affordable and value for money and whether it offers appropriate assistance for those struggling to pay.”
Water companies submitted their business plans for PR19 to the regulator on Monday (3 September).