Energy arrears are now the most common debt type

It comes as energy market researcher Cornwall Insight forecasts the energy price cap will rise to £4,266 at the start of 2023. Its update follows regulator Ofgem’s announcement that it would be revising the price cap methodology - going from once every six months to once every quarter. 

According to the Money Advice Trust, energy arrears are now the most common debt type among people contacting its National Debtline service, making up 32% of total calls in the first quarter of 2022 - up by ten percentage points since 2021. 

In addition to this, 45% of callers have a deficit budget where they do not have enough coming in to cover essential costs. As such, the charity is warning the options for many people are running out, and further support is needed as soon as possible. 

Its director of external affairs Jane Tully added: “Government support announced so far to help with energy and cost of living price rises has been welcome but does not get close to matching the scale of the challenge households now face.

“At National Debtline and Business Debtline, we are hearing from more and more people struggling to afford soaring energy bills and whose incomes cannot keep up with rising costs. Further targeted support is needed for those on the lowest incomes, including significantly raising benefits and additional direct support to help households afford energy bills this winter.

“Ofgem also needs to do more to protect households struggling with their energy bills including ensuring energy firms treat people struggling to pay or already in energy arrears fairly and halting potentially harmful debt collection practices.”

Following Cornwall Insight’s projections, Sir Ed Davey - leader of the Liberal Democrats - has called on the government to recall parliament so a law can be passed to scrap the energy price cap as soon as possible. 

He said: “People are worried sick about the next staggering rise in energy bills which is just round the corner. Yet we are faced with a deafening silence from the prime minister and chancellor, while both Conservative leadership candidates have failed to come up with a bold plan to solve this crisis. 

“The Liberal Democrats have prepared legislation that is ready and waiting to implement our plans to scrap the energy price rise. Parliament must be recalled now so we can pass this law as soon as possible. 

“Every day that goes past without any answers from this Conservative government creates more angst amongst those worried about how they will pay the bills this winter. We need to reassure families and pensioners now by introducing measures to protect them from this social and economic catastrophe.”