Addressing Fuel Debt
Our latest research [ 1.2 mb] shows that over a 12 month period nearly 1 in 10 households (2.9 million households) fall behind with payment on an essential household bill.
Our analysis also suggests that those affected by recent changes to the welfare system have found it increasingly difficult to manage their essential household bills and juggle conflicting priorities. During a period when several reforms were introduced, the number of households falling behind on an essential bill remained largely the same, while the number falling behind on multiple bills increased.
Alongside this, stagnating wages, increasing household costs and a rise in insecure work mean that people on low and fluctuating incomes are having to budget extremely carefully.
A particular concern for the energy sector is that around 17% of households pay for their energy through a prepayment meter [ 0.64 mb]. These consumers may self-disconnect if they are unable to meet the cost of essential household bills, leaving them without a supply of gas or electricity. Last winter, the Citizens Advice Extra Help Unit helped 220 consumers who could not afford to top up their prepayment meter, but this is only a small proportion of households who self-disconnect.
Many energy companies are adapting well to these challenges and are keen to make further improvements to support consumers who are financially vulnerable. Many recognise the benefits to their business, such as higher debt collection rates, improved staff morale and better customer service for all their customers. At our half-day conference on ‘Addressing fuel debt’, stakeholders said that they were keen to share good practice and work collaboratively on these issues. The event itself provided a platform for these discussions.
This summary paper [ 200 kb] describes stakeholder responses to our policy recommendations as well as existing good practice identified during the workshop discussions. We hope that this will be useful for both well-established and newer energy suppliers, other utilities providers and creditors in other sectors.