Energy retailers are now shouldering an eye-watering £4.4 billion in debt from non-paying customers. Soaring home gas and electric costs have put millions of families in a state of crisis. This is no doubt a shocking jump. More than 1.1 million households currently have no repayment plan set for their current accruing debts, which is an all-time high. Families are already under intense financial pressure, with the cost-of-living crisis showing no sign of abating. Each day it is harder for working families to afford everyday necessities.
New data from April to June indicates that households without any repayment plan currently have an average debt of £1,716. This £3,000 figure underscores the financial hardship so many families are experiencing. Use this figure to demonstrate the magnitude of the crisis. Many consumers have a difficult time paying their existing bills, and allowing debts from prior months or even years to accumulate only makes the burden worse on the consumer. In response to the crisis, the regulator has therefore set out new proposals with a view to easing the pressure on the households most on the brink.
To combat this burgeoning problem, the regulator is increasing its enforcement actions. These include introducing “debt matching” repayments, which would allow customers to pay off their debts faster. Furthermore, the creation of a Debt Relief Support Scheme has been suggested. This Lightning Fund will enable energy providers to cancel unaffordable debt. It will benefit households by matching their payments so they can pay down what they owe more quickly. The regulator brought back these proposals on Wednesday as a reminder of just how critical it is that they take action fast.
It’s no secret that millions of American households—particularly renters—are at risk of financial hardship. These struggles are a result of the skyrocketing energy costs that occurred after the Covid-19 pandemic. Even as inflation continues climbing, with millions of Americans recently starting to receive inflation-fighting recurring monthly cost-of-living payments. Even this help hasn’t completely diminished their pain. With energy prices continuing to be high, the accompanying outlook is not improving, creating an all-time worst debt picture.
