Fears of £4bn raid on middle classes as energy debts soar

Telegraph

13 hours ago

Household energy debts have topped £4bn for the first time, raising fears of a raid on the middle classes to cover the growing deficit.
Total customer debt and arrears climbed to £4.15bn in the first three months of 2025, new figures from regulator Ofgem showed, up from £3.85bn in the final quarter of 2024.
Energy debts have quadrupled since 2018 thanks to a toxic mix of rising gas prices and green levies that have sent bills soaring. Poorer households have been hit hardest because energy bills take up a greater proportion of their income.
Growing debts are a significant problem for energy suppliers, which fund themselves through household bills. A drop in their income has raised fears that some smaller suppliers could be at risk of collapse.
Ofgem launched a consultation on how to tackle the debt crisis last year, which included proposals to write off debts for the poorest households. If debts are written off, money needs to be raised from somewhere else to fill the gap.
Options that are being weighed up by the regulator include extra charges on the bills of households not caught up in the crisis, levies on energy suppliers, or a mixture of both. It means millions of people could face higher bills to pay off the debts of others.
The outcome of that review has not yet been published.
In April, Jonathan Brearley, the chief executive of Ofgem, raised the prospect of charging richer households more for their energy to help pay for the costs of reaching net zero.
'We want to at least ask the question whether or not we can allocate costs more progressively,' he said.
Economists typically use the term progressive to mean people pay higher tax rates as their income increases.
Adam Berman, director of policy at Energy UK, the trade body for energy suppliers, said: 'A certain amount of debt, the debt which there really isn't any hope of recovery, that effectively gets socialised on everyone's energy bills.
'It's in the interest of society overall that we minimise debt because ultimately the more debt that we get, the more other consumers end up having to pay for that debt.'
An Ofgem spokesman said: 'We know the cost of energy remains a huge challenge for many households and the growing issue of debt is one that requires urgent action from everyone across the sector and government.'
The energy regulator said it was considering the introduction of a new debt relief scheme 'that could serve as a lifeline for millions of households struggling with unmanageable debts'.
Andrew Bowie, the Conservative shadow energy spokesman, said: 'Consumer debt is rising because impossible net zero targets have driven up energy bills and distracted the Government from focusing on cutting them.
'As long as Miliband remains Energy Secretary with his impossible net-zero targets, bills will continue to rise.
'The country needs a serious approach to energy policy – one that tackles the root cause of our high energy prices, rather than raising taxes to pay for sticking-plaster solutions.'
Earlier this month, the boss of British Gas called for Rachel Reeves to raise taxes to pay for net zero, rather than putting the cost on energy bills.
Chris O'Shea, the boss of British Gas owner Centrica, said: 'At the moment, the costs for doing [net zero] come off consumer bills. There is an option to put that on general taxation and that's something that we would support at Centrica.'