Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Deferred
Domestic energy debt has significantly increased, becoming the fastest growing type of consumer debt
Conclusion
Alongside a rise in energy prices, Ofgem statistics from June 2024 show the total owed by domestic consumers for both electricity and gas was over £3.7 billion compared with £1.8 billion at the end of 2021.51 A report by Clear Consultancy Services suggested that millions of people are living in cold conditions and cutting back on essential costs such as food; and concluded that “energy is the fastest growing type of debt presenting at debt advice services”.52 The same report also concluded that the value of energy debts rose by 33% between 2022–23 and 2023–24.53 It also suggested that “the majority of debt advisers said that energy suppliers are the worst, or one of the worst, categories of creditors that they deal with.” 44 Q 32; C&AG’s Report, infographic on page 6 45 C&AG’s Report, para 9; Q 28 46 Qq 32, 33 47 Qq 42, 43 48 C&AG’s Report, para 4.7 49 Qq 44, 45 50 EBS0002 51 C&AG’s Report, para 4.6 52 Clear Consultancy Services, Supporting households in energy debt, February 2025 53 Clear Consultancy Services, Supporting households in energy debt, February 2025 12
Government Response Summary
The government disagrees and proposes that Ofgem, as the market regulator, is better suited than DESNZ to collect pertinent information and evaluate the guidance provided to energy customers experiencing debt. They are actively working with Ofgem to refine these processes.
Government Response
Deferred
HM Government
Deferred
4.1 The government disagrees with the Committee’s recommendation. 4.2 To address the Committee’s concerns, the department proposes an alternative approach, recommending that Ofgem, as the market regulator, is better suited than DESNZ to collect pertinent information and evaluate the guidance provided to energy customers experiencing debt. DESNZ takes this matter seriously and is actively working with Ofgem to refine these processes. In December 2024, Ofgem initiated a Consultation on Improving Debt Standards, focusing on enhancing supplier engagement with consumer advocacy groups and debt advice charities. This consultation also explores ways to streamline support for these organisations, ensuring they can more effectively assist their clients in discussions with energy suppliers. 4.3 Via licence conditions, Ofgem currently requires that energy suppliers provide clear and accessible information to customers about the support available if they are struggling to pay. This includes details about payment options, debt advice services, and relevant industry schemes. 4.4 The review of Ofgem is exploring whether Ofgem may need additional tools or powers to ensure that customers are protected and that Ofgem acts as a consumer champion. The Review aims to publish its outcomes in the autumn 2025.