An energy minister has told the bosses of Great Britain’s biggest energy suppliers to do more to help households get on top of their unpaid energy bills this winter, before the government spends almost £2.5bn to help write off the country’s record high debts.
Energy bosses were summoned to a roundtable meeting on Thursday to discuss the government’s plan to pay down the energy debts of about 2.4m of the hardest-hit households.
The debt relief scheme is part of a wider “circuit-breaker” strategy put forward by the chancellor in the annual budget statement last month. This includes measures to tackle household energy debt, which could reach £7bn by the end of the year.
The minister for energy consumers, Polly Billington, is understood to have told bosses from energy companies including Octopus Energy, British Gas and EDF Energy that suppliers would still need to play a “crucial role” in tackling the longstanding issue of problem debt alongside the government’s multibillion-pound support package.
Suppliers are expected to proactively identify customers who may be under financial strain and offer help such as debt payment plans or pointing them in the direction of debt advice services.
The government is also planning to work with the industry to make it easier to spot households that may need extra help, and to modernise payment systems to make it easier to pay. The government has backed the use of smart meters and smart pre-pay meters to help households track their spending and avoid getting into arrears.
One attendee of the online roundtable meeting said there was “clearly a lot of ambition” behind the government’s plans, and the minister wanted to get the suppliers together with consumer groups “to make sure it is delivered”.
The meeting was attended by senior leaders from the largest six energy suppliers, and representatives from the industry trade association Energy UK, the fuel poverty charity National Energy Action, and five consumer advice groups including Citizens Advice.
In a statement after the meeting, Billington said: “I know that energy debt weighs heavily on millions of families across the country. That affects all of us, with the costs passed on to other billpayers.”
The average household currently pays about £50 a year on their energy bill to service unpaid energy bills across the market, but this would be likely to rise without action to shrink the debt pile.
The government believes that the one-off energy debt relief scheme, and new measures to keep debt from building up again in future, could save all households about £130 on average over the next 10 years.
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“That is exactly why we’re bringing in measures to help vulnerable households that have been in energy debt since the energy crisis a few years ago. Energy is an essential and making it affordable for everyone is our top priority,” said Billington.
Gillian Cooper, the director of energy at Citizens Advice, who attended the meeting, said that with typical annual energy bills predicted to increase again in January it was “essential” that the government’s new initiative “not only tackles existing energy debt, but also includes protections to help prevent households from falling into it in the first place”.
About 40% of unpaid bills are understood to build up during the process of moving home. The government plans to tackle this with reforms including a new obligation on landlords to provide meter readings and moving dates to their supplier when a tenant moves in or out of a property.
Rachel Fletcher, a director at Octopus Energy, the country’s biggest energy supplier, said she was “pleased to see a focus on improving what suppliers do to prevent customers from falling into debt in the first place”.
“Nothing in this package should weaken suppliers’ incentive to keep innovating and investing to help customers avoid and manage debt,” Fletcher said.
