David Hilferty: we need urgent action

Last week we called on the energy regulator, Ofgem, to bring in a new debt relief scheme for people in energy debt.

This follows years of soaring energy bills which have had a simply devastating impact on households across the country.

Across the Citizens Advice network, we see the real-life cases of people who are hit hardest by energy debt. Many were already pushed to breaking point by the pandemic and then the cost of living crisis which followed. With the spiralling energy bills of the last couple of years, this has had a cumulative and compounding impact.

Typical household energy bills increased by 54% in April 2022 and by 27% in October 2022. Lower wholesale prices have led to some falls in prices, but bills remain around 29% above what they were in winter 2021/22. For most people, that is a massive increase to have to cope with. For those who were already struggling, it’s impossible.

As we set out to the regulator this week, the average energy debt that people bring to their local Citizens Advice Bureau (CAB) in Scotland was £2,500. Worryingly, this figure is 8% higher than the previous year. In rural Scotland, the problem is even worse – average energy debt stands at £3,130, 30% higher than the average energy debt overall.

The human impact of this is stark. By now we’re all far too familiar language around people who are forced to choose between heating and eating. Let’s be clear what that means. People are going without heat – even in the depths of a freezing winter like this one. Some have no choice, having been cut off. People switching their lights off, sitting in the dark, or going to bed in the afternoon and staying there till morning. This includes households with children, pensioners or disabled people.  

In our message to Ofgem we highlighted the case of Helen, who retired early to care for her terminally ill husband, who subsequently passed away. This put Helen under serious financial pressure and she accrued energy arrears of almost £2,700, which had a significant negative impact on her mental health. One case, but not untypical of the ones our advisers see every day. The extent of the problem is unjustifiable and unjust. And it shows no signs of easing.  

We believe the case for an energy debt relief scheme is now inarguable. Only bold, targeted and urgent action will begin to undo the harm that far too many are facing.  

What would a debt relief scheme look like?  We’ve urged Ofgem to engage the UK Government to obtain funding for an enduring system of support that will reverse the current situation. We believe it should include debt-matching and debt write-offs.  

Yet this measure is only part of the solution. When debt is unavoidable, the problem is rooted within markets not people. So alongside the debt write off scheme, we have been advocating for a new social tariff for energy to keep bills affordable.

This situation is well beyond the point of tinkering at the edges. For far too many people, energy is far too expensive – something of a luxury when it is in reality an absolute essential.

Energy affordability is a long-term problem that necessitates long-term, far-reaching solutions. Without that, huge numbers of people in Scotland will continue to endure further harm. 

David Hilferty is Director of Impact at Citizens Advice Scotland.

This column was first published in the Herald www.theherald.co.uk