Help to Repay campaign progress: Ofgem consults on proposed support scheme

Posted December 12, 2024

One of the things that has stood out to me since I joined the Money Advice Trust earlier this year has been the sheer number of people who simply don’t have enough money coming in to cover their essential costs. This is a huge driver of debt and nowhere has this been clearer than when it comes to energy arrears.

High energy prices over the past few years have had a devastating effect for some households, leaving them trapped in energy debt they are struggling to repay. Total energy debt continues to break new records every quarter, with £3.8 billion, now owed. In the last three years alone, total energy debt has swelled by more than £2 billion (a 118% increase).

These stats are alarming in themselves. But behind these figures are millions of people. People who, as energy prices have remained high and budgets continue to be stretched by the longer-term impact of high inflation, have little to nothing left at the end of the month to put towards repaying their energy arrears.  

That’s why – for the past year – the team here at the Money Advice Trust have been leading the campaign for a Help to Repay scheme, backed by 13 other organisations. It's also why we're really pleased to see Ofgem announcing a consultation on introducing a dedicated debt support scheme. It comes alongside proposed action to improve the help people in energy debt get from suppliers, and wider measures on standing charges, too.

It’s testament to the strength of the collective voice of the campaign that there is now not only consensus on the need to help people with energy debt, but action too – with Ofgem’s debt consultation marking an important step to making the scheme a reality.

Understanding the impact

Such a scheme has the potential to have a hugely positive impact. Depending on exactly how it is designed, it could lift hundreds of thousands of households out of energy debt.

Crucially, evidence from similar schemes shows it helps keep people out of debt too. We have consistently pointed to schemes like Wessex Water’s Restart scheme (offering debt repayment matching), where 90% of customers have gone on to maintain up to date payments of their regular water usage. A specific EDF debt write-off scheme last year showed similar, with 87% of customers supported remaining debt free.

In doing so, we will see benefits for wider consumers and suppliers, too – through bringing down the high costs of servicing such high levels of debt in the energy market, which passes costs onto customers via the price cap.

Designing an effective scheme

There is plenty still to do. Effective design and delivery of the scheme, including the eligibility criteria, will be crucial to ensuring people in need get the right support. We stand ready to play our part: our advisers at National Debtline and Business Debtline are on the frontline of supporting people with energy debt and can play an important role in ensuring people who need the scheme can access it.

We hope to see widespread support for the overarching scheme, and look forward to working with Ofgem, suppliers and other charities on the exact design. Of course, this will take time. So making sure people in debt get the support they need this winter in the meantime, including forbearance from suppliers, will be key. 

For now, this represents a significant step forward and the clear intention to deliver the support we know is so desperately needed.

A huge thank you to the following organisations, who have supported the Help to Repay campaign: National Energy Action, Scope, Fair By Design, Independent Age, End Fuel Poverty Coalition, StepChange Debt Charity, Mencap, Christians Against Poverty, Community Money Advice, Debt Justice, University of Bristol Personal Finance Research Centre, Energy Action Scotland, Groundwork.  

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