One in ten households in arrears on energy bills

Between April and June 2022, the number of households falling behind on their utility bills grew by 14% (295,000), to hit 2.7 million, or one in 10 UK households, according to new figures released by credit reference agency Equifax.

On 1st April 2022, Ofgem increased the energy price cap from £1,277 to £1,971. In the three months that followed the number of households in ‘early delinquency’, those missing one or two bills for the first time, rose by a significant 22%, pushing delinquency rates to levels not seen for years.

Paul Heywood, Chief Data & Analytics Officer at Equifax said “These figures are a warning sign of what’s to come; the early tremors in what is shaping up to be an earthquake to household finances this winter. By the end of June, one in ten households were already struggling with energy bills, but we all know this is just the tip of the iceberg, Ofgem’s changes to the price cap take two-months to flow through into finances, and as winter bites this number is only going to rise.”

“The most troubling signal in all of this is the early delinquency data, the households who fell behind on utility bills for the first time between April and June this year. These early missed payments will quickly escalate into several more if swift action is not taken to provide tailored support.”

“This is not the time for finger pointing, we all know someone who is worried about how they will tackle this winter, and we should all be coming up with ways to help. From the government, we need swift financial support and protection for lower income households, as we saw with mortgage holidays and other forbearance measures during the pandemic.”

“The credit industry stands ready to deliver this support as it did during the pandemic, and thanks to innovations like Open Banking, has a far greater ability to means test this support than it did during the last major recession. With warnings from energy providers that energy prices may stay high for several years, now is the time to come together, to collaborate and innovate, or we will be left with a financial legacy that lasts long beyond these high prices.”