Clearing the Decks: Tackling Energy Debt to Lower Bills
- 24th June 2026
Energy debt built up during the 2022 to 2024 price crisis continues to rise, with millions of households in arrears and many owing substantial sums. For low-income households, this is not driven by disengagement but by a fundamental affordability gap, where bills exceed what people can realistically pay. As a result, many are cutting back on essentials, rationing heating to unsafe levels, and living with sustained financial pressure, stress, and impacts on wellbeing.
Share
This paper sets out the case for expanding Ofgem’s Debt Relief Scheme, using public funding to clear a larger share of accumulated domestic energy debt. Evidence from our frontline casework shows that removing debt can restore stability, reduce anxiety, improve wellbeing, and enable households to re-engage with their energy use and wider support.
Clearing energy debt would also reduce costs for all consumers. Debt-related costs are currently embedded within the energy price cap, adding around £50 to £70 per year to typical bills. Bringing down overall levels of debt would reduce these costs, delivering ongoing bill savings across households.
Without action, debt will continue to grow, deepening hardship and increasing pressure for more restrictive interventions. This creates a clear choice between dangerous debt management tools, including involuntary prepayment, or acting to clear debt directly. This paper argues that debt clearance is the better response, reducing harm, lowering bills, and helping households regain stability.