Energy Debts: Amount Families Owe Mounts

The number of families in debt to their energy supplier is rising, with around one in five households owing money, a study suggests.

Collectively, Britons are estimated to owe £637m to energy firms, which is £159m more than last year's projections, comparison website uSwitch said.

Some 20% of bill payers surveyed by the website, equating to more than five million households nationally, are in debt to their energy supplier after falling behind with payments or due to discrepancies between estimated bills and actual amounts.

This figure is up from 14% when similar research was carried out last year.

The latest survey of more than 2,000 bill payers in February found that the typical amount owed is £8 less than it was a year ago, at £123.

But a recent string of price hikes by energy companies combined with the unseasonably chilly weather could see the size of people's energy debts shooting back up again, the study warned.

The average annual household energy bill has risen by almost £100 in the space of a year, adding to the pressure on families as wages remain stagnant.

The website said the typical bill now stands at £1,353 a year, which is around £830 higher than it was in 2004.

This sum is based on a consumer who uses a medium amount of electricity and gas on a standard dual fuel bill, paying quarterly by cash or cheque.

Just over one fifth of those in debt to their supplier said they were turning a "blind eye" to what they owe in the hope that the amount will go down naturally over time.

A similar proportion plan to pay off a big lump sum, while one in 12 people in debt said they would need to try and agree a repayment plan with their supplier.

Ann Robinson, director of consumer policy at uSwitch, said: "The soaring number of households in debt to energy suppliers is a clear indication of the pressure people are coming under just to meet the cost of their basic bills."

She said ways that people could cut down on their costs included paying by direct debit as suppliers tended to offer discounts for paying in this way.

And consumers should also make sure that someone was taking regular meter readings, as relying on estimated bills can be a "shortcut to debt".

A Green Deal scheme has recently been launched by the Government, which allows people to make energy efficiency improvements such as loft insulation or double glazing at no up front cost. Repayments are then to be added to the property's energy bill over a period of time.

Last week, utility giant SSE was handed a record £10.5 million fine by regulator Ofgem for "prolonged and extensive" mis-selling.

SSE provided "misleading and unsubstantiated statements" to potential customers about prices and savings that could be made by switching to SSE, according to Ofgem.

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