Industry representatives are forecasting a significant rise in household energy debt across Great Britain, projecting unpaid energy bills could climb to £7bn by the end of the year. The increase follows a surge in domestic energy arrears that reached £6bn at the end of June, marking a record level. This escalation reflects mounting pressure on household finances as energy costs remain elevated.
The anticipated debt growth is tied to expected increases in the government’s energy price cap, which is set to rise by 4% in October to a three-year high. Industry analysts project typical household gas and electricity bills will reach approximately £1,729 annually under the new cap from that point forward. The price movements reflect conditions in global wholesale gas markets, where ongoing geopolitical tensions continue to influence supply costs. Additionally, expenditures associated with upgrading Great Britain’s energy infrastructure are contributing to higher overall costs for consumers.
The government has introduced a measure to reduce VAT on household electricity bills beginning in October, intended to provide modest relief by cutting annual bills by roughly £45 on average. However, trade association Energy UK contends this step will be insufficient to counteract the broader price cap increase. The group’s leadership has called for more comprehensive policy solutions, specifically proposing a permanent social discount tariff program that would provide targeted assistance based on household circumstances rather than temporary measures.
Measurements of energy debt vary depending on methodology. Energy UK’s projections of £7bn in outstanding payments reflect bills overdue for more than 30 days, while the energy regulator Ofgem applies a different threshold, counting bills as arrears once they reach 90 days unpaid. Despite using lower figures in public reporting, Ofgem’s calculations incorporate the broader debt estimates when distributing costs across the consumer base, currently adding approximately 3% to typical annual bills.
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