Six million one hundred thousand households across the UK are now in arrears on their energy bills, a record figure that exceeds anything seen during the 2022-23 crisis. The average household in debt owes £1,300, according to The Independent. That is more than double the level of three years ago.
The July price cap rise, confirmed at £63 for the typical dual-fuel household, will push an already strained system further. AOL.com reports that charities are warning of a “two-tier” energy market, where those who can pay are subsidising those who cannot, as suppliers spread the cost of bad debt across all customers.
Who is in debt, and why
The 6.1 million figure represents roughly one in five UK households. The Independent notes that the sharpest increases are among low-income households in poorly insulated homes, where heating costs are highest. A typical 3-bed semi with an EPC rating of E or D uses around 14,000 kWh of gas and 3,000 kWh of electricity per year, about 20% more than an equivalent C-rated home.
The catch is that the price cap itself is part of the problem. It rises and falls with wholesale costs, but it does nothing to address the underlying inefficiency of the housing stock. The debt crisis is about high prices and homes that leak heat faster than a sieve holds water.
What the price cap rise means for your bill
From 1 July, the typical household on a standard variable tariff will pay an extra £63 per year, taking the annual bill to around £1,928. For those already in arrears, the increase will be added to their debt before they have paid off existing balances.
AOL.com reports that suppliers are now required by Ofgem to offer repayment plans, but many households are struggling to meet even those reduced payments. The average repayment plan adds an extra £20-£30 per month onto the current bill, a figure that rises automatically when the price cap goes up.
Grants and schemes that can help
The news coverage focuses on the debt itself, but the longer-term solution lies in reducing energy demand. Three government programmes remain open for eligible homeowners:
ECO4, the Energy Company Obligation, provides free insulation, boiler upgrades, and heat pumps for low-income households in EPC bands D-G. Applications run through your energy supplier.
HUG2 (Home Upgrade Grant) targets off-gas-grid homes in England and Wales, covering solid wall insulation, heat pumps, and solar panels. Local authorities administer the grants.
Boiler Upgrade Scheme offers £7,500 off a heat pump for all homeowners in England and Wales, regardless of income. The scheme runs until 2028, but installer availability is tight.
For a 3-bed semi with an EPC rating of E, upgrading to a heat pump and adding cavity wall insulation could cut annual heating costs by £400-£600, enough to halve the average debt within two years.
What this means for your EPC rating
The debt crisis also ties directly into the Minimum Energy Efficiency Standards (MEES). From 2028, private landlords in England and Wales will need an EPC rating of at least C for new tenancies. For owner-occupiers, a poor EPC rating means higher bills and lower property value. The average EPC D home costs £1,200 more to heat per year than a C-rated equivalent, according to industry data.
The Independent’s analysis suggests that the debt burden is concentrated in the least efficient homes, precisely those that would benefit most from the grants listed above. Yet many households do not know they qualify.
Next steps for readers
Check your EPC rating on gov.uk. If you are in bands D-G and on a low income or receiving benefits, contact your energy supplier about an ECO4 assessment. For off-gas-grid homes, contact your local council about HUG2 funding.
If you are already in arrears, call your supplier before the July price cap rise takes effect. Ofgem rules require them to offer a repayment plan you can afford. Do not ignore the letters, debt can lead to prepayment meter installation or, in extreme cases, disconnection.
Finally, consider a heat pump quote under the Boiler Upgrade Scheme. At £7,500 off, it is the most generous government incentive ever offered for home heating. The scheme has already funded over 50,000 installations, and installer lead times are currently 4-8 weeks in most regions.
Frequently Asked Questions
A record 6.1 million households are in arrears on their energy bills, with the average debt standing at £1,300 per household, according to reports from The Independent and AOL.com.
ECO4 provides free insulation and heating upgrades for low-income households in EPC bands D-G. HUG2 covers off-gas-grid homes. The Boiler Upgrade Scheme offers £7,500 off heat pumps for all homeowners in England and Wales.
The price cap will rise by £63 for the typical dual-fuel household, bringing the annual bill to around £1,928. This adds to the debt burden for households already in arrears.
