Consumers in Scotland facing legacy of mounting energy debt

Nearly half of affected households not confident they can clear debts or arrears.

The latest Energy Affordability Tracker from Consumer Scotland shows energy debt is becoming an increasing issue of concern – despite falling bills.

New analysis from Consumer Scotland shows the impact of increasing energy debt includes adverse effects on both mental and physical health.

We have highlighted an ongoing need to support consumers struggling with energy affordability, alongside longer-term reform to tariffs designed around the varying needs of consumers – particularly those in the most vulnerable circumstances.

Our findings on the causes and impact of energy debt show:

  • More than one in twelve (9%) households in Scotland are in energy debt
  • Almost half (48%) of consumers in energy debt said they were not confident they will be able to clear their debt or arrears
  • Customers in energy debt are substantially more likely to say that keeping up with energy bills negatively affects their mental health a lot compared to those not in debt - 45% compared to 7%
  • One third (31%) of those in energy debt said keeping up with energy bills impacts their physical health a lot compared to 4% of those not in energy debt
  • The risk factors most associated with energy debts are having a disability that limits a lot, having a health condition, and having a child under five in the household

Consumer Scotland’s Head of Energy Kate Morrison said:

“Our latest Tracker finds some improvement in the affordability of energy bills, but this improvement coincides with a growing concern about the level of debt and arrears.

“Energy indebtedness has significant impacts on the mental health and wellbeing of those affected.

“We highlight an ongoing need to support consumers that are struggling with energy affordability.

“The growth of energy debt also reiterates how important it is that suppliers treat indebted customers fairly and with compassion through their debt management practices and that Ofgem continues to monitor compliance with new consumer standards.”

Consumer Scotland has also proposed reform of tariff structures to embed fairness in the future retail market, developing an energy market which reflects the varying needs of consumers and working towards solutions that improve energy affordability for all households.

Figures released by Ofgem in December last year showed energy debt across GB had reached an all-time high, totalling more than £3 billion following periods of unprecedented energy price rises and broader cost of living pressures.

The definition of energy debt used in Consumer Scotland’s research is deliberately broader, encompassing people who have borrowed from friends or family or taken out loans to cover  energy costs, as well as those in debt or arrears with their energy supplier.

On this broader definition, the energy debt of GB households likely exceeds Ofgem’s quoted figure.

Energy bills have declined from their peak in winter 2022-2023, but they remain substantially higher that pre-2022 levels, exacerbating difficulties in getting back on track for those who have fallen behind with their payments.


Insights from latest Energy Affordability Tracker: The causes and impact of energy debt

The Energy Affordability Tracker is administered as an online survey delivered on our behalf by YouGov. The responding sample is weighted to the profile of the sample definition to provide a representative reporting sample. Approximately 1,600 individuals have been interviewed at each wave.

Consumer Scotland was established in April 2022 as the statutory body for consumers in Scotland. We advocate on behalf of consumers and represent consumer interests. We are a Non-Ministerial Office, accountable to the Scottish Parliament.

Consumer Scotland is the levy-funded advocacy body for the electricity, gas, post and water sectors in Scotland.