The UK government and energy regulator Ofgem have announced plans for a scheme to write off energy debts for households in genuine financial need, targeting £2.47 billion in arrears accumulated during the 2022-2024 energy crisis. The Debt Relief Scheme, anticipated to roll out in spring, could make up to 2.4 million consumers unlikely to repay their balances eligible for help, including pensioners, disability benefit recipients, and those on means-tested support.
The scheme will be rolled out in a single phase, extending eligibility beyond earlier drafts. Ofgem will launch a formal consultation on the updated plans shortly.
Customers will need to collaborate with energy suppliers on agreements to manage future bills and prevent further arrears. Ofgem chief executive Tim Jarvis said too many households are still weighed down by debt built up during the energy crisis, and the scheme will help people "get back on top of their finances and make a fresh start". He said the strategy balances customer rights with their responsibility to pay, empowering them to manage and track bills.
Energy Secretary Miatta Fahnbulleh said she knows how worrying energy debt is and that the costs are passed onto other billpayers. She said the government is helping vulnerable people with targeted support and taking action to tackle energy affordability, which is her "number one priority".
Government analysis suggested the strategy could save a typical household around £130 over the next 10 years by avoiding the costs of debt being added to all consumers' bills, and should prevent the accumulation of more than £5 billion of new debt by 2036. The scheme also includes reforms to improve the home-moving process to prevent debt build-up and will review rules on involuntary prepayment meters.
Energy UK's deputy director of customer policy, Ned Hammond, said it is “great to finally see a joint debt strategy” and that without action debt is heading towards “a staggering £7 billion by the end of 2026 and potentially reaching £8 billion in the first half of 2028”. He said the relief must be delivered in collaboration with suppliers to ensure it reaches customers effectively.
Analysis
Why This Matters
- Millions of struggling households could have their energy debts cleared, providing direct financial relief and a fresh start
- The scheme aims to reduce the burden on all billpayers by preventing debt from being spread across consumer bills, potentially saving the average household £130 over 10 years
- Success depends on household participation and supplier collaboration; the formal consultation will shape final eligibility
Background
The UK energy crisis began in 2021 and was exacerbated by Russia's invasion of Ukraine, leading to sharp increases in wholesale gas prices. Household energy bills surged, and many fell behind on payments. By 2024, arrears had reached £2.47 billion. The government and Ofgem have introduced various support measures; this debt relief scheme is a targeted effort to address the accumulated debt.
Key Perspectives
- Tim Jarvis, Ofgem chief executive: said the scheme provides a "much-needed circuit breaker" for customers in hardship, helping them reset and regain control, and balances rights with responsibilities to pay
- Miatta Fahnbulleh, Energy Secretary: said the government is helping vulnerable people with targeted support and taking action on energy affordability as her number one priority, noting that debt costs are passed onto all billpayers
- Ned Hammond, Energy UK deputy director of customer policy: welcomed the joint strategy but stressed relief must be delivered in collaboration with suppliers, warning that without action debt could reach £7-8 billion by 2028
What to Watch
- The formal consultation from Ofgem, expected shortly, which will finalise eligibility details
- The spring 2026 rollout: whether suppliers can implement the scheme effectively and reach eligible households
- The trajectory of energy debt: if measures are not delivered at pace, debt could continue to grow to £7 billion by end of 2026
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedThe UK scheme could write off energy arrears for millions of households.The Independent UK: “Millions of UK households could have energy debt written off under new government plans.”
- SupportedThe government and Ofgem plan to address £2.47 billion in arrears accumulated during the 2022–2024 energy crisis.The Independent UK: “the Debt Relief Scheme aims to address the £2.47 billion in arrears accumulated during the height of the energy crisis between 2022 and 2024”
- SupportedAs many as 2.4 million consumers unlikely to repay their balances could be eligible for help.The Independent UK: “The regulator estimates that as many as 2.4 million consumers who are unlikely to repay their outstanding balances could be eligible for help.”
- SupportedEligibility is extended to pensioners, people receiving disability benefits, and households claiming means-tested support.The Independent UK: “the initiative will be rolled out in a single phase, extending eligibility to pensioners, individuals receiving disability benefits, and households claiming means-tested support.”
- SupportedThe scheme is anticipated to roll out in spring.The Independent UK: “ahead of the scheme's anticipated rollout in the spring.”
- SupportedCustomers will need to work with suppliers on agreements to manage future bills and prevent further arrears.The Independent UK: “customers required to collaborate with energy suppliers on agreements to manage future bills and prevent further arrears.”
- SupportedTim Jarvis said the scheme would help people “get back on top of their finances and make a fresh start”.The Independent UK: “Our targeted debt relief scheme will help people get back on top of their finances and make a fresh start”
- SupportedJarvis said the strategy balances customer rights with their responsibility to pay and empowers them to manage and track bills.The Independent UK: “These steps balance customer rights with their responsibility to pay, empowering them to manage and keep track of their energy bills”
- SupportedEnergy Secretary Miatta Fahnbulleh said tackling energy affordability is her “number one priority”.The Independent UK: “That goes alongside action we’re taking to tackle energy affordability – my number one priority.”
- SupportedGovernment analysis suggested the strategy could save a typical household around £130 over the next 10 years.The Independent UK: “Government analysis suggested the strategy could save a typical household around £130 over the next 10 years”
- SupportedGovernment analysis suggested the strategy should prevent more than £5 billion of new debt accumulating by 2036.The Independent UK: “should prevent the accumulation of more than £5 billion of new debt by 2036.”
- SupportedNed Hammond said debt was heading towards £7 billion by the end of 2026 and could reach £8 billion in the first half of 2028 without action.The Independent UK: “With debt heading towards a staggering £7 billion by the end of 2026 and potentially reaching £8 billion in the first half of 2028 without action”