Debt help charity sees ‘concerning’ rise in new clients in energy arrears

The proportion of new clients in energy arrears is growing, even before the “catastrophic” impacts of the October price cap hike are felt, a debt help charity has reported.

StepChange said one in five (20%) clients who completed full debt advice in July said the cost of living was their primary reason for contacting StepChange, up from 18% in June.

It also said that the proportion of new clients in gas arrears rose from 23% in June to 26% in July, while the proportion of those in electricity arrears was up from 28% in June to 30% in July.

Phil Andrew, chief executive of StepChange Debt Charity, said: “It’s no surprise to see cost-of-living pressures continue to take their toll on our clients’ finances.

“What’s most concerning is the new rise in energy arrears we’re seeing in the middle of summer when energy use is typically low, and the catastrophic effects of October’s new energy price cap are yet to take hold.”

Last week, regulator Ofgem confirmed an 80% rise in the energy price cap for around 24 million households in England, Scotland and Wales, sending the average household’s yearly bill from £1,971 to £3,549.

The cap will come into effect on October 1, but Ofgem has warned some suppliers could start to increase direct debits before then to spread costs.

It will remain in place until December 31, when it will be adjusted again, with forecasts suggesting bills could surge again to around £5,400 in January and around £7,000 in April.