Energy bill arrears reach highest level since records began in 2012

Consumer debt in the UK has fallen to its lowest level since at least 1999, according to Resolution Foundation research published on 3 March 2024, while arrears on priority bills have risen. The foundation said consumer debt, meaning credit cards, overdrafts and personal loans, has dropped from 23% of household disposable incomes in the mid-2000s to 13% today¹.

The research describes two phases since the start of the pandemic. During lockdowns, households paid down debt to the tune of £26bn between December 2019 and March 2021. More recently debt has been rising again, but not as fast as incomes, with the foundation pointing to lenders tightening access to loans and to inflation eroding the value of existing debts¹.

The foundation said that if debt levels had stayed at their 2019 level, that would mean £1,700 more per household. It added that British families are spending less servicing their consumer debts than before the pandemic, even after interest rate rises¹.

The fall in consumer debt has come with a shift in where the pressure sits. The foundation said those on lower incomes have been falling behind on priority bills such as rent, utilities and council tax rather than borrowing on credit cards. Energy bill arrears are the highest since records began in 2012¹.

The foundation noted that interest costs do not mount up on bill arrears in the way they do on credit cards, but said the risks are large, because unpaid bills can lead to eviction or the power being cut off¹.

Why it matters for households

The figures describe two different groups. For households overall, the cost of servicing consumer debt is lower than before the pandemic, and the stock of credit card, overdraft and personal loan debt is smaller relative to income than at any point since at least 1999¹.

For households on lower incomes, the change is in the type of debt rather than the amount. Falling behind on rent, energy and water bills or council tax does not carry the same compounding interest as a credit card, but these are priority debts, where the consequences of non-payment can include eviction or disconnection¹. The foundation's comparison of Citizens Advice clients points to roughly £1,000 less credit card debt and more than £500 more in bill arrears per person since Covid¹.

The research does not set out how many households are affected, which bills the arrears relate to beyond energy, or how the arrears are distributed across the UK. Those figures have not been reported¹.

What happens next

No further steps, publication dates or policy announcements are set out in the research. The foundation states only that the debts households take on are changing, and that politicians and policymakers need to keep up¹.