Ofgem publishes statutory consultation on a Debt Relief Scheme

Ofgem published a statutory consultation on a Debt Relief Scheme in November 2025¹. The consultation document sets out the regulator's proposals for providing targeted relief to some of the households most in need¹.

Consumer Scotland, in its 2026 Energy Affordability Tracker published on 27 May 2026, said it welcomed the intention to introduce the scheme, while cautioning that further action is likely to be needed¹:

"We welcome Ofgem's intention to introduce a Debt Relief Scheme to provided targeted relief to some of the households most in need. But further action is likely to be needed if the total amount of debt is not to increase, let alone be brought down."

Consumer Scotland, Insights from the 2026 Energy Affordability Tracker¹

The tracker reports that total domestic energy debt and arrears in Great Britain reached £4.55bn in Q4 2025, an increase of £700m in a year, up from £1.09bn in Q1 2018, a four-fold rise¹. Arrears account for the majority of that total at £3.44bn¹. Ofgem's price cap stands at £1,641 for April to June 2026, down from £1,849 in April 2025 but roughly 12% higher in inflation-adjusted terms than the £1,138 cap for April to June 2021¹. Cornwall Insight forecasts the cap will rise again in the July to September 2026 quarter¹.

In Scotland, the proportion of households in energy debt or arrears stands at 19%, up from 8% in October 2023 and 9% in January and February 2024¹. Rates vary by household type:

Household group	In energy debt
Receiving means-tested benefits	38%
Not receiving means-tested benefits	13%
With children under five	34%
Without children under five	17%
Five or more members	33%
Single person	21%
Two to four people	17%
Member with a disability or health condition	31%
No member with a disability or health condition	15%
Income under £20,000	29%
Higher-income households	11-19%
Prepayment meter	28%
Direct debit or standing order	17%
Electricity as main heating	27%
Mains gas as main heating	16%

Source: Consumer Scotland, Insights from the 2026 Energy Affordability Tracker¹

Among 16 to 24-year-olds in Scotland, the proportion reporting energy debt rose from 8% in October 2023 to 31% in January and February 2026, and among 45 to 54-year-olds from 8% to 24%¹. For those aged 65 and over it rose from 3% to 6%¹. Of those in energy debt, 36% reported having been put on a prepayment meter because of their debt¹. The tracker also reports that 38% of households in Scotland cannot afford to heat their home to a comfortable level and 16% find it difficult to keep up with their energy bills¹.

Why it matters for households

The consultation concerns a scheme intended to relieve energy debt for households in the most acute need¹. Consumer Scotland's tracker records that most energy debt in Scotland is new, under a year old, and does not involve a formal repayment plan or debt recovery action¹. The tracker also notes that debt costs are socialised across energy bills through allowances in the price cap, so rising debt affects consumers beyond those who owe money¹. The tracker's fieldwork ran between 27 January and 17 February 2026, before the start of the conflict in the Middle East, so its figures do not capture any effect of that conflict on prices¹. Consumer Scotland says the Bank of England expects higher energy prices to add 0.9 percentage points directly to CPI inflation by 2026 Q3, and a further 0.3 percentage points indirectly¹.

What happens next

The tracker states that the current price cap is fixed until the end of June, with Cornwall Insight forecasting an increase in the July to September 2026 quarter¹. Consumer Scotland says it welcomes the UK Government's initiative to prepare targeted support packages for autumn and winter 2026-2027 should prices continue to rise¹. It also says it has made recommendations to the government on improving the Warm Home Discount¹. The tracker reports that in April 2026 the UK Government published its review of Ofgem, described as the "first step" in giving Ofgem the power to regulate the heating oil market¹. The outcome of the Debt Relief Scheme consultation has not been reported in these sources.

For how consultations work and how to respond, see Consultations and discussion papers: how new rules are made and how to respond, part of the regulation and policy section.

Sources1 cited