CIH response to the consultation on resetting the energy debt landscape and the case for a debt relief scheme

As a professional body, we engage continually with our members to understand the challenges they and their tenants are facing. Evidence we have gathered from members over the past year has pointed to an increase in number of social housing residents seeking help with energy debt, and some of our members have had more requests to support tenants who are self-disconnecting and cannot clear debt on their prepayment meters.

The sector has responded to this crisis by deepening the support it offers, such as through HACT’s Fuel Fund and the Scottish Federation of Housing Association’s Fuel Support Fund, which have provided thousands of pounds of debt relief and write-off for social housing residents.

Despite this, it is clear that the energy debt crisis has reached unsustainable levels that cannot be addressed through the work of housing providers, charities, and consumer groups. With energy bills set to stay well above pre-pandemic levels for the rest of the decade, it is also clear that without intervention, debt will continue to persist and cause significant harm to consumers.

We are therefore writing to express our full support for the introduction of a debt relief scheme, as proposed by Ofgem in its consultation on resetting the energy debt landscape. We agree with Ofgem’s case for change and the proposed design principles for the scheme, as well as its key objectives.

We feel that other stakeholders with specialist expertise in delivering debt advice are best placed to advise on the exact design of the scheme. However, as supporters of their Help to Repay campaign, we would like to endorse Money Advice Trust’s full response to the consultation. We would also like to make two more general observations.

Scheme awareness and information

It should be made as simple as possible for people to become aware of the scheme and benefit from it (if eligible). Through their day-to-day work, social housing providers regularly come into contact with residents experiencing energy affordability issues, and as noted above, frequently provide different types of support such as fuel vouchers and debt write-off initiatives.

Additionally, many housing providers have longstanding money advice teams who act as a trusted source of advice and information for tenants, including on energy. We do not think housing providers would be suitable to participate directly in the scheme, and we are also mindful of the need to not overwhelm suppliers and debt advice charities with third party referrals. However, if they are aware of the scheme and its finalised eligibility, money advice teams in housing providers will be well placed to encourage eligible tenants to engage with their supplier or an authorised debt advice charity.

We therefore encourage Ofgem to ensure that the professional and trade bodies across the GB housing sector, especially the National Housing Federation, Scottish Federation of Housing Associations, Community Housing Cymru, Local Government Association, National Federation of ALMOs, and Association of Retained Council Housing, as well as ourselves at CIH, are made aware of the final introduction and design of the scheme. This means they will be able make their respective members aware of it and the support it could provide to their tenants.

Longer-term solutions to energy debt

While we wholly support the introduction of the debt relief scheme, it is unlikely to completely reset the trend of energy debt accumulation. Energy prices are not forecasted to fall significantly this decade, and it is unlikely that the acceleration of renewable generation and/or the Review of Electricity Market Arrangements (REMA) will deliver significant reductions in consumer energy bills for several years, if at all.

Wider cost of living pressures, especially high housing costs, are likely to ensure that consumer debt remains unsustainable, and the installation of fabric efficiency measures is not sufficient on its own to drive sufficient improvements in energy affordability. We therefore continue to feel that more ambitious interventions in the energy market are required to improve affordability and reduce debt in the longer run.

CIH supports the introduction of a social tariff in the energy market, but we recognise that this is not something that Ofgem can unilaterally introduce. We therefore encourage Ofgem to continue working with national and devolved governments to explore mechanisms for significantly bringing down energy bills and debt this decade.

We would be happy to discuss any of our points with Ofgem, and pleased to work together to ensure social housing providers and their tenants are made aware of the proposed introduction of the debt relief scheme when finalised.