Households are paying more for every unit of energy while consuming less, debt is being added to everybody else’s bills, and Britain has some of the developed world’s highest electricity prices. Yet the Government still refuses to publish a complete, whole-system account of what its accelerated energy transition will cost.
There comes a point when household debt ceases to be merely a social-policy problem and becomes evidence that the underlying system is failing.
Britain may now have reached that point.
Energy UK estimates that domestic energy debt and arrears overdue by more than 30 days had climbed to approximately £6 billion by the end of June 2026. It warns that the figure could approach £7 billion before the end of the year.
This is not simply a story about a small number of people failing to manage their household budgets. It is the cumulative result of millions of consumers being exposed to energy prices that remain far above their pre-crisis level.
The latest warning comes as the typical household energy bill is forecast to rise again from October. The Government’s proposed VAT reduction, advertised as giving families approximately £45 of “breathing space”, is expected to be more than wiped out by the forecast increase.
The energy industry, the regulator and the Government all know what is happening. The question is why Britain is continuing with an accelerated, open-ended energy transformation without first proving that households, businesses and the public finances can afford it.
The £7 Billion Debt Spiral
Ofgem’s official figures use a relatively narrow definition, counting domestic debt and arrears that have existed for more than 90 days. On that basis, the total had already reached £4.79 billion in the first quarter of 2026—an increase of 15% in a year.
Energy UK uses a broader measure that includes unpaid bills more than 30 days overdue. That produced an estimate of approximately £5.5 billion earlier in 2026 and roughly £6 billion by June. Its forecast, drawing on analysis by Baringa, suggests the figure could increase by another £1.6 billion during 2026 and move towards £7 billion.
The underlying picture is even more disturbing than the headline total. Energy UK reported approximately two million indebted electricity accounts. Among households with repayment arrangements, the average amount owed had increased from around £800 in the third quarter of 2021 to more than £1,400 by the third quarter of 2025. For households in arrears without a repayment arrangement, the average had risen from approximately £1,500 to more than £3,200.
This demonstrates that the crisis is not merely affecting more households. Many of the people already in difficulty are sinking deeper into debt.
The cost does not remain with the indebted customer or the supplier. It is recovered through everybody else’s energy bills. Energy UK calculates that a typical dual-fuel household is already paying approximately £50 a year towards debt-related costs. Customers paying by standard credit can face around £140. If total debt reaches £7 billion, a further £10 to £15 could be added to a typical annual bill.
That produces a self-reinforcing spiral:
High bills create debt. Debt creates supplier costs and losses. Those costs are then socialised across other customers. Their bills rise, pushing more households into difficulty.
An energy system that responds to unaffordable bills by adding the resulting debt to everybody else’s bill is not solving the crisis. It is recycling it.
Energy UK’s report, Energy Debt: Everyone Pays describes this as a crisis that is “spiralling out of control”. Ofgem’s official data confirm that debt and arrears have continued rising even after the extreme price peaks of 2022 and 2023 passed.
Families Are Paying More While Using Less
The presentation of the energy price cap now conceals an important change.
From July 2026, Ofgem reduced the amount of energy assumed to be consumed by a “typical” household. The electricity assumption was reduced from 2,700 kilowatt-hours a year to 2,500 kilowatt-hours. The gas assumption was cut much more sharply, from 11,500 to 9,500 kilowatt-hours.
Ofgem states correctly that changing the assumption does not itself change anybody’s tariff. Households still pay for the energy they use. However, it substantially changes the headline annual figure used to communicate the price cap.
Under the new, lower-consumption methodology, the July-to-September cap is presented as £1,663. Under the previous methodology, exactly the same capped rates would have produced a headline figure of £1,862.
As of 25 August, Cornwall Insight forecasts that the October cap will rise by approximately 4% to £1,729 using the new consumption assumption. Using the previous methodology, the equivalent figure would be approximately £1,941—the highest since summer 2023.
Electricity is forecast to rise from 26.11p to 26.57p per kilowatt-hour, while gas is expected to rise from 7.33p to 7.90p. The actual Ofgem decision is due by 26 August.
Therefore, the lower headline does not mean energy has suddenly become affordable. It partly reflects the fact that “typical” consumption has been revised downwards. The unit prices remain painfully high, and households that cannot reduce their consumption—because of age, disability, poor insulation, medical requirements or family circumstances—cannot escape them.
Britain is increasingly presenting lower consumption as though it were a lower cost of living.
Families are not necessarily using less because the energy system has become more efficient. Many are rationing heat and electricity because they cannot afford their previous consumption. That is not prosperity. It is energy deprivation.
Ofgem’s revised Typical Domestic Consumption Values show clearly how the headline figures change under the new methodology. The original report of the October forecast also acknowledges that the previous consumption methodology would produce a figure of approximately £1,941.
Gas Explains This Increase—but It Does Not Explain the Whole System
It would be inaccurate to claim that Net Zero policies alone caused the latest quarterly increase.
Ofgem attributes the July increase principally to higher international wholesale gas prices following the escalation of conflict in the Middle East. Gas remains important for household heating and electricity generation, and it continues to set Britain’s wholesale electricity price much of the time.
That is a genuine vulnerability, and it should not be ignored.
But neither should “global gas prices” be used as a blanket explanation for the long-term cost of the entire British electricity system.
Under Ofgem’s current direct-debit price-cap breakdown, wholesale energy—including Contracts for Difference—represents approximately 45% of the typical bill. Networks account for 25%. Operating, debt and industry costs represent 16%, while the category explicitly labelled “policy costs” represents another 6%.
In April 2026, the network-cost allowance increased by £66—from £397 to £463—an increase of 17%. Ofgem said this was principally connected to the new RIIO-3 price-control settlements covering electricity transmission, gas transmission and gas distribution.
It would be equally wrong to label every pound of network investment a Net Zero cost. Britain has ageing infrastructure that requires maintenance, replacement and reinforcement regardless of climate policy.
However, it would also be wrong to pretend that the 6% labelled “policy” represents the transition’s complete impact on bills. Contracts for Difference sit inside Ofgem’s wholesale category. Major transmission expansion appears under networks. Other system costs arise through balancing, constraint management, reserve, capacity provision, storage, financing and the duplication needed to support weather-dependent generation.
That is precisely why quoting the cost of an individual wind turbine, solar farm or auction contract does not tell consumers whether the system as a whole is becoming cheaper.
Cheap generation is not the same thing as a cheap electricity system.
The proper calculation is:
Build it, finance it, connect it, balance it, back it up, maintain it, replace it and eventually decommission or restore it.
Until all those costs are presented together, ministers cannot credibly claim that the chosen pathway is the cheapest or that another vast round of construction will reduce bills.
Britain’s Electricity Prices Are Among the Developed World’s Highest
Claims about international energy prices also need to be precise.
Britain does not pay more for every form of energy than every country in the world. UK gas prices, particularly for industry, have often compared more favourably with the international average.
The strongest and most defensible evidence concerns electricity.
In 2023, the UK recorded the highest domestic electricity price among the 25 International Energy Agency countries reporting data. It also had the highest industrial electricity price among the 24 countries reporting.
The Office for National Statistics found that UK industrial electricity prices in 2023 were almost 50% higher than those in France and Germany and approximately four times those in the United States and Canada.
The position remained extremely serious in 2024. Government figures show that the UK had the highest industrial electricity price among 25 reporting IEA countries, at 26.63p per kilowatt-hour. The IEA median was 16.33p. For domestic electricity, Britain had the second-highest price in the G7, behind Germany.
Therefore, the accurate conclusion is not that Britain has the most expensive energy of every type everywhere in the world. It is that Britain has developed one of the most expensive electricity systems in the developed world—and the most expensive industrial electricity among the IEA countries reporting in 2024.
That distinction strengthens rather than weakens the argument.
Electricity is supposed to become the foundation of transport, domestic heating, data centres and industrial production. Yet the more the Government demands electrification, the more damaging Britain’s electricity-price disadvantage becomes.
A country cannot rebuild manufacturing, attract investment, expand artificial intelligence, electrify transport and heat millions of homes around one of the developed world’s most expensive electricity systems.
The Public Accounts Committee, the Office for National Statistics, the Government’s Food Security Digest and the House of Lords Library all provide evidence of Britain’s electricity-price disadvantage.
The Government Already Knows
The Government cannot claim that it has not been warned.
Ofgem publishes the debt figures. DESNZ publishes the international price comparisons. Energy UK says bills have been too high for too long. The ONS has documented the damage high energy prices inflict on British businesses. The network companies have acknowledged the scale and cost of the infrastructure programme now being undertaken.
The evidence exists.
What does not exist is a single, consolidated and publicly auditable account bringing together the cost of generation, transmission, distribution, balancing, curtailment, storage, reserve, backup generation, consumer support, subsidies, financing, decommissioning and land restoration.
The figures exist. The complete ledger does not.
That absence matters because the 2030 clean-power programme and the statutory 2050 Net Zero target are being treated as fixed destinations. The public is expected to absorb whatever networks, subsidies, contracts, land, financing and supporting infrastructure are required to reach them.
Affordability is then dealt with separately through discounts, rebates, VAT changes and debt-relief proposals.
A properly targeted social tariff may protect vulnerable people from immediate hardship. But it does not reduce the underlying cost of producing and delivering energy. It merely decides who pays which part of it.
A VAT cut transfers revenue away from the Treasury. A subsidy transfers the cost to taxpayers. A debt allowance transfers it to other billpayers. None of those measures proves that the energy system itself has become cheaper.
The Government appears to be treating household support as the answer to an unaffordable system. It is not. It is an admission that the system is unaffordable.
Net Zero Cannot Be Exempt from an Affordability Test
This is not an argument against maintaining the grid, replacing worn-out infrastructure or developing sensible low-carbon technology.
It is an argument against committing Britain to a politically dictated timetable without first proving that the engineering is deliverable, the grid will be ready, reliable power will remain available and the complete cost can be carried by households and businesses.
No target should be immune from reassessment when the evidence changes.
If household energy debt may reach £7 billion, if electricity prices remain among the developed world’s highest, if industrial consumers are being placed at a severe international disadvantage and if the Government cannot produce a complete cost ledger, then accelerating further obligations without an affordability audit is not responsible government.
It is target-chasing at the public’s expense.
Britain urgently needs an independent whole-system audit covering the chosen generation mix, transmission build-out, balancing and constraint costs, storage requirements, firm backup, financing, supply-chain capacity and credible delivery dates.
It also needs a public Grid Reality Register showing which generation and infrastructure projects can actually connect, what enabling works they depend upon, when construction has started, the credible completion date and who ultimately pays.
This is the meaning of GRID FIRST.
Build and strengthen the grid before making further connection promises. Secure sufficient reliable domestic generation before closing existing capacity. Test every major project against whole-system cost rather than promotional claims about the cost of an individual megawatt-hour.
Affordability, security and engineering reality must determine the timetable.
The timetable must not dictate reality.
Britain Cannot Decarbonise by Impoverishing Its People
Britain is not technically bankrupt. But an energy policy that leaves households borrowing to keep warm, transfers unpaid debt onto other consumers and exposes British industry to some of the world’s highest electricity prices is making the country poorer.
That is not a successful transition.
It is not compassionate to continue increasing the cost of an essential service and then offer targeted assistance to some of the people harmed by it.
It is not economically responsible to demand widespread electrification before making electricity internationally competitive.
It is not energy security to replace dependence on gas with dependence on imported equipment, weather-dependent generation, vast network expansion and technologies that still require reliable backup.
And it is not democratic accountability to commit hundreds of billions of pounds across multiple programmes without presenting the public with a complete, comprehensible account of the cost.
The £7 billion energy-debt warning must become a turning point.
The Government should stop asking how households can be made to carry the existing plan and start asking whether the plan itself remains affordable, deliverable and in the national interest.
No more blank-cheque acceleration.
No more pretending that the cost of generation is the cost of the system.
No more hiding falling consumption behind a lower “typical bill”.
No more treating affordability as secondary to a political deadline.
Grid first. Reliable power first. Affordability first.
Targets must serve the country. The country must never be sacrificed to meet the targets.
Shane Oxer — Campaigner for fairer and affordable energy
Principal sources
- Energy UK — Energy Debt: Everyone Pays
- Ofgem — Debt and arrears indicators
- Ofgem — July to September 2026 price-cap breakdown and revised consumption values
- Office for National Statistics — The impact of higher energy costs on UK businesses
- House of Commons Public Accounts Committee — Energy Bills Support
- House of Lords Library — Electricity prices in Great Britain
- UK Government — United Kingdom Food Security Digest 2025
- The Guardian — Households could owe energy suppliers £7bn
SAY NO TO THE DESTRUCTION OF OUR LAND 
Leave a comment