British Gas sounds alarm as household energy debt tops £1billion while bills keep rising

British Gas has warned unpaid household energy bills have surged beyond £1billion as families across Britain continue struggling with rising living costs and higher utility prices.

Centrica, the parent company of British Gas, revealed residential customer debt climbed to £1.04billion over the past year, rising sharply from £799million during the same period 12 months earlier.

The figures come amid growing concern that Britain’s energy debt crisis is worsening at pace.

Energy UK, the industry trade body, warned earlier this year that at least two million households could struggle to pay their gas and electricity bills by December.

The organisation’s February analysis estimated that total household energy debt across all suppliers could rise from £5.5billion to around £7billion by the end of the year.

Just four years ago, residential energy arrears across the industry stood at approximately £1.2billion.

Analysts warned the pressure on household finances is expected to intensify further in the coming months as energy costs continue climbing.

Cornwall Insight forecast that Ofgem’s energy price cap could rise to around £1,837 per year from July, compared with the current level of £1,641.

Rising wholesale gas prices linked to the ongoing conflict in the Middle East are expected to drive the increase.

The growing scale of unpaid energy bills has placed ministers under mounting pressure to introduce targeted support for households struggling with rising costs.

Chancellor Rachel Reeves has indicated any Government intervention to tackle energy debt would focus primarily on lower-income households.

Meanwhile, Energy Secretary Ed Miliband is reportedly considering whether to expand a debt forgiveness scheme for customers who owe money to suppliers.

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The company said earnings within its retail division would fall towards the lower end of previous forecasts because of what it described as "continued challenges in residential energy bad debt collection".

Particularly concerning for the business is the fact that £812million worth of unpaid household bills has remained outstanding for more than 12 months, significantly reducing the likelihood of recovery.

Centrica said ongoing cost of living pressures and economic uncertainty were affecting customers’ ability to pay their bills.

The company also pointed to the continuing suspension of forced prepayment meter installations as another factor complicating debt recovery efforts.

The practice was halted across the industry following a scandal in 2023 after an undercover investigation revealed debt agents forcibly entering the homes of vulnerable customers to install prepayment meters.

Industry leaders are now calling for coordinated Government action to prevent household debt levels from rising further.

Kevin O'Byrne, chairman of Centrica, said energy affordability had become "a serious and growing challenge" that required intervention from ministers.

Mr O'Byrne said: "We need to be helping those who genuinely cannot pay, while ensuring those who can pay do pay, so that debt does not continue to build and the financial resilience of the energy market is maintained."

Energy suppliers have argued an increasing number of customers exploiting legal loopholes to avoid payment is adding costs for other households through industry surcharges designed to offset losses.

Shadow Energy Secretary Claire Coutinho criticised the Government’s approach to the growing debt problem.

She said: "Everyone suffers when energy debts rise because the cost is spread over everybody else's bills."