The Trust’s response to the resetting the debt relief landscape consultation

The British Gas Energy Trust (the Trust) is a Britain-based charity dedicated to alleviating fuel poverty by providing financial assistance, energy efficiency advice, and practical support to vulnerable households. Established in 2004 and solely funded by British Gas, the Trust has invested nearly £200 million in tackling energy-related hardship, supporting around 170,000 individuals in the last four years alone.

The Trust collaborates with local charities, community organisations, and energy experts to help those struggling with energy bills or maintaining adequate heating. Over the 2023/24 financial year, the Trust supported over 64,000 clients, with more than £16.3 million allocated for debt write-off and financial assistance grants. A further £6.9 million of client debt was written off through holistic support programmes, while £25.8 million of client debt was successfully managed.

Since 2020, the Trust has provided a total of £26,308,775 in debt write-off grants.

This response builds from the Trust’s 2015 Social Return on Investment (SROI) analysis, which assessed the Trust’s impact from April 2020 to March 2024. Notably, the latest findings show that for every £1 spent, the Trust generated £5.50 in social value. Grants for money and energy advice services demonstrated the highest return at £6.50 per £1 spent, underlining the importance of coupling financial relief with long-term advisory support.

Introduction

The conclusion from the Trust’s recently published report, ‘Towards an end to fuel poverty in Britain’ highlights the need for a comprehensive, collaborative, and long-term approach to effectively tackle fuel poverty in Britain. Several, key learnings from the report set the context for any policy changes on debt relief and the introduction of a debt relief scheme.

Fuel Poverty is Complex and Interconnected: Fuel poverty intersects with various social issues, including mental health, disability, and wider poverty problems. Addressing it requires a holistic approach.
Holistic Support is Effective but Resource-Intensive: Holistic support, though resource-intensive, creates long-term savings and significant social value. It addresses the root causes of fuel poverty and improves overall wellbeing.

The Trust is drawing on its experience providing energy debt relief grants to make the following key points in relation to Ofgem’s Resetting the Debt Relief Landscape consultation.

The Trust is supportive of a debt relief scheme, if it is part of a long-term solution to energy affordability and creates enduring benefits. At £3.8bn, debt and arrears are significant issues for the energy sector. In our experience, well-targeted funding, through debt write-off or other support, can help struggling and vulnerable energy customers. For a debt scheme to be successful, in the Trust’s experience, it needs to consider:

Energy debt may be the entry point through which individuals engage with the Trust, our Grants schemes and support and advice from our Funded Organisations, but it reflects wider issues and personal circumstances. It is critical that energy debt advice and support provided should link to a range of other advice services.
Once a debt is cleared, it provides a platform to discuss further support, income maximisation, budgeting, energy efficiency, etc., enhancing future financial stability.
Accurate data is needed regarding eligibility to ensure it is efficient, effective, and targeted at the right people and households.
Advice matters – one-off debt relief alone is not a sustainable solution unless it is aligned with advice and support addressing how it intersects with other issues facing individuals and households.
Energy is an essential service, and the transition to net zero must be socially just.

A key issue for the Trust is understanding the impact of policy changes prior to implementation to avoid unintended ripple effects on vulnerable customers.

We are also concerned that with numerous consultations, discussions, and working groups (e.g., the Scottish Government Social Tariff Working Group) happening simultaneously, there is a risk that schemes become siloed rather than viewed holistically and interdependently.

We recognise Ofgem’s proposals are at an early stage, and there are several considerations and options that will impact the complexity, size, and costs of any potential scheme. We would be pleased to engage further in any discussions and work on it with Ofgem.

Our Experience in Providing Debt Relief and Advice

A key aspect of the Trust’s work involves providing energy debt grants to individuals and families struggling with unpaid energy bills. These grants are designed to help reduce or clear energy-related debt, allowing recipients to regain control of their finances and avoid the stress of escalating arrears.

The grants are available to households that meet specific criteria, based on income levels, vulnerability, and the severity of their debt. In addition to offering financial relief, the Trust ensures that recipients also receive tailored advice and support to prevent future energy debt. This can include guidance on budgeting, managing energy consumption, and accessing other relevant support services.

Through these grants, the Trust helps ease the burden of energy debt and provides a stepping stone toward long-term financial stability for vulnerable households.

The Trust provides direct energy debt relief through two funds:

Individuals & Families (I&F) Fund
Energy Support Fund (ESF)

Both funds offer targeted debt write-off grants to households facing severe fuel poverty. In 2023/24, the Trust:

Provided 5,383 debt write-off grants totalling £7.8 million
Issued £2.4 million in Emergency Fuel Vouchers
Assisted 25,367 households across England, Scotland, and Wales

The key criteria for our grants in relation to debt is:

I&F

Pre-payment meter customers must have between £50 and £1,700 of energy debt
Credit customers must have between £250 and £1,700 of energy debt
You must be in or facing fuel poverty

ESF

You must have a minimum debt of £50 as a pre-payment meter customer, or £250 as a credit account customer
Have a maximum £2,000 gas and/or electricity debt
You must be in or facing Fuel Poverty

For more information on the criteria – see Grants Available – British Gas Energy Trust.

Who We Support

Analysis of grant recipients in 2023/24 highlights the severe financial hardship of those seeking help:

Average household income of £18,000–£20,400, placing them in the poorest 15% of UK households
97% were in fuel poverty
56% received Universal Credit (4x the national average)
Prepaid meters were used 56% of the time (5x the rate of UK households overall)
59% identified as disabled
69% of recipients were female, with single parents (predominantly women) being the most common household type

The Oxford Economics SRoI Report found that:

65% of respondents reported feeling less stressed after receiving support
77% felt more financially stable
Wellbeing increased significantly, with satisfaction ratings rising from 44% pre-support to 74% post-support

In addition, analysis on people who received a grant and also money advice showed a high proportion of people staying out of debt after 3 and 6 months

Debt Write Off (Winter 2021-2022) – No Money Advice

Grant recipients not in debt 3 months later – 61%
Grant recipients not in debt 6 months later – 53%

Debt Write-off Grants July 20222 – April 2023) – With Money Advice

Grant recipients not in debt 3 months later – 81%
Grant recipients not in debt 6 months later – 84%

These figures highlight the benefit of the Trust’s approach as individuals and households who receive advice and support that will include, income maximisation, money advice, money and debt management, health referrals etc, but also energy efficiency support to help them reduce their energy use and bills in the future.

The Individual and Families fund, our support through Financial Assistance Payments, and our Supporting Communities at Risk programme are also available to the clients of other energy suppliers as well as British Gas customers.

Key learnings from our own Debt Relief Grant Schemes

A successful debt relief scheme must go beyond simple debt write-off and:

Integrate energy debt relief with holistic support, including money advice, income maximisation, and energy efficiency guidance
Ensure accurate eligibility assessments to target the most vulnerable households
Encourage responsible financial management, preventing a cycle of recurring debt
Avoid unintended consequences such as higher bills for non-participating customers

Introducing a Debt Relief Scheme

The Trust supports a targeted, one-off debt relief scheme if it is structured as a long-term solution for households unable to repay historic energy debt but capable of managing future energy costs. However, without proper identification of those in genuine need, the effectiveness of such a scheme is uncertain.

In our view the key issues for Ofgem to consider are:

Identifying Those in Need

Determining eligibility solely through means-tested benefits is inadequate. Instead, a comprehensive assessment should factor in:

Total household income
Vulnerability factors (e.g., disability, caring responsibilities)
Level and duration of energy debt
Ability to pay ongoing energy costs after intervention

Level of Support

Ofgem estimates energy debts typically range between £500 and £3,000 for low-income households. The Trust’s 2023/24 data found that:

The average grant was £960 (Energy Support Fund)
The average grant was £530 (Individuals & Families Fund)

A one-size-fits-all debt relief scheme may leave recipients still in financial distress if partial debt write-off does not enable sustainable repayment of remaining arrears. A tiered approach should be adopted, where:

The most vulnerable households receive 100% debt clearance
Households with higher incomes receive partial relief, ensuring affordability without creating perverse incentives

Debt Write-off vs. Debt Matching Schemes

The consultation suggests excluding those who are servicing their debt. However, this risks excluding fuel-poor households who sacrifice essential needs (food, heating, or taking on high-cost debt) to make payments.

The Trust could be in favour of a more sustainable debt matching model, where:

A percentage of debt is cleared
The remainder is conditional on regular payments over a 6–12 month period
Incentives (e.g., smart meter installations, direct debit sign-ups) align customer behaviour with affordability goals

Data Sharing & Cross-Sector Collaboration

The Trust’s ‘Towards an End to Fuel Poverty in Britain’ report advocates for better data sharing between public, private, and third-sector organisations to:

Improve service delivery
Reduce duplication
Enable early intervention for at-risk households

Energy suppliers must not only identify eligible customers but also address the root causes of energy debt, ensuring long-term sustainability.

Funding Concerns: Avoiding Unintended Consequences

Ofgem estimates that the proposed fund will clear between £500m and £1bn of energy debt. However, with total energy market debt standing at £3.8bn, the scheme will only cover a fraction of arrears.

The Warm Home Discount scheme distributed £471 million in rebates to 3.14 million households in 2023/24. In comparison, the proposed debt relief fund is a larger intervention but still insufficient to resolve the issue permanently.
A poorly designed funding mechanism could increase bills for non-qualifying consumers, worsening the cost-of-living crisis.

The Oxford Economics SROI analysis found that:

Grants for money and energy advice services generate £6.50 per £1 spent
Direct fuel debt clearance grants yield a return of £2.60–£2.30 per £1 spent
The overall social return of debt write-off grants is positive, but holistic interventions deliver higher long-term value

Government funding should prioritise the most cost-effective interventions, ensuring sustained benefits rather than a temporary reduction in arrears.

Aligning with Broader Policy Initiatives

The Trust urges Ofgem to ensure any Debt Relief Scheme aligns with broader energy affordability measures, including:

A substantial Social Tariff, ensuring long-term affordability for vulnerable households
Standing charge reforms, reducing disproportionate costs for low-consumption households
Smart meter rollouts, supporting efficient energy management

Miatta Fahnbulleh MP, Minister for Energy Consumers, recently confirmed that social tariff proposals are under government review. Additionally, the Scottish Government’s Social Tariff Working Group will report findings to the UK Government by March 2024. The Trust is actively contributing insights through joint roundtables to ensure policy coherence.

Conclusion

To effectively combat fuel poverty, debt relief must be part of a broader, long-term strategy. Key lessons from the Trust’s experience include:

Fuel poverty is deeply interconnected with wider socio-economic challenges
Holistic support delivers greater long-term benefits than standalone debt clearance
Policy interventions must be coordinated to deliver lasting affordability solutions

A Debt Relief Scheme alone will not resolve the affordability crisis. Ofgem must ensure its approach forms part of a coherent and effective strategy to support the UK’s most vulnerable energy consumers.

In the Trust’s view a progressive social tariff with clear eligibility criteria, backed by data sharing would be the most effective and long-term solution to alleviate fuel poverty and would help to prevent the build-up of unsustainable debt in the future.