We welcomed the opportunity to feed into Ofgem’s policy update working paper on the proposed Debt Relief Scheme. StepChange has long endorsed the introduction of a nationwide scheme to tackle historic energy debt, as well as work to drive up standards in the energy debt pathway and an intervention to bring about long-term, widespread energy affordability.
We understand why Ofgem has decided to separate the scheme into two phases: the first primarily targeted at delivering debt write-off for customers on means-tested benefits, and the second seeking to reach customers not on means-tested benefits but who are deemed eligible for debt relief subject to an affordability assessment. However, we urged Ofgem to ensure that work on designing the second phase of the scheme does not lose momentum.
Responding to Ofgem's initial consultation on scheme proposals in February 2025, we advocated for an initiative that is clearly branded, well-targeted and effective in alleviating some of the substantial pressures consumers with energy debt are facing. We were particularly supportive of an automatic eligibility route, with allowances for 100% debt write-off for qualifying customers on eligible debt. We continue to see this as a sensible approach – to enhance both simplicity of delivery and consumer understanding, as well as to bring about the most impactful financial support.
Our latest response noted that, since this earlier consultation period, Ofgem has proposed shifting the scope of the scheme to some extent – to focus more explicitly on facilitating consumer engagement with their suppliers, and embed conditionality into the scheme design. While engagement is certainly a worthy intention, we highlighted that making debt write-off for a group of customers receiving means-tested benefits conditional on specific actions is problematic because it risks excluding some in the most precarious situations who most need support. Indeed, Ofgem has itself acknowledged that "consumers in vulnerable situations are significantly less likely to be able to engage with their supplier and protect or represent their own interests".
We said that, if Ofgem proceeds with its proposed approach around conditionality, it is vital that it designs both phases of the scheme in a way that mitigates the fundamental risk of people most in need missing out on support due to engagement requirements. We reiterated that we want to see Ofgem maintain the lowest possible threshold for engagement as enabling inclusion into scheme eligibility and that it should reconsider the need for that conditionality at all.
We also believe that the foundation for dealing effectively with energy debt must be improving debt collection standards at pace. We would like to see Ofgem clarify and redouble its work to improve debt collection standards in tandem with rollout of the Debt Relief Scheme. This work must also be placed in a context where typical energy bills continue to sit far above pre-energy crisis averages, while the level of targeted financial assistance available to support those in or at risk of fuel poverty has quite simply not sufficiently kept pace.
So, alongside this welcome move to implement this Debt Relief Scheme, StepChange also wants to see targeted, long-term intervention which properly protects consumers in vulnerable situations, including those on lowest incomes, from unaffordable energy costs and poor debt collection practices.