Cold home
Families face their fifth winter of unaffordable energy costs as charities warn of growing health risks from cold homes. (PHOTO: Erik Mclean/Unsplash)

British households owe a record £5.5 billion ($7.43 billion) in unpaid energy bills, and that staggering debt is now directly impacting your monthly statement.

As temperatures plunge and another harsh winter takes hold, energy prices remain stubbornly fixed at crisis-era levels. Ofgem's latest price cap, effective from 1 January 2026, is set at £1,758 ($2,361) annually for a typical dual-fuel household, according to Energy UK.

This figure remains approximately 40 per cent higher than before the energy crisis began, and the average bill is still £500 ($672) higher than in winter 2021, according to the Big Issue.

Why You're Paying for Your Neighbour's Debt

Here is a stark reality that few households are aware of: the typical British home is now paying more than £50 ($67) annually simply to cover debt allowances from other customers, according to Energy UK. When energy suppliers cannot recover unpaid bills, those costs are incorporated into the price cap, meaning responsible bill-payers effectively subsidise the growing mountain of household debt.

This problem is structural. Non-wholesale costs, including policy charges and network upgrades, now account for an increasingly larger share of your bill. The expansion of the Warm Home Discount scheme alone has added nearly £40 ($54) to annual bills, Energy UK reported.

Six Million Children in Fuel Poverty

The human toll extends well beyond regulatory figures. According to the Big Issue, six million children now live in fuel-poor homes, where families are unable to afford adequate heating or hot meals.

'We enter the coldest months of the year with energy prices stubbornly high and a warm home out of reach for millions of households,' said Adam Scorer, chief executive of National Energy Action.

A January 2026 YouGov survey found that 44% of Britons have struggled to pay for food in the past three months, while 37% report difficulty covering energy bills. Only 9% say their financial situation has improved over the past year, and just 12% expect an improvement in 2026.

Simon Francis, coordinator of the End Fuel Poverty Coalition, painted a bleak picture of households facing their fifth consecutive winter of unaffordable energy costs.

'For millions of people, this cold isn't just an inconvenience, it's a real risk to health and safety,' Francis told the Big Issue. 'More households are being pushed into cold, damp homes, where cutting back on heating, delaying repairs and blocking ventilation increases the danger of carbon monoxide exposure.'

Where the Blame Falls

Public patience has worn thin. YouGov data shows that 65% of Britons now blame the government's failure to act decisively as the main cause of rising costs, up slightly from 62% in 2022. Factors once considered primary culprits have seen sharp declines: the Ukraine war fell from 74% to 44%, and the impact of the pandemic dropped from 56% to 44%.

Just 8% of Britons believe the government is managing the crisis well, while 85% say it is handling it poorly. That net approval score of -77 is the lowest since YouGov began tracking attitudes in late 2022.

What Happens Next

The government's £15 billion ($20.15 billion) Warm Homes Plan, expected to be announced this month after delays, represents what Scorer called 'the biggest single opportunity to turn the tide on fuel poverty.' The plan aims to upgrade millions of homes with better insulation, solar panels, and heat pumps, according to the Big Issue.

However, relief remains distant. Although wholesale gas prices have stabilised, Energy UK notes that structural costs mean prices are likely to stay elevated for years. The industry body has called on ministers to shift policy costs to general taxation and to implement better-targeted support based on income and consumption data.

For now, families face a tough reality. With 63% of Britons expecting to cut spending and energy costs ranking as the top household concern at 36%, according to YouGov, this winter offers little warmth—both literally and financially.

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