Ofgem’s Debt Relief Scheme is designed to write off energy arrears that built up between 1 April 2022 and 31 March 2024, provided at least £100 of that debt was on your account when the figure was calculated on 6 November 2025. It is a genuine write-off rather than a loan or a matched-payment deal, there is no application form and no fee, and phase one alone is expected to clear up to £500 million of debt for up to 200,000 households on means-tested benefits. Ofgem consulted on the scheme in November 2025 and its consultation page still showed the decision as pending when we checked in August 2026, so treat the dates below as Ofgem’s published plan rather than a confirmed launch.
The catch is that most people who qualify have never heard of it, and one condition buried in the rules quietly disqualifies people who would otherwise be in line for relief. This guide covers which debt counts, who is in each phase, what the engagement condition means, what to do if your supplier has gone quiet, what the scheme costs everyone, and what help exists if you are not eligible.
What the Debt Relief Scheme actually is
Energy debt in Great Britain has been climbing for years. Ofgem’s debt and arrears indicators show combined domestic debt and arrears rising 5 per cent between the fourth quarter of 2025 and the first quarter of 2026, from £4.55 billion to £4.79 billion, and standing 15 per cent higher than a year earlier. In that quarter 1.13 million electricity accounts and 0.91 million gas accounts were in arrears with no repayment arrangement in place.
Much of that money is never going to be repaid, and it is not absorbed quietly. Ofgem was blunt when it set out its plan to reset and reform energy debt in October 2025: unrecovered debt “is recovered via the debt allowance that is included in everyone’s bills, currently adding £52 under the current price cap”. That £52 is Ofgem’s October 2025 figure, and the cap has been reset every quarter since.
The Debt Relief Scheme, set out in Ofgem’s debt strategy update, is the attempt to draw a line under the crisis-era portion of that balance. Where a customer qualifies, the eligible amount is to be removed from the account outright. There is nothing to repay, nothing to match, and no interest deal to sign.
It applies across Great Britain — England, Scotland and Wales. Northern Ireland has its own energy regulator, the Utility Regulator, and is outside both the Debt Relief Scheme and the Ofgem price cap, so households there need to go through their own supplier and local advice services.
Which arrears qualify, and which do not
The scheme is deliberately narrow. Ofgem’s delivery guidance for the Debt Relief Scheme defines eligible debt as the increase in outstanding charges on your account based on billed charges between 1 April 2022 and 31 March 2024, as calculated on 6 November 2025, with a minimum of £100.
Three things follow from that definition, and they trip people up in different ways.
- Only crisis-era debt counts. Arrears that accrued before April 2022 or after March 2024 are outside the scheme, even if they are on the same account and even if the total is far larger.
- There is a floor. If your eligible debt is below £100 you are out, regardless of your circumstances.
- There is a ceiling, fixed in the past. The relief is capped at what your eligible debt figure was on 6 November 2025, the date Ofgem published its statutory consultation on the Debt Relief Scheme. Nothing you do to the account after that date increases the amount available.
Why the 6 November 2025 snapshot matters
Fixing the calculation to a historic date stops the scheme rewarding anyone who stops paying once they hear about it. It also means the number your supplier works from may look nothing like your balance today, because everything you have paid and used since sits outside it. If you switched supplier after November 2025, raise the scheme with the supplier you owed the money to as well as your current one.
Who is in phase one, and who has to wait
Phase one, which Ofgem intended to run from early 2026, is limited to customers receiving means-tested benefits. Crucially, you cannot prove this yourself. Suppliers identify eligible customers by data-matching against Warm Home Discount data first, then referring unmatched accounts holding eligible debt to the Department for Work and Pensions for a bespoke check. Customers cannot submit their own benefit paperwork to force a match.
Ofgem’s headline expectation is that phase one supports up to 200,000 consumers on means-tested benefits and reduces the debt stock by up to £500 million. Its impact assessment models it more precisely: around 706,000 accounts holding roughly £0.905 billion of eligible debt fall inside phase one, of which it expects between 280,000 and 400,000 accounts to receive relief worth £312.4 million to £472.9 million. The gap between accounts in scope and accounts helped is, in large part, the engagement condition.
Phase two was scheduled for summer 2026 and drops the benefit test entirely, assessing remaining customers through a standardised ability-to-pay test. The impact assessment puts roughly 1.7 million further accounts and about £1.6 billion of eligible debt in that group — larger than phase one, and harder to administer, because affordability has to be judged case by case.
The scheme is not open-ended. Ofgem’s published timeline has both phases closing to applications in the first quarter of 2027, a wind-up period running through 2027, and closure of the scheme after final claim submissions in the third or fourth quarter of 2028. Those are planned dates from the November 2025 delivery guidance, and they shift if the decision does.
The engagement condition, and why people fail it by accident
This is the part almost nobody knows about. Qualifying debt and qualifying benefits are not enough on their own. Ofgem states that eligible households “will be expected to be making some contribution towards their debt or ongoing energy use, or if they are unable to do so at this time, be willing to work with a debt advice charity to seek help managing their debts”.
In the delivery guidance that becomes a specific test. A customer meets it by having made a payment in the billing period immediately before the supplier enrols them; prepayment meter customers are treated as meeting it by topping up; and customers already sticking to an agreed repayment plan, repaying through Fuel Direct, or accepting a referral into free debt advice all count.
Read that the other way round and the risk is obvious. If you have stopped paying anything, have no plan in place and are ignoring your supplier’s letters, you can be perfectly eligible on paper and still be passed over. The fix is not necessarily money: accepting a referral to a debt adviser satisfies the condition on its own, and costs nothing.
A small regular payment can be worth hundreds of pounds
Meeting the engagement condition is often the difference between relief and nothing — work out what you can genuinely afford first.
Explore GetSmartSaver →There is no application, and nobody to pay
The Debt Relief Scheme has no public application portal, no claim form and no deadline you personally have to diarise. Under the proposed licence conditions, suppliers must make reasonable endeavours to contact every phase one customer they identify, make at least one further attempt using a different contact method, explain the scheme and the ways of engaging with it, and document those attempts for audit. The relief is then applied to your account, with the guidance requiring the adjustment within 30 calendar days of either the scheme going live or the date you meet the engagement condition, whichever is later.
That design has an unpleasant side effect: a scheme that contacts people out of the blue about their debts is a gift to fraudsters. Take three rules as absolute.
- Never pay anyone to “apply” for you. No fee, no percentage, no admin charge. There is no application, so there is nothing anyone can do on your behalf that you cannot do free by ringing your supplier.
- Never move money or hand over card details. Relief is applied as a credit to an existing account. It is never paid out to you, and nothing has to leave your bank first.
- Verify through your bill, not through the message. If a text, email or call claims to be about the scheme, hang up and call the number printed on your own bill or your supplier’s official website.
Who pays for it, honestly
Everybody does. The scheme is funded through network distribution charges on a “pay when paid” basis: networks collect the money through their charges and distribute it to eligible suppliers from May 2027, using a claims process Ofgem says will closely align with the Supplier of Last Resort levy framework. Ofgem’s impact assessment estimates the effect as an increase of between £3.23 and £5.13 per dual-fuel household over a year, described as a one-off impact.
Whether that is good value is a fair question. The argument for it is that unrecoverable debt is already charged to bill payers through the cap’s debt allowance — £52 a household when Ofgem published that figure in October 2025 — and clearing a stubborn block of it should reduce that drag. The argument against is that a levy is still a levy, and it lands on households who paid their own bills through the same crisis.
For scale, the price cap for 1 July to 30 September 2026 works out at £1,862 a year for a typical dual-fuel direct debit household, a 13 per cent rise, built on unit rates of 26.11p per kWh for electricity with a 57.19p daily standing charge, and 7.33p per kWh for gas with a 29.04p standing charge. Ofgem has confirmed that the levels for 1 October to 31 December 2026 will be published by 26 August 2026. We have covered how the cap is built in our guide to the Ofgem price cap and what drives it.
What to do if your supplier has not been in touch
Silence is not proof that you were assessed and rejected. Contact details go stale, accounts sit in the wrong name and data matches fail for mundane reasons. If you had arrears in the 2022 to 2024 window, take the initiative.
- Ask the specific question. Ring your supplier and ask whether your account has been assessed for the Debt Relief Scheme, how much eligible debt it holds as at 6 November 2025, and whether you currently meet the engagement condition.
- Check the account details. Make sure the account is in the name of the person who receives the benefit, and that your address and contact details are current, since the match runs through DWP records.
- Fix the engagement condition first. If you are paying nothing, either restart a payment you can genuinely sustain or ask to be referred to free debt advice. Either one puts you back in scope.
- Ask about phase two. If you are not on means-tested benefits, ask when your supplier expects to assess accounts under the ability-to-pay route and what evidence it will want.
- Escalate if you get nowhere. Ofgem’s guidance on complaining about your energy supplier says suppliers must try to fix reported problems within eight weeks; after that, or on a deadlock letter, you can go to the Energy Ombudsman, whose decisions the supplier must carry out.
If you are not eligible, there is still real help
Most households in arrears will not get a write-off. Several of the options below are stronger than people assume — particularly the rule that a repayment plan must be set at a level you can actually afford, not one that suits a collections target.
Ofgem’s consumer guidance on getting help with your energy bills is explicit that suppliers “must work with you to agree on a payment plan you can afford”, and that you can ask for a review of current payments, payment breaks or reductions, more time to pay, access to hardship funds and energy efficiency advice. If a plan is proposed that leaves you unable to eat or heat the home, say so and ask for it to be reassessed against your income and outgoings.
| Option | What it does | Who it is for | How to get it |
|---|---|---|---|
| Debt Relief Scheme | Would write off eligible arrears outright, once Ofgem confirms the scheme | Arrears from 1 Apr 2022 to 31 Mar 2024, £100+, held at 6 Nov 2025 | No application — supplier contacts you; never pay a fee |
| Affordable repayment plan | Spreads arrears at a rate based on what you can pay | Anyone behind on a credit meter | Ask your supplier; Ofgem rules require them to work with you |
| Fuel Direct | Pays arrears, and optionally ongoing usage, straight from benefits | Universal Credit, income-related ESA or Pension Credit | Ask your supplier — it requests the deduction from DWP with your consent |
| Supplier hardship funds | Grants that can clear part or all of a balance | Varies — most large suppliers run one | Apply via your supplier; each fund sets its own rules |
| Priority Services Register | Free extra support, not money — priority in emergencies, nominee contacts, accessible bills | Pension age, pregnancy or young children, disability or medical need, difficulty with English, recent bereavement or job loss | Free — ask your supplier and network operator |
| Fuel vouchers | A code that adds credit to a gas card or electricity key | Prepayment customers who cannot top up | Referral via a council, Citizens Advice or a support agency |
| Warm Home Discount | £150 off the electricity bill | Qualifying benefits; scheme reopens October 2026 | Usually applied automatically by the supplier |
| Breathing Space | Up to 60 days with most interest, fees and enforcement frozen | England and Wales only | Through a debt adviser, free |
| Moratorium on diligence | Six months’ protection from creditor enforcement | Scotland only | Apply on the Register of Insolvencies yourself, or have a free money adviser apply for you |
| Free debt advice | Budget, negotiation and formal solutions | Anyone | StepChange 0800 138 1111, National Debtline 0808 808 4000, Citizens Advice, MoneyHelper |
Breathing space and the Scottish equivalent
If arrears have spread beyond energy, the Debt Respite Scheme is worth knowing about. GOV.UK sets out that standard breathing space gives up to 60 days during which creditors must stop enforcement action and contact, and most interest and charges are frozen, with a longer version tied to mental health crisis treatment. You still owe the money and you still have to apply through a debt adviser, and it is only available in England and Wales.
Scotland has its own route. A moratorium on diligence runs for six months and stops creditors arresting your bank account, freezing wages or making you bankrupt, though it does not cancel debts or stop interest or charges being added. You cannot apply if you have already applied for one in the last 12 months. You apply using the debtor moratorium form on the Register of Insolvencies website, either yourself or through a money adviser.
Grants, vouchers and the Priority Services Register
Citizens Advice keeps a list of the grants and benefits available to help pay energy bills, including hardship funds run by British Gas, EDF, E.ON Next, Octopus, Ovo, Scottish Power, Utilita and Utility Warehouse. Each fund sets its own eligibility rules and application process, so check the terms for your own supplier.
The Priority Services Register is free and often overlooked. It does not reduce a bill, but it brings priority support in an emergency, advance notice of planned interruptions, a nominated contact, meter readings and accessible billing. Register with each supplier and your network operator, and again if you switch.
Whatever route applies, the underlying arithmetic still has to work. Our budget planner is a straightforward way to work out what you can genuinely commit to a repayment plan before you agree to one, and the practical measures in our guide to cutting your energy bills in 2026 reduce the size of the next bill rather than the last one. If you are on a qualifying benefit, check our explainer on how the Warm Home Discount works before the scheme reopens in October.
Frequently asked questions
Do I have to apply for the Energy Debt Relief Scheme?
No. There is no application form and no portal. Suppliers identify eligible customers by data-matching with DWP records and must make reasonable endeavours to contact everyone they find in phase one, plus at least one further attempt. Relief is applied to the account, and Ofgem’s guidance requires the adjustment within 30 calendar days of either the scheme going live or the date you meet the engagement condition, whichever is later.
Which energy debt actually gets written off?
Only arrears built up on billed charges between 1 April 2022 and 31 March 2024, worth at least £100, and still held on the account as calculated on 6 November 2025. Debt from before April 2022 or after March 2024 is outside the scheme, and the November 2025 figure sets the maximum relief available on your account.
Is it a real write-off or a repayment deal?
It is designed as a genuine write-off. The eligible amount is removed from your balance with nothing to repay and no matched contribution required. Ofgem expects phase one to reduce the debt stock by up to £500 million for up to 200,000 consumers on means-tested benefits, with its impact assessment modelling £312 million to £473 million actually written off.
What is the engagement condition?
It is the requirement to be doing something about the debt. You meet it by making a payment in the billing period immediately before enrolment, topping up a prepayment meter, sticking to an agreed repayment plan, repaying through Fuel Direct, or accepting a referral to free debt advice. Accepting a debt advice referral costs nothing and satisfies the condition on its own.
Does the scheme cover Scotland, Wales and Northern Ireland?
It covers Great Britain, meaning England, Scotland and Wales. Northern Ireland is regulated separately by the Utility Regulator and sits outside both the Debt Relief Scheme and the Ofgem price cap. Breathing Space is England and Wales only; in Scotland the equivalent is a six-month moratorium on diligence, applied for on the Register of Insolvencies either by you or by a free money adviser.
How much does the scheme add to everyone’s energy bills?
Ofgem’s impact assessment estimates between £3.23 and £5.13 per dual-fuel household over a year, recovered through network charges on a pay-when-paid basis. For context, Ofgem said in October 2025 that unrecovered debt was adding £52 to bills through the price cap’s debt allowance, and the cap for 1 July to 30 September 2026 sits at £1,862 a year for a typical household.
Last reviewed: August 2026. Figures come from Ofgem documents published up to August 2026. Ofgem’s Debt Relief Scheme statutory consultation closed on 19 December 2025 and its consultation page still showed the decision as pending when this article was checked, so the launch dates quoted are Ofgem’s plan, not a confirmed go-live; the timetable and phase two design may change, and price cap levels for 1 October to 31 December 2026 are due to be published by 26 August 2026. The scheme covers Great Britain only — Northern Ireland is regulated by the Utility Regulator. Breathing Space applies in England and Wales; Scotland uses a moratorium on diligence. This article is general information, not personal financial or debt advice — check your own position with gov.uk, Ofgem or MoneyHelper, and get free help from Citizens Advice, StepChange or National Debtline before acting on it.
