Gordon Brown: Government and Ofgem are creating booming business for loan sharks

Former prime minister Gordon Brown has accused Ofgem and the Government of creating a “booming business” for loan sharks after the prepayment energy meter scandal was uncovered.

Mr Brown accused the regulator’s chief executive, Jonathan Brearley, of “dismally” failing to protect vulnerable customers after it was revealed that hundreds of thousands of impoverished Britons were forced to switch to costly prepayment meters, pushing some of them into the hands of illegal moneylenders.

The scandal uncovered by The Times found that British Gas routinely sent debt collectors to break into customers’ homes and force-fit pay-as-you-go meters, even when they were known to have extreme vulnerabilities.

Responding to these revelations, Mr Brown said the Ofgem boss needed to “consider his position” after “failing on his responsibilities to energy customers”.

Former prime minister Gordon Brown speaking at an event in December 2022
Former prime minister Gordon Brown accused Ofgem’s chief executive, Jonathan Brearley, of ‘dismally’ failing to protect vulnerable customers(Jane Barlow/PA)

Writing in The Independent, the former Labour leader savaged both the energy regulator and the Government for perpetrating “harsh and callous policy decisions” and “failing to defend low-income families against the indefensible”.

“(Mr) Brearley’s official responsibility… is to ‘protect energy customers by ensuring they are treated fairly’… (and to) ‘stamp out sharp and bad practice’,” Mr Brown said.

“So (Mr) Brearley – and the now restructured Energy Department – should immediately explain why instead of being on the side of the public, they have failed dismally to properly monitor and expose utility companies and their debt agents who, in the middle of the worst cost of living crisis for 50 years, have been breaking into the homes of impoverished customers.”

The former prime minister said Ofgem was “not alone in failing to defend low-income families against the indefensible”, accusing the Government and its agencies of “harsh and callous policy decisions” that were “turning illegal money lending into Britain’s biggest booming business among low-income communities”.

File photo dated 19/09/13 of a person using a central heating thermostat
A recent Times investigation revealed British Gas routinely sends debt collectors to break into customers’ homes and force-fit pay-as-you-go meters, even when they are known to have extreme vulnerabilities (Steve Parsons/PA)

Mr Brown said that through his work with local charities he had learnt users of pre-payment metres were needing to spend “a lot more” for each unit of their energy, adding that “at least” 20% of them had not been able to obtain the cash or discount vouchers they were promised.

“This failure to act is creating an even more serious social emergency for hardpressed families: Pushing them further into debt and, most worrying of all, into the hands of illegal moneylenders,” he said, listing the bedroom tax, the two-child rule and other caps and taxes which had worsened the financial situation for low-income households.

“Ministers are leaving families unable to cover the costs of their weekly food bill, without resorting to borrowing wherever they can find cash.

“The welfare state safety net is now full of holes – and instead of being the last line of defence for people in need, our own social security ministry is pushing families into ever more desperate measures.”

A homeowner turns down the temperature of a gas boiler in Basingstoke, Hampshire
The former Labour leader said ‘our own social security ministry’ was ‘pushing families into ever more desperate measures’ (Andrew Matthews/PA)

He added: “Blood is in the water and loan sharks are circling.

“A record number of families are now so deep in debt that they are turning to the door-step lender, and the pay-day lender standing outside the cut-price stores, the pub and the betting shop. And even more worryingly, as illegal money lending moves online, the desperate are even more at risk as long as these social media platforms remain exempt from proper scrutiny.

Mr Brown’s comments follow the senior presiding judge of England and Wales telling magistrates to stop the processing of applications by energy firms to enter homes to install prepayment meters.

Ofgem has already asked energy suppliers to suspend the activity.

Meanwhile, Paypoint revealed that around one in five people did not redeem the £66 energy support voucher they were sent in November by the company under a Government support scheme

Of the hundreds of thousands of vouchers sent out only about 81% had been redeemed on Sunday when they ran out – 90 days after they were issued.

It means that thousands of households with prepayment meters missed out on energy bill support they were entitled to receive.