Households across the UK are bracing themselves for an increase in bills, as prices for essential services are set to rise from Tuesday, April 1. Citizens Advice has warned that those on the lowest incomes will be particularly affected, as they are already stretched financially. A recent study conducted by the charity in collaboration with the Institute for Public Policy Research (IPPR), abrdn Financial Fairness Trust, and Policy in Practice revealed that households in the lowest 10% income bracket were spending a significant portion of their earnings on essentials such as water, energy, broadband, and car insurance.
According to the study, single-adult households, especially those with children, were found to be spending a significant amount of their post-housing income on essential bills, leaving them vulnerable to price increases. The IPPR suggested that targeted social tariffs and bill support schemes could potentially save households hundreds of pounds each year. For instance, a 25% reduction in essential bills could result in savings of around £13 per week or £680 annually for those in the lowest income bracket.
Dame Clare Moriarty, Chief Executive of Citizens Advice, emphasised the importance of social tariffs in providing a safety net for vulnerable households. She called for collaboration between the government and service providers to ensure that those in need receive the support they require. Professor Ashwin Kumar from the IPPR echoed this sentiment, highlighting the impact that well-designed social tariffs could have on alleviating financial pressure for low-income households.
One of the major contributors to the rising cost of living is the increase in energy bills, with Ofgem raising its price cap by 6.4% from April 1. This marks the third consecutive quarter of price increases, adding an average of £111 to the annual bill of households paying by direct debit. Additionally, water bills in England and Wales are set to increase by an average of £86 per year, as part of a significant industry-wide upgrade.
Council tax bills are also on the rise, with most local authorities in England planning to increase typical Band D bills by 5%. Some councils, including Birmingham, Newham, and Windsor & Maidenhead, have been granted permission to impose hikes of up to 10%. Mobile and broadband customers will also see price increases, ranging from inflation-linked adjustments to fixed hikes, depending on their contract terms.
Other bills set to increase include the TV licence fee, car tax, and mobile phone contracts. The standard rate of car tax for vehicles registered after April 2017 will rise to £195, and owners of electric vehicles registered from April 2025 will also be subject to a new tax. Overall, the cost of living is expected to rise for the average household, with analysts predicting an additional £49.45 in monthly expenses.
As households prepare for these impending bill increases, it is recommended to assess current contracts, consider switching providers where possible, and explore available support options. By staying informed and proactive, consumers can navigate the changing financial landscape and make informed decisions to manage their budgets effectively.