As the new financial year begins on April 1, households in the UK are facing a significant surge in their essential bills. From council tax to water bills, car tax to broadband, a range of costs are set to rise, impacting millions of people across the country. Citizens Advice has raised concerns about the strain these increases will place on families, particularly those with lower incomes. The charity highlighted that households in the lowest income bracket already spend a substantial portion of their earnings on essential bills, leaving them vulnerable to sudden price hikes.
A study by Citizens Advice in partnership with the Institute for Public Policy Research (IPPR) revealed that households in the lowest 10% income bracket spend around 41% of their earnings after housing costs on water, energy, broadband, and car insurance. In contrast, middle-income households spend just 11%, while those in the top 10% income bracket spend a mere 5% on these bills. Single-adult households, especially those with children, are particularly at risk, as they often spend 20% or more of their income after housing on essential bills.
The IPPR proposed that well-designed social tariffs and bill support schemes could potentially save households hundreds of pounds annually. For example, a 25% reduction in these essential bills could result in savings of around £13 per week or £680 per year for those in the lowest income bracket. Dame Clare Moriarty, chief executive of Citizens Advice, emphasised the urgent need for effective safety nets like social tariffs to help struggling households make ends meet. She called for automatic enrollment in bill support schemes to ensure that those in need receive assistance.
Professor Ashwin Kumar, IPPR’s director of research and policy, echoed these sentiments, highlighting the severe impact of high-cost bills on low earners. He emphasised the importance of social tariffs and bill support across various sectors to provide vital financial relief to vulnerable households. The rising costs come at a time when energy bills are set to increase by 6.4% following another price cap rise by Ofgem, marking the third consecutive quarterly hike. Additionally, annual water bills in Wales are expected to rise significantly, with the average bill projected to climb from £503 to £639.
Local authorities in Wales are also increasing council tax bills, with some areas seeing hikes of up to 9%. Broadband and phone bills, as well as the cost of a TV licence and car tax, are all on the rise, further adding to the financial burden on households. The average household already spends a substantial amount on essentials each month, and these additional hikes are expected to impact budgets significantly. To mitigate the impact of these increases, households are advised to review their current contracts, consider switching providers, and explore potential cost-saving measures.
As households brace for these financial challenges, it is essential for individuals to be proactive in managing their expenses and seeking out ways to reduce costs where possible. By staying informed about the upcoming bill increases and exploring options for savings, households can navigate these changes more effectively. With rising living costs and essential bills, financial planning and budget management are crucial to ensure financial stability in the face of mounting expenses.