Tens of millions of people in the UK will be hit by a new wave of rising bills in April, which coincide with the end of the government’s energy support scheme.
Starting from April 1, households will be hit by increases to their water and council tax bills, alongside “inflation-busting price hikes” on mobile and broadband contracts.
The increases are compiled by higher mortgage payments for borrowers shopping for a new deal, as well as those with variable loans, after the Bank of England raised borrowing rates to a 14-year high of 4.25 per cent in a bid to combat inflation.
Household finances app Nous.co has estimated that a typical family will be £682.70 a year worse off as a result of the April increases. Founder and chief executive, Greg Marsh, said: “These are worrying times, and this could push millions of families who are just about managing over the edge.
“And we are not just talking about those on lower incomes. Even dual-income families with above average earnings will now be drawn into the struggle to afford to live.”
The Independent has compiled a list of the April price hikes here:
Council Tax
Most local authorities are putting up council tax by 5 per cent from April, meaning those living in a band D home can expect to pay about an extra £100 each year, and pushing the average bill over £2,000 for the first time.
Research from the County Councils Network (CCN), published in February, found that 84 councils out of 114 that provide social care and have published their 2023/24 budget proposals are planning to hike council tax by the maximum permitted, which is 4.99 per cent.
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The body’s Labour vice-chair Sam Corcoran warned at the time that “local authority leaders are setting their budgets in the most difficult circumstances in decades”, pointing to “inflation reaching levels not seen for over 40 years” and “pressures for care services showing no sign of abating” as he sought to justify the rise.
Mobile and broadband
Broadband and mobile phone prices are expected to rise by between 14 per cent and 17 per cent, with Citizens Advice warning that the increases could amount to an additional £90 per year for customers.
Telecoms companies typically link annual mid-contract price rises to the rate of inflation reflected in January’s increase or that of the retail price index (RPI) or consumer price index (CPI), which rose unexpectedly to 10.4 per cent in February, up from 10.1 the previous month.
Matthew Upton, director of policy at Citizens Advice, said: “We called on these firms to support their customers during this uniquely challenging time, but they didn’t listen. Instead, they’re pushing ahead with these mid-contract price rises.
“Ofcom should be holding these companies to account, but it’s kicked the can down the road with a review that won’t land until the end of the year. When the regulator does act, it must deal with this once and for all by banning any future mid-contract price hikes.”
Water bills
Households in England and Wales face the largest increase to their water bills in nearly 20 years, as prices rise to an average of £448 a year.
Industry body Water UK said the 7.5 per cent increase would see customers pay around £1.23 per day on average – an increase of 8p per day or an average of £31 more on last year’s charges.
Water UK argued in February that water bills remained lower in real terms than they were a decade ago and said this year’s increase reflected higher energy costs, with water firms using around 2 per cent of the country’s electricity.
Energy bills
The government’s Energy Bill Support Scheme – brought in to ease the pain of Ofgem’s soaring price cap – came to an end in March, leaving households having to find an extra £67 a month to cover their gas and electricity.
While the separate Energy Price Guarantee had been set to increase – meaning the limit on a typical household bill would rise to £3,000 per year – chancellor Jeremy Hunt has decided to extend the current guarantee of £2,500 for a typical bill for another three months.
From July, lower wholesale gas prices are expected to feed through further to customers, with Cornwall Insight data predicting the Ofgem price cap will reach just over £2,000 a year for a typical household. The regulator’s price cap sat at £1,277 in October 2021, before rising to £1,971 the following April and £3,549 in October.
Wages
In better news for households, the National Minimum Wage and National Living Wage are both set to rise in April.
The National Living Wage – for employees aged 23 and older – will increase from £9.50 to £10.42, in what the Resolution Foundation think-tank has described as the largest annual cash rise in the 24-year history of the UK minimum wage.
Around 1.7 million workers earning up to 5p above the current minimum wage will directly benefit in full from the increase in the National Living Wage, according to the think-tank, with another five million potentially benefitting indirectly from its “spillover” effects as employers look to maintain differentials between pay bands.
The National Minimum Wage for those aged 21 and 22 will also rise from £9.18 to £10.18, from £6.83 to £7.49 for 19 and 20-year-olds, and from £4.81 to £5.28 for those under the age of 18. The Apprentice Rate will increase from £4.81 to £5.28, with the Accommodation Offset rate up 4.6 per cent from £8.70 to £9.10.
Pensioners will also receive some relief, as the state pension rises by 10.1 per cent under the triple-lock system, in line with rising living costs.
Businesses facing hikes
However, businesses will be facing a further squeeze on their finances on multiple fronts, after the government’s Energy Bill relief scheme ended on 31 March.
While a new Energy Bills Discount Scheme (EBDS) will run until April 2024, the British Chambers of Commerce (BCC) has warned that businesses face an 85 per cent decrease in energy support from Saturday.
“Almost half of firms say paying bills will be difficult from 1 April onwards, but of the seven energy policies we advocated for the government to include in the spring Budget, not one was acted upon,” said Alex Veitch, director of policy and public affairs at the BCC.
“Flexibility to increase support for those who desperately need it – ignored. Easing the burden of claiming VAT on energy – ignored. Funding for improved business energy efficiency – ignored.”
Under the new support, non-domestic energy users, including schools and hospitals, will be given a discount of up to £6.97 per megawatt hour (MWh) of gas and £19.61 per MWh of electricity. Companies paying less than £107 per MWh for their gas and £302 per MWh for their electricity will not get support.
Firms with profits over £250,000 also face a 6 per cent rise in corporation tax – as it hits 25 per cent – which Mr Hunt has said will impact around one in 10 businesses.
However, shops, pubs and other high street businesses are expected to enjoy business rate cuts of more than 50 per cent from Saturday, due to drops in the value of commercial real estate and increased sector support.
Prescriptions
Following a freeze for the past year, prescription charges in England will rise by 30p from Saturday, taking fees to £9.65 per item or appliance.
While prescriptions are free in Scotland and Wales, the government has said that nearly 89 per cent of prescriptions in England are also provided free of charge. Campaigners say that most of the income to the NHS from prescription charges comes from working-age people with long-term conditions.
It was reported last month that proposals by Boris Johnson’s government to end free NHS prescriptions for 60 to 65-year-olds in England had been scrapped.
Personal tax
While not technically an increase, the government has frozen personal tax thresholds in the UK – excluding Scotland – until 2028.
Frozen tax thresholds create what is termed “fiscal drag” – also sometimes dubbed a “stealth tax” – where people end up paying more tax as wage increases push them into higher brackets.
The freezing of income tax and National Insurance allowances will cost most basic rate taxpayers an additional £500 and most higher rate taxpayers £1,000, according to the Institute of Fiscal Studies.
Additional reporting by PA
