Why families are facing a £700 hit to their finances in April

This article was originally written for my column in the Evening Standard.

March was not a good month for household finances. The brief downward trend in inflation came to a surprise halt as CPI ticked back up to 10.4%. The price of food is rising at the fastest rate ever recorded. And the Bank of England’s decision to increase interest rates to 4.25% will add hundreds of pounds a month to the mortgage payments of some 1.7 million borrowers looking for a new deal this year.

As Spring approaches, families are desperate for some respite. But unfortunately there’s more gloom to come. Budgets are going to come under even more pressure in April as a number of essential bills increase at the same time. Council tax, energy, water, mobile, broadband and NHS prescriptions are all going to get more expensive. 

So exactly how much is this going to cost your family? Analysis of official figures by my company Nous.co has found the typical household will be £682.70 worse off over the course of the year. Our research is based on what the average household currently pays, and how much prices are due to go up. The price hit comes from:

  • The loss of the £400 energy support payment
  • A £99 increase in council tax
  • A £31 increase to water 
  • A £142 increase to broadband and mobile
  • A £10.70 increase to NHS prescriptions

These are not encouraging numbers. Data from the Office for National Statistics shows that 49% of adults who pay energy bills are already finding it difficult to afford them. In a further sign of how hard people are finding it to make ends meet, 24% of adults are already borrowing or using credit cards more than they did a year ago.

During such a difficult time, the Government needs to step up its efforts to make sure cost of living help is reaching those who need it. What’s more, it’s about time the practice of sneaking huge mid-contract price rises into telecoms bills came to an end.

Let’s take energy. It’s certainly good news for bill payers that Chancellor Jeremy Hunt maintained the current Energy Price Guarantee for a further three months in his Spring Budget. Millions of low-income households will start to receive their next cost of living payments from 25 April. However, there are worrying signs that vulnerable households are still missing out on support they badly need. 

Data released this week by the Department for Energy Security and Net Zero shows that two million Energy Support Payment vouchers for prepayment customers still haven’t been redeemed – more than a fifth of all vouchers. Prepayment customers are the very people the Government’s Energy Support Payments were designed to help. They are more likely to be vulnerable, and more likely to be struggling to keep up with their energy bills. 

Faced with this problem, ministers have put pressure on suppliers to reach customers who have not redeemed their vouchers. Grant Shapps has told energy firms to “redouble their efforts” to reach those who haven’t successfully used their vouchers. But with this  many prepayment vouchers still unclaimed, this woolly approach simply isn’t enough.  

Broadband and mobile bills are another area where consumers need better support. Telecoms companies are allowed to increase your bills by the rate of inflation, plus an additional 3.9%. In previous years, this might have meant a negligible rise that most people wouldn’t even notice. This year, it means some customers could see their monthly payments increase by an eye-watering 17%.

Ofcom has already introduced rules for providers to make mid-contract price hikes more transparent. However many people are still caught unaware until they receive the unwelcome news that their bill is going up.

There’s far more Ofcom could do to protect people in this area. If they can’t stop providers from increasing bills, they should be making sure customers can exit their contracts without paying huge penalties. At the very least they could bring in measures to stop the advertising of so-called special deals right before April price hikes are announced.

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