We are now more than two years into the worst cost of living crisis in a generation.
Although inflation has slowed significantly, wage increases have only made small inroads into the eroded budgets of households across the UK. At the same time, interest rates are sitting at a 16-year high, with most homeowners having seen their monthly mortgage payments rocket over the last 12 months.
Despite signs that some of the pressure on our finances is easing - for example, retailers have seen inflation fall - people are facing fresh financial pain this month. Key household utilities will see significant above-inflation price hikes, including council tax and water bills.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So, how much extra can you expect to pay? MoneyWeek has rounded up all the confirmed increases to your bills.
Mobile and broadband price hikes
The majority of people who have a contract for their mobile, broadband, landline or TV will see an inflation-busting bill hike in their April bills. This is because most providers are allowed to implement mid-contract price increases each spring (although telecoms regulator Ofcom is planning to scrap the controversial practice).
Almost all providers set prices using a formula that they will write into your contract. Most use December’s Consumer Prices Index (CPI) and add 3.9 percentage points on top. Others use January’s Retail Prices Index (RPI) before adding 3.9 percentage points. Providers argue these increases allow them to maintain the quality of their service and invest in their infrastructure.
Research by comparison website Uswitch has estimated that the aggregate annual bill rise for broadband and mobile contract holders since the start of 2023 works out at a whopping 23.4% on average. Coming in from the end of March or start of April (the exact date depends on your provider), we currently know about hikes from the following major providers:
| Provider | Price hike? | Date prices go up |
|---|---|---|
| BT | 7.9% (no hike for Home Essentials customers) | 31 March |
| EE | 7.9% (no hike for EE Basics mobile users) | 31 March |
| O2 | 8.8% | 1 April |
| Shell Energy | 7% | 1 April |
| Sky | 6.7% (figure is an average; no hike for in-contract mobile users) | 1 April |
| TalkTalk (broadband only) | 7.7% (4% for out-of-contract Fixed Price Plus users) | 1 April |
| Three | 7.9% | 1 April |
| Virgin Media | 8.8% | 1 April |
| Vodafone | 7.9% | 1 April |
Most of the providers listed above will have written the price hike into your contract. It means, if you're well within the minimum term of your contract, you'll have to go along with the price hikes or face a hefty exit fee.
However, it's different with Sky Broadband. The provider does not write mid-contract increases in. So, you'll be able to switch to another deal within 30 days of being informed that your prices are rising.
Overall, Uswitch estimates that there are 4.2 million consumers who are out of contract and are therefore free to switch their broadband, mobile or both without facing any exit fees.
Council tax increases
Council tax has risen by more than the rate of inflation in most parts of England and Wales.
Government data for England shows the average increase from 1 April will be 5.1% (an extra £106 a year for the typical Band D property). The biggest hikes will be seen in London (£104, or +5.8% year-on-year) and metropolitan areas (£109, or 5.3%), with unitary authorities increasing their levies by an average of 5.1% (£109) and shire areas upping prices by 4.8% (£103).
Several local authorities that are in particularly dire financial straits, namely, Birmingham City Council, Slough Borough Council, Thurrock Council and Woking Borough Council, will be allowed to go above this threshold. The Department for Levelling Up, Housing and Communities has allowed them to implement hikes of up to 10%. Birmingham's rate will increase by 10% in the following tax year too.
Meanwhile, Wales’s devolved administration has not set a maximum for its councils. It means several areas face increases of at least 6%, with Cyngor Sir Ynys Môn (Anglesey County Council) proposing the steepest hike (9.8%) MoneyWeek has seen.
Rates will be frozen in Scotland, although some councils may still vote to implement hikes. So far, only Argyll and Bute Council has confirmed it will not be freezing its rates. It is pushing through a 10% hike.
Owners of furnished second homes are also likely set to see a significant rise in council tax. Local authorities currently tend to apply discounts to holiday homes that remain unoccupied for most of the year. But under new rules designed to increase the amount of housing stock, owners of these properties could have to pay as much as double the full rate of council tax.
Water bills rise above inflation
Despite the recent controversy over the performance of water companies, they are increasing bills by an average of 6% across England and Wales. This rise means the average bill will rise £24 a year.
Kicking in from 1 April, the trade body for UK water firms, Water UK, says the move will coincide with £14.4 billion of additional infrastructure investment. This spending will “significantly reduce” the number of sewage spills into rivers and coastal areas, it claimed. The organisation also said that water firms will be boosting support for low-income households.
In Scotland, water bills will rise 8.8%. The increase will appear as a council tax rise as it is paid alongside the local levy. This is because Scottish Water is nationalised. The public-owned company says its bills increase means the average council tax bill will rise £35.95 a year (70p a week).
Energy bills to fall
Gas and electricity costs have fallen back significantly. The Ofgem energy price cap plummeted 12% on 1 April.
It means the average home is now paying the equivalent of £1,690 a year for its energy, more than £238 below the previous level of the price cap. What you’ll actually pay depends on the type of home you reside in, how much energy you use and what part of the country you live in.
Why have we included this in an article about bill hikes? Well, energy bills remain well above the level they were at before the energy crisis began in late-2021. The October 2021 price cap sat at £1,277 a year - two-thirds of the cost of the current January to March 2024 rate of £1,928. Prices were actually even lower for many households back in autumn 2021, as most were on a cheap fixed tariff.
Energy consultancy Cornwall Insight, which has accurately predicted the level of the price cap ahead of each announcement, has said it expects energy bills will fall again in July when the next Ofgem price cap rate comes in. But it has also warned costs will remain higher than historical averages until at least the end of the decade.
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
