Customer LoginRising Prices- What you need to know and how to manage it
There’s been a lot of news circulating recently about rising prices, and we understand how concerned you may be. It is going to be a tough year- that’s for sure- but we want you to know that there is help available and ways to minimise your spending to accommodate for increasing expenses. But what exactly is going up?
Energy Bills
In April the Default Tariff Cap will rise by 54%, a new record high, and will impact approximately 22 million people. Customers on default tariffs and paying by direct debit will experience an increase of around £693 per year, unlike prepayment customers who will face an increase of roughly £708.
Why?
A record rise in global gas prices over the last six months- due to shorter supplies- has triggered a huge surge in energy prices. A cold winter in 2020/2021 in Europe put pressure on suppliers to provide more gas and a somewhat windless summer in 2021 made it difficult to generate energy from wind turbines.
What can you do?
- Submit your meter reading to your supplier before 1st April when new prices come into effect- this will ensure your bill is accurate and will stop your supplier from overcharging you.
- Consider installing energy-efficient materials such as solar panels, heat pumps or insulation- VAT on these items will be cut from 5% to zero for five years.
- The government announced that all households will receive £200 off their energy bill in October- but it must be paid back in five yearly instalments of £40, as of 2023.
- Check to see if you’re entitled to Warm Homes Discount– a government scheme in place to support the poorest households, offering eligible homes £150 off their energy bills.
- Don’t automatically change your energy supplier- unfortunately, there aren’t many good deals floating about and it could cost you more.
- If you do want to change supplier, try using Citizens Advice’s price comparison.
- If you’re really struggling, contact your supplier to see if they can offer any support or arrange an affordable payment plan.
- Apply for grants or benefits to help with your energy bill.
Council Tax
At the start of the new financial year in April, residents will face a spike in their council tax bill, which will rise by up to 5%. Each new rate will be set by local councils and the rate of increase will depend on tax bands.
Why?
The COVID pandemic put a massive strain on the NHS both physically and financially. Therefore, local councils are raising council tax to recoup, and distribute, more money into social care.
What can you do?
- Council taxpayers in bands A-D in England, Scotland and Wales will receive a £150 rebate off their bill in April, which does not need to be paid back.
- Make sure you’re paying the right amount by checking you’re in the correct council tax band.
- Check to see if you’re eligible for council tax reduction. Discounts range from 25% to 100% and can make a huge difference to our monthly outgoings.
- Check to see if you’re eligible for any government benefits such as Income Support or Working Tax Credit, by using a Benefits Calculator. If you do qualify, this may reduce your council tax bill.
- Local authorities will get another £500m for the Household Support Fund from April, creating a £1bn fund to help vulnerable households with rising living costs
Fuel
For much of the same reasons, the cost of petrol and diesel have also reached record highs due to limited supplies.
Why?
The price of crude oil has increased causing an inevitable ripple effect for consumers. This is largely due to lesser supplies, but it has also been exasperated by the Russia/Ukraine conflict. As the third-largest producer of oil in the world, countries around the world are concerned that Russia’s involvement in the war will impact their exportation of oil and cause even further shortages.
What can you do?
- If it’s possible, consider switching to a hybrid or dual-hybrid car to cut down on your fuel consumption, or downgrade your car to balance out fuel costs.
- The Chancellor has recently announced that fuel prices will be cut by 5p a litre, which should help you save roughly £100 over a year.
- If it’s cheaper, use public transport.
- Cycle or walk when possible.
- Schemes such as TopCashback can save you money when you’re next at the pump.
- Some loyalty cards, such as Tesco Club Card, help customers gain points that can be used towards fuel.
Food
UK inflation climbed by 5.5% at the beginning of the year, surpassing the 30-year high of 5.4% the month before in December 2021. However, some industry experts predict that food prices will continue to rise throughout the year and could increase by a further 15%.
Why?
There are many reasons why UK food prices have drastically surged, but the main, contributing factors are Brexit, supply chain issues, rising ingredient prices and transport costs. Similarly, Ukraine and Russia provide close to 30% of the world’s wheat exports and whilst the conflict is ongoing, production may be stunted.
What can you do?
- Shop smart and find the best deals via Money Saving Expert.
- Make the most of supermarket vouchers and discount codes.
- Stock up on discounted food and freeze it if you must.
- Focus on making cheap and healthy meals.
National Insurance
From April 6th 2022, workers can expect to pay 1.25 percentage points more in National Insurance. However, this increase will not apply to people exceeding the State Pension age.
Why?
The COVID pandemic put a monumental strain on the NHS and the government is calling on the British public to fund the backlog and pay more towards social care reform.
What can you do?
- If you are eligible to pay National Insurance, there is little you can do to change this however, there are other steps you can take to prepare for the increase:
- Create a budget planner and factor in increased charges.
- Learn how to prioritise your spending.
- Use budgeting tools if you need a helping hand.
- Also, it’s worth noting that the income threshold on National Insurance will rise to £12,570 in July.
Other costs which may be impacted:
• Household goods
• Cosmetic Products
• Used Cars
• TV/Broadband Prices
• Interest Rates for homeowners
What to do if you’re really struggling
If you’re still worried that you’ll not be able to keep up with the rising costs, remember, you’re not alone. Millions of households across the UK will be stretched to their limits and it’s understandable, but there is more help available.
If you’re already on a debt solution with us, make sure your complete your annual review and factor in surging costs. But if you’re worried and would prefer to speak with an advisor, do not hesitate to get in touch.
