Bleak Friday: Household bills to soar by £80 a month from 1 April

LYME REGIS, UNITED KINGDOM - MARCH 20: A Sterling British Five Pound GBP bank note lies on top of 10p coins that are in an amusement arcade slot machine, on March 20, 2022 in Lyme Regis, England. The UK is currently facing a cost of living crisis, as inflation hits a near-30-year high and rising energy bills will squeeze household incomes still further. To add to the misery, many UK households face a further rises in home energy prices when the energy price cap is likely to be raised in April.  (Photo by Matt Cardy/Getty Images)
Typical household bills will go up £80 a month as the cost-of-living crisis squeezes people's finances, experts have warned. (Getty)

Typical household bills will go up by £80 a month as the cost-of-living crisis squeezes people's finances, experts have warned.

Brits across the country will see their outgoings increase from Friday amid warnings the crisis could plunge 1.3 million people - including 500,000 children - into absolute poverty.

UK households are already battling an inflation rate of 6.2% - the highest for three decades - amid soaring energy costs and rising food and petrol prices. According to the Office for Budget Responsibility, this could lead to the biggest fall in living standards in any single year since records began in the mid-1950s.

Stark figures released today by the Office for National Statistics reveal one in three households are already cutting back on gas or electricity as well as food shopping and other essentials in a bid to cut spiralling bills.

The squeeze is set to become even more marked next month as households are hit with increases to council tax, national insurance contributions, energy and water bills, among other outgoings.

The ongoing war in Ukraine will also have significant implications for the costs of goods and services in the UK.

Read more: Cost of living crisis: UK shop prices rise at highest rate since 2011

Britain's Chancellor of the Exchequer Rishi Sunak leaves after attending a Service of Thanksgiving for Britain's Prince Philip, Duke of Edinburgh, at Westminster Abbey in central London on March 29, 2022. - A thanksgiving service will take place on Tuesday for Queen Elizabeth II's late husband, Prince Philip, nearly a year after his death and funeral held under coronavirus restrictions. Philip, who was married to the queen for 73 years, died on April 9 last year aged 99, following a month-long stay in hospital with a heart complaint. (Photo by Daniel LEAL / AFP) (Photo by DANIEL LEAL/AFP via Getty Images)
Chancellor Rishi Sunak last week announced measures to help households, including raising the national insurance threshold to help offset the impact of April’s tax hike. (Getty)

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, branded 1 April "Bleak Friday" and said the series of changes will add up to more than £80 to a typical household's outgoings.

She said: “Bleak Friday will see council tax bills hiked another £67 on top of horrendous 54% hikes in energy bills and water bills rising as much as 11% in some areas.

"Annual price rise day on April 1 is going to hit hard and be a Bleak Friday for millions.

"It will still see your bills rise by an average of £80.41 each month. For anyone whose budget is already feeling the stretch, it could be the final straw."

What is changing?

  • National Insurance payments

Last year, Rishi Sunak announced by a 1.25 percentage point rise in national insurance from April 2022 to fund the NHS and social care.

While the Chancellor decided against postponing the planned hike in his Spring Statement last week, he did raise the threshold for when the payments are made to £12,500.

He said this would mean 70% of all workers will have their taxes cut by a greater amount than the extra burden they faced when NICs increase.

  • Council tax

On average, councils will raise tax by around 3.5% to an average of £1,966 for Band D properties on 1 April.

The most expensive Band D council tax in England is in Rutland, at £2,300, followed by Nottingham, Dorset, Lewes, Wealdon and Newark and Sherwood.

These sums do not take into account Sunak's £150 rebate that will be provided to households in Bands A to D by the Government.

Watch: Sunak 'making economy worse', says senior Tory in cost of living row

  • Inflation rate

Inflation is rising to record levels, with the Office for Budget Responsibility (OBR) estimating a peak of 8.7% in October and warning that the average person will see their disposable income slashed by around 2.2% per person in 2022/23.

The Bank of England deputy governor Ben Broadbent warned Britain is likely to face the worst ever external hit to national income and that the scale of the impact is potentially unprecedented.

Read more: One in five would 'struggle to cope' in a cashless society

  • Energy price cap

Perhaps the most significant price rise will be the 54% rise in the energy price cap from £1,277 to £1,971 a year.

It means the monthly energy bill of a typical user on the price cap will rise by £57.83 to £164.25.

It’s the kind of increase that means even those who consider themselves comfortable will have to think twice about how they can cover the cost.

A homeowner turns down the temperature of a central heating thermostat in Basingstoke, Hampshire. Ofgem is expected to announce that the energy price cap is to rise by 50 percent because of soaring wholesale gas prices, meaning the average bill could hit �1,915. Picture date: Thursday February 3, 2022.
The most horrendous price rise will be the 54% rise in the energy price cap from £1,277 to £1,971 a year. (Getty)
  • Water bills

Water bills are rising by an average of 1.7% (£7) to £419, although the pain doesn’t fall evenly across the country. While some will see bills fall, others will see them spike by as much as 10.8%, such as £36 with. Northumbrian Water. The most expensive bills will be £472 (South West Water).

  • Air passenger duty

While travel restrictions have been lifted following the COVID pandemic, those planning international travel will be levied with an increase of air passenger duty.

The charge will be rising with inflation, so duty on economy flights costs an extra £2, and the tax on other classes of seats is up £5.

  • Car tax

The standard rate of car tax for cars registered after 2017 is up 6% from £155 to £165. The first-year road tax has also been tweaked to fall more heavily on cars that produce a lot of emissions.

It now ranges from £120 to £585 for most people, but rises to as much as £2,365 for the most polluting cars (up £120 in a year).

The premium rate – on cars with a list price of £40,000 or more for the first five years of the car’s life – is also up from £335 to £355.

File photo dated 31/07/18 of a smart meter next to an energy bill, as more than eight in ten Scots are worried about the soaring costs of energy on household budgets despite measures designed to take the sting out of the cost of living crisis.
Brits are facing the biggest dip in income for decades. (Getty)

What is the government doing to tackle the issue?

Chancellor Rishi Sunak laid out his Spring Statement last week, announcing a raft of measures aimed at tackling the crisis.

His decision to cut the NICs threshold was greeted with praise by money saving expert Martin Lewis, who said the increase in the national insurance threshold would be a tax cut for those earning under £35,000 a year.

Alongside the decision to the cut NICs threshold, Sunak also announced a cut to fuel duty to tackle soaring prices at petrol pumps exacerbated by the war in Ukraine.

He revealed a temporary 5p per litre reduction until March 2023, the biggest rate cut on record.

Sunak also scrapped VAT on energy efficiency measures such as solar panels, heat pumps and insulation installed for five years, while doubling the Household Support Fund to £1bn from April.

Watch: Something 'has to be done' says Gordon Brown over cost of living

He put another £500m into the household support fund, which allows councils to help poorer families. This could cut the cost of having a solar panel installed by £1,000.

Sunak added during his Spring Statement that the Conservative government was committed to cutting taxes by the end of this parliament, announcing a new tax plan.

Last week the IPPR think tank called the mini-budget "woefully out of touch", describing it as a "missed opportunity" leaving the poorest families at risk of being pulled further into poverty and debt

Paul Johnson, director of the Institute for Fiscal Studies (IFS), warned the most vulnerable were left exposed: “What was completely missing was anything for people on Universal Credit or the state pension, which is only going up by 3.1% this month when inflation will be around 8%. [It is] a big cut in living standards for those on the very lowest incomes.”