Household bills set to go up with big increases forecast in Energy and Council Tax
Energy and Council Tax bills could rise by 30% and 5% respectively next year
Researchers have predicted Energy and Council Tax bills could rise up dramatically from next year.
A report by the Institute for Fiscal Studies (IFS) predicted that Council Tax may need to rise by up to 5% a year for the next three years to keep services running and pay for social care reforms.
A different report, by research agency Cornwall Insight, estimated that energy bills could rise by 30% next year.
Increases in gas prices could run up household bills
Cornwall Insight has predicted further increases in gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer.
The forecast is approximately 30% higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Senior consultant Craig Lowrey explained: "With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap (£1,277 for a typical dual fuel direct debit customer) for Winter 2021-22, the GB energy market remains on edge for fresh volatility and further consolidation."
Energy regulator Ofgem reviews the price cap once every six months.
The price cap changes based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.
Potential rises in Council Tax bills
The Institute for Fiscal Studies (IFS) said that under current Government spending plans, a rise of at least 3.6% on council tax bills will be needed per year.
The increase would be just for town halls to keep services running at the levels seen before the coronavirus pandemic.
Though this would likely be a minimum requirement, with extra cost pressures and demand, bills could rise by up to 5% every year up to 2024/25, the researchers explained.
IFS research economist Kate Ogden said: "The Government has stepped up with billions in additional funding for councils to support them through the last 18 months, it is likely to have to find billions more for councils over the next couple of years if they are to avoid cutting back on services, even if they increase council tax by 4% a year or more.
She also stressed how the next financial year is likely to be "especially tough" as some ongoing Covid-related pressures could still be prevalent.
"At the same time, Government needs urgently to deal with a local government funding system which is becoming hopelessly out of date, being based on population levels and characteristics in 2013. This results in manifest unfairnesses in the distribution of resources between councils," she added.
A Government spokesperson said councils have directly received more than £12 billion since the start of the pandemic and that the Government recognises that "councils are best placed to deal with local issues."
"The Spending Review will continue to focus on supporting jobs and delivering the public's key priorities," the spokesperson added.