Harrogate and Dales residents to feel the 'Big Squeeze' as energy bills skyrocket from today
Energy, petrol, and shopping bills are all rising, can your household budget survive #TheBigSqueeze?
Families across Harrogate and the Dales are facing a huge hike in their energy bills from today.
The energy price cap is going up by an average of 54% from today, which means a typical bill will rise by £700 this year and there are warnings prices could go up again in October.
Combined with record petrol prices, inflation at the supermarket, and interest rates bumping up mortgage costs, families are facing the biggest squeeze in household budgets in a generation.
Citizen's Advice are warning five million families won't be able to afford the latest rise in energy prices alone, and they're due to rise again later this year.
It's thought households will be around £1000 worse off this year as a result of all the price rises across the board.
Josh Boyes from Harrogate lives alone. He lost his job after he suffered an injury at work and can't get a new one on advice from his doctor. As a result, he nearly ended up homeless.
He said:
"I only get about £300 a month in Universal Credit so it's a crappy wage. That's why I'm trying to get back into work and get more money but at the moment with my hand injury, no money, cost of living increasing, trying to pay my rent, it's not enough. It's very stressful.
"Two weeks ago I was nearly kicked out because I couldn't pay my full rent. As soon as the cost of living went up I nearly lost my flat. If it's like this now, what's it going to be like in a month or so?
"Food prices have gone up, energy has gone up and now I'm finding I'm having to wear jumpers in the house just to cut costs. It's just going to get worse.
"The energy bill is about £200 extra in total. It's near enough doubled."
Mr Boyes has had to turn to Harrogate District Food Bank to get support.
"I've been getting support for just over a month now. I've been finding it really hard to get by and the food bank and parcels prevent me from struggling further down the line", he said.__
"For me at first I was a bit nervous and embarrassed to come to the food bank but the staff have been spot on. They make you very welcome and it makes it a lot easier to come."
What does this mean to my finances?
The bad news is these price rises are affecting everyone in the country.
- Energy bills will hit around £2000 a year, with further significant increases in October
- Unleaded and Diesel prices have hit record levels in the last month
- Supermarkets are charging more as inflation impacts their prices too
- Inflation means even pay rises of 2-3% means you will still be worse off than you were this time last year.
Price rises explained
Very few things you spend your money on are going to get cheaper this year. Let's take a look at where the biggest hits on your pockets will come.
Energy prices
The cost of energy is skyrocketing because of increased demand since economies opened up after months or years of coronavirus restrictions.
Most of our homes are gas-powered through central heating, and a large part of our electricity comes from gas too.
The price cap, which was designed to stop companies charging too much, is now setting the minimum amount you can pay, after looking at national and global supply factors.
Earlier this year, Ofgem decided 54% was a fair increase for energy companies to charge, pushing bills up to around £2000 per household.
It's thought it could go up to closer to £2500 a year if prices on the wholesale market continue to rise.
Petrol and diesel
Demand for petrol and diesel has done the same to prices at the pumps, which saw record amounts charged at filling stations throughout March.
Unleaded now regularly costs more than £1.60 a litre, and its more than £1.70 for diesel.
Wholesale prices are rising, as people return to workplaces after months or years of working from home, and demand for items in shops and online means fuel is in massive demand.
That means higher prices too.
Grocery shopping
The route items take to get to our supermarket shelves has also been disrupted by coronavirus, and new rules and red tape introduced because of Brexit.
That's pushed up prices too.
At the moment, prices are increasing by more than 5% on last year, which could hit as high as 8% later this month.
National insurance
The government announced last year they were pushing up the National Insurance rate to pay for social care.
For most people it comes directly out of your wages, just like tax.
A 1.25 percentage-point rise introduced by Chancellor Rishi Sunak will mean someone earning £20,000 per year will take home £89 less compared to last year, but a change to thresholds announced in the Spring Statement now means a typical employee will take home an extra £330.
Pay rises that don't match inflation
At any other time, we'd be celebrating the highest pay rises in a decade, with some staff seeing a 3% rise in their salaries this year.
But given inflation is currently higher than 5%, it actually means you're actually worse off, as your new pay amount won't match the increase in the things we want or need to buy.
Is it just me who is struggling?
Absolutely not. The Office for National Statistics has been asking people about the cost of living, and figures show the majority of people are now feeling the big squeeze on their finances.
- Four out of five people say they've noticed the cost of living going up. It was around 3 in 5 six months ago
- 90% of people have noticed their food shop is costing more
- 83% are noticing the price rises in their energy bills
- 79% are feeling the pinch when it comes to the price of petrol
- More than half of us are cutting back on spending on non-essentials
What are the government doing about it?
The government has announced that anyone who pays Council tax in bands A-D will get a £150 rebate on their Council Tax bill this year to help with energy bills.
They've also announced a deferral of £200 of payments on energy bills this year, so for a £200 "discount" now, you'll have to pay £50 extra on top of your energy bill for following five years.
The £350 reduction on this year's bill still won't be enough to cover the extra amount most families are facing.
There is a new discretionary pot for families who don't qualify for the Council Tax rebate
2.2 million low income households can claim a warm home discount of £140
And VAT is being scrapped on costs associated with insulating your home, or installing green alternatives like solar panels.
And there are other measures too:
The National Living Wage is increasing to £9.50 an hour, that's an extra £1000 for full-time worker.
In the Spring Statement, the Chancellor raised the threshold at which you start paying National Insurance, that should see families take home a greater share of their earnings.
Rishi Sunak says its worth more than £330 a year to a typical employee (from July 2022).
And there's been a 5p cut in fuel duty, which means the cost of filling your tank has dropped slightly, although you'll still be paying a lot more than a year ago.
What can I do about my energy bills?
In the past, you'd be advised to switch to a cheaper energy supplier, but they're mostly charging the price cap rate, so for now that's not really an option.
Many companies which were locked into fixed rate deals ended up going bust because they could no longer make any money from the wholesale market.
The Energy Saving Trust is offering advice on insulating your home, so you're keeping in the heat, which means you don't need to use as much energy.
You can shop around to find your cheapest supermarkets and prices will vary at petrol forecourts, but don't expect to see massive discounts on unleaded and diesel.
For benefits, housing, debt and family advice you can find out more from Citizen's Advice