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Energy bills and rent to account for a third of wages

While many costs households face have fallen in the last 50 years, energy bills and rent continue to take up a higher proportion of income

Energy bills and rent could soon account for one third of the average household's expenses

Energy bills and rent could soon account for one third of the average household’s income

Rising energy costs have been a problem each winter for the last few years. This winter, households have been hit with the news that four of the big six energy firms are to increase gas and electricity prices again.

These events have left ministers debating methods for bringing prices down, with the government putting its faith in new initiatives such as fracking for the long term, and the opposition stating that it would freeze prices for 20 months if it gains power at the next general election.

Energy and rent continue to increase

Energy bills and rental prices are two of the biggest expenditures that households face at the moment. In 2013, the Office for National Statistics said that these account for 26% of household income.

Much of this rise has come in the past six years – in 2007, the both expenses combined were taking up just 21% of household income.

It said that they are two of the only areas that have increased compared to wages in the past 50 years. In 1963, the two accounted for just 13.5%.

In contrast, food bills now make up just 9.2% of income, compared to 24% in 1963, reflecting a sizeable drop in the past 50 years.

The problem is likely to be exacerbated, with PricewaterhouseCoopers (PwC) predicting that within the next 17 years rent and energy will cost homeowners even more of their wages.

By 2030, its Economic Outlook forecasts, these two will account for 30% of income.

John Hawksworth of PwC said: “It means that other areas of more discretionary spending will tend to be squeezed.

“For people in sectors such as clothing and transport, it will remain a pretty tough environment even after the economy recovers.”

Government policies blamed

While the government has promised that methods such as fracking will help to reduce bills over the next few years, many of its policies have come under scrutiny for increasing prices rather than bringing them down.

Its energy levies, for example, have been blamed by bosses at some of the biggest providers for the heightened prices they have announced in the last few weeks.

Elsewhere, the government has been criticised for introducing a strike price far above the level of inflation for the newly agreed Hinkley C nuclear power plant. Detractors have claimed the deal will see energy bills increase for 35 years.

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  • Solar Fuel Blog

    True talk. One of the ways we can solve this problem is to increase our energy consumption. Energy consumption has increased more than 10 times over the past few decades. Switching off that bulb when not in use would be a great start.