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Household bills rise 25% since 2008 – consumers more worried about living costs than their health

  • Essential bills rise 25% in five years – car insurance (67%), gas (52%), electricity (32%) and petrol (33%) see biggest hikes

  • Wages climb just 6% over same period although in real terms fall back to 2003 levels[4]just one in two consumers (52%) expect pay rise in 2013

  • Consumers more worried about rising living costs than their health[5] – and 55% believe next week’s Budget will make things worse

  • Top priorities for Chancellor – tackling rising utility bills (58%) and petrol prices (50%), stimulating economic growth (41%) and sorting out benefits system (38%), say consumers

  • Two in three (67%) want ‘mansion tax’ introduced and 84% want personal tax allowance raised beyond £10,000

  • 71% say their finances have worsened since Coalition came to power and 85% feel Chancellor does not understand the real fears of ordinary people.

New data from Uswitch.com, the independent price comparison and switching service, shows that the cost of running a household has risen by 25% in the last five years, with some bills having soared by an eye-watering 67%. The figures come alongside pay increases of just 6% over the same period. Consumers are currently more worried about the rising cost of living than they are about their health, and are calling on the Chancellor to stem spiralling household bills before he tackles the economy at large.

A shopping basket of essential household bills, compiled by Uswitch.com, shows that drivers have been the hardest hit over the last five years. The cost of fully comprehensive car insurance has risen 67% since 2008, from an average of £684 a year to a staggering £1,140 a year. Adding fuel to the fire, unprecedented hikes in petrol prices mean that a two car family can now expect to spend £331 a month filling up their cars, up 33% from £250 a month in 2008. The situation is unlikely to improve any time soon, with the AA predicting petrol prices hitting their highest ever level by Easter.

Energy bills are also a major cause for concern, with the average household now shelling out £67 a month for gas and £45 a month for electricity – increases of 52% and 32% respectively since 2008. Water bills have not escaped the hikes, with homes now seeing average bills of £32 a month, a jump of 13% since 2008.

With high deposits and soaring house prices forcing more people than ever to rent rather than buy homes, the 24% rent hike from £467 to £577 a month has hit consumers hard. The 0.5% interest rate since 2009 may have helped some mortgage holders, but with predictions that the average house price will climb to £219,000 this year, first-time buyers are facing an increasingly tricky time.

Food bills have climbed 17% since 2008 with the average monthly shopping bill rising from £220 to £256 a month. Prices have risen 4.5% in the last year alone, with vegetables up 8.4% and fruit up 7.2% after rain devastated harvests.

Broadband is the shining star in the shopping basket of bills, actually witnessing a 68% decrease since 2008. The average cost of standalone broadband is now just £5 a month, compared to £17 a month five years ago. Unfortunately, this drop is offset by the cost of having a landline – required for most broadband to operate – which has risen 31% from £12 to £15 a month.

Table 1: Essential Bills 2008 – 13

|

Monthly bill

|

2008

|

2013

|

Increase

|

Rent

|

£467

|

£577

|

24%

| |

Council tax

|

£80

|

£92

|

15%

| |

Food

|

£220

|

£256

|

17%

| |

Gas

|

£44

|

£67

|

52%

| |

Electricity

|

£34

|

£45

|

32%

| |

Water

|

£28

|

£32

|

14%

| |

Petrol

|

£250

|

£331

|

33%

| |

Phone line rental

|

£12

|

£15

|

31%

| |

Broadband

|

£17

|

£5

|

-68%

| |

Car insurance

|

£57

|

£95

|

67%

| |

Buildings insurance

|

£17

|

£19

|

12%

| |

Contents insurance

|

£11

|

£10

|

-9%

| |

Total monthly spend

|

£1,237

|

£1,544

|

25%

|

Source: Uswitch.com, data correct as at 7th March, 2013

Against the backdrop of rising bills, wages are failing to keep up. Average salaries have risen 6% from £24,900 a year in 2008 to £26,500 at the end of 2012. In real terms, however, the value of UK workers’ wages has fallen back to 2003 levels, with salaries plummeting by 4.5% between 2007 and 2011.  Just one in two consumers (52%) have had a pay rise this year; more than one in three (36%) have had their pay frozen for 12 months or more and one in eight (13%) have actually had their pay cut.

The relentless bill hikes are placing unprecedented levels of pressure on consumers. Over half (55%) say that the rising cost of living is their biggest cause for concern at the moment, compared to the 29% who are most concerned about their health. 39% are worried that they simply do not have enough money and 18% are concerned about job security.

Almost six in ten consumers (56%) fear that next week’s Budget will shatter their confidence even further. Before tackling the UK economy as a whole, Brits say the Chancellor’s priority should be addressing the price hikes – especially spiralling utility and petrol prices – before stimulating economic growth and sorting out the benefits system.

Two thirds of consumers (67%) would support the introduction of a ‘mansion tax’ on homes worth over £2 million, while 84% are calling for the personal tax allowance to be raised beyond £10,000. 85% believe that the Chancellor does not understand the financial fears of ordinary people and 71% say that their financial situation has worsened since the Coalition came to power in 2010.

Michael Ossei, personal finance expert at Uswitch.com, says: “Consumers are anticipating next week’s Budget with a mix of dread and despair. Spiralling living costs are stretching household budgets to their absolute limit and people are running out of ways to fund their ever-increasing bills. With salaries failing to deliver, many are being forced to turn to debt just to stay afloat. Unfortunately, the most accessible forms of debt are often the most dangerous.

“People want the Chancellor to show that he really does recognise the challenges they are facing and to help ease the strain on family finances. But consumers also need to help themselves by not burying their heads in the sand and realising that there are options open to them. The first step is to take a long hard look at your household budget to see where you can cut costs. Making sure you are on the best possible deal for your home essentials will help you to ease the financial pain and to beat price rises.”

FOR MORE INFORMATION

Charlotte Nunes

Phone: 020 7148 4664

Email: charlotte.nunes@uswitch.com

Twitter: @uswitchPR

Notes to editors

  1. Table 1 has been sourced as follows:

Rent – ONS stats: Family Spending Table 2.8 expenditure on rent by renters 2008 to 2010 and Table 2.8 Expenditure on rent by renters 2009 to 2011. 2012 and 2013 have been calculated based on rises of 3.9% (2012) and 3.1% (2013) as detailed in RPI January 2013.Council tax – ONS housing expenditure report 2007 to 2009 and 2009 to 2011. 2013 expenditure calculated based on RPI of 0.4%. Food - Based on ONS weekly expenditure, includes non-alcoholic drink http://www.ons.gov.uk/ons/rel/family-spending/family-spending/family-spending-2012-edition/art---chapter-4--trends-in-household-expenditure-over-time.html#tab-Table-4-1-to-Table-4-52012 data calculated from 3.5% rise and 2013 data from 4.2% rise from CPI detailed figures by division. Gas - Based on a medium user profile on a standard plan, using 16500kWh gas, paying on receipt of bill. Bill size averaged across all regions. Electricity - Based on a medium user profile on a standard plan, using 3300kWh electricity, paying on receipt of bill. Bill size averaged across all regions. Water – Sourced from Ofwat - ‘Average household bills 2008-09’, published 29/02/2008. 2013 figure from Ofwat  Average Household Bills information: 2012 - 13 using overall combined total. Petrol – based on based on two car family petrol cost, Uswitch.com calculation from AA.com fuel price report Jan 08 (104.3ppl) and Feb 13 (138.32ppl). Phone line rental – monthly cost of BT line rental if paying by monthly direct debit. Broadband – average price for standalone broadband from uSwitch.com. Car insurance – 2008 figure sourced from http://www.theaa.com/motoring_advice/news/aa-bipi-graphsandtables-april2008.pdf (annual premium for Comprehensive insurance was £685.29 as at January 2008); 2013 figure sourced from AA British Insurance Premium Index Quarter 4 2012 ((annual premium for Comprehensive insurance was £1,143.76 as at January 2013) www.theaa.com/newsroom/bipi/201301-bipi.pdf Home insurance – 2008 figure sourced from http://www.theaa.com/motoring_advice/news/aa-bipi-graphsandtables-april2008.pdf. Annual premium for buildings was £208.93 and premium for contents was £127.24. 2013 figures sourced from AA British Insurance Premium Index Quarter 4 2012 with annual buildings premium £232.41 and contents premium £116.81 as at January 2013. www.theaa.com/newsroom/bipi/201301-bipi.pdf 2. According to ONS Patterns of Pay 28th February 2013, average gross pay was £24,900 in 2008 and £26,500 at the end of December 2012 http://www.ons.gov.uk/ons/dcp171766_300035.pdfResearch was carried out online with the Uswitch.com Consumer Opinion panel 25th February to 5th March 2013 amongst a sample of 1,032 UK adults.3. ONS announcement 13/2/13, real wages fall back to 2003 levels http://www.ons.gov.uk/ons/rel/mro/news-release/real-wages-fall-back-to-2003-levels/realearn0213.html4.Research was carried out online by Optimum Research via The Future Laboratory for Uswitch.com in February 2013 amongst a nat. rep. sample of 2,016 UK adults.5. According to the AA, 22nd February 2012.6. Rental Britain report by Savills and Rightmove March 2012 http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=72418&intNewsSitePageId=119059-0&intNewsMonth=3&intNewsYear=20127. According to ONS quarterly Housing Prospects report, March 2013.8. According to the ONS CPI report January 213.

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