As Ofgem raises its price cap, cost of postage stamps and dental checkups also rises
British consumers are facing a multibillion-pound wave of price rises on Monday, including an increase in energy bills of £117 a year.
The costs amount to an extra £240 on every household’s annual budget, according to the personal finance website money.co.uk, which puts the total cost of the increase at £4.5bn.
Aside from energy, other price increases on 1 April are:
- Average council tax bills, up by as much as 4.5% across the UK, a rise of £75.60 a year.
- Prescription costs, up by 20p to £9 (2.27%).
- The NHS charge payable for a dental checkup, up by £1.10 (5%) to £22.70.
- TV licence costs, up by £4 to £154.50.
Postage stamp prices also went up last week, with first class rising from 67p to 70p and second class up from 58p to 61p.
While prices rises are hitting consumers, there is a consolation for low-paid workers, as the legal minimum wage will rise by 4.9% on Monday from £7.83 to £8.21 an hour. The increase will be worth an extra £690 full time over a year and will affect about 1.6 million people over the age of 25.
In terms of household bills, energy will rise by 10%, or £117 a year, from Monday, when the energy regulator Ofgem’s new higher price cap comes into force. This is will affect about 11m households.
The controversial price ceiling, which only came into existence four months ago, has been raised to an average of £1,254. The move more than wipes out the promised savings when ministers launched the government cap, on New Year’s Day.
The price hike, which will cost householders £1.4bn in total, affects gas and electricity customers on their supplier’s most expensive standard variable tariff (SVT) – the default deal that users are moved on to when they come off a fixed-term tariff, or those who have never switched supplier. Many elderly users remain on these deals as they are far less likely to switch supplier.
All the big energy firms have increased their SVTs up to maximum the new cap allows. It means an average three-bed household will pay £1,254 a year to heat and light their home – up from the old cap of £1,137. Contrary to what some believe, it is the unit prices that are capped, rather than the total bill.
The regulator Ofgem defended the increases blaming higher wholesale costs and other charges. But consumer groups have questioned the move, not least because the UK’s eighth biggest energy supplier, Bulb, lowered its average prices to £1,000 days after Ofgem announced its cap increase.
There is also a rise of £106 a year to £1,242 for 4m households on prepayment meters, who are typically more vulnerable customers.
The consumer group Which? said those who hoped the cap would bring an end to price hikes would be left “reeling” by these increases.
The highly politicised price cap was proposed in 2013 by the then Labour leader, Ed Miliband. At the time it was ridiculed by the Daily Mail and other right-leaning newspapers, as a return to days of old Labour. However, that changed when the Theresa May adopted the policy in 2017 and it became a “crackdown on energy rip-offs”.
Despite much lobbying against its introductions by the industry, the measure finally came into play on 1 January, but came with the proviso that prices would be reviewed every six months.