Just when the roller coaster of cost of living pressure seemed to be slowing down and no longer doing stomach-churning loop the loops, we’re getting an ominous sense of deja vu as a result of the “Awful April” combination of increased costs now upon us.
It’s shorthand for the multiple significant cost rises hitting households as the new financial year begins. These increases are expected to outpace both wage growth and benefits uprating, and this will hit those at the lower end of the income spectrum who spend a higher share of their income on essential bills, particularly hard.
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At StepChange, we’re braced for impact as we anticipate that many of our existing clients, as well as new clients, may find that the changes are enough to tip them over from just about coping to finding themselves in negative budget territory. For these households it’s not just a question of belt-tightening to absorb the higher costs – they’ve already done that. It may mean a more fundamental rethink, perhaps even a change of debt solution if alternatives can’t be found to help keep a balanced budget.
Council tax is likely to be a big cost impact on many households – and we’ve already been seeing an increasing burden of debt arising from it, with the average arrears value rising 14% in 2024. Council tax arrears are common among clients who seek help, but council’s too often escalate arrears to bailiff enforcement prematurely and support for people struggling to agree affordable repayments is patchy at best.
Then there are utility bills. Those on variable rate energy tariffs linked to the price cap see a definite rise, while water bills are also increasing. Once again, the rate of increase in costs is outpacing the rate of increase in wages or benefit income. Add in the cumulative additions of other April hits such as higher car tax, mobile phone and broadband costs, TV licenses and food inflation outstripping wider inflation, and what we’re seeing is a lot of basic costs going up.
So what can be done? We certainly need councils, utility companies and central government all to be very alive to the impacts of these changes on the most precariously balanced households, and to provide support rather than aggressive debt collection to prevent the financially stretched tipping over into problem debt. Steps to promote benefits take-up, targeted bill reductions and referrals to free advice have a role to play, as does flexibility and a focus on what is truly a sustainable long term outcome for struggling households.
