COST OF HOUSEHOLD BILLS RISES TWICE AS FAST AS SALARIES OVER PAST DECADE

June 2017

  • Household bills have increased significantly faster than inflation and more than double the rate of wage growth in the past decade

  • Gas and electricity are the biggest drivers of price increases

  • Brits will spend nearly £525,000 on basic household bills1 over their lifetimes

  • Santander’s 1|2|3 Current Account and 1|2|3 Lite Current Account give up to 3% cashback on household bills


Basic household bills have increased by an average of 43 per cent in the last decade – more than double the rate of wage growth, new research2 from Santander shows.

Analysis of government data also reveals that bills for Council Tax, TV, phone, broadband, gas, water and electricity have, on average, increased 10 percentage points more than inflation over the past 10 years.

Gas and electricity are the biggest drivers of price increases, rising 73 per cent and 72 per cent respectively in the last decade, while water bills have increased by 41 per cent – all significantly higher than inflation at 32 per cent. Council Tax has risen by 27 per cent and TV, phone and broadband prices have all risen by 24 per cent, albeit slower than inflation but still faster than wage growth (19 per cent).

Table One: price rises over the past decade

Year 2006 2016 Change
Inflation 3.20% 1.80% 32.2%3
Median wage £19,375 £23,099 19.2%
Household bills £2,148 £3,063 42.6%

Source: Santander, 2017

Household bills continue to squeeze incomes as an eighth (13 per cent) of the average UK adult’s salary is spent paying basic domestic bills. Over the course of a lifetime4, people will fork out an average £524,464 on bills, with those in London set to spend the most (£601,638), closely followed by people in the South East (£580,566). However, it’s those living in the South West who will spend the largest proportion of their salary on basic household bills - with almost a sixth (15 per cent) of their earnings going towards them over the course of a lifetime.

Table two: Total lifetime expenditure and income

Region Median annual salary 2017 spend on bills Lifetime spend on bills Share of income
London £32,326 £3,608 £601,638 11.2%
North East £21,788 £2,758 £459,861 12.7%
Scotland £23,537 £3,028 £504,796 12.9%
West Midlands £22,333 £2,886 £481,117 12.9%
Yorkshire and The Humber £21,808 £2,945 £491,049 13.5%
South East £25,205 £3,482 £580,566 13.8%
North West £22,192 £3,075 £512,639 13.9%
Wales £21,372 £2,989 £498,386 14.0%
East £22,978 £3,223 £537,402 14.0%
East Midlands £21,744 £3,099 £516,699 14.3%
South West £21,824 £3,308 £551,605 15.2%
United Kingdom £23,723 £3,145 £524,464 13.3%

Source: Santander, 2017

Matt Hall, Head of Banking and Unsecured Credit at Santander, said: “Households have been hit hard as the cost of bills and other goods continue to rise. With increased prices across a variety of key household items, families will be looking for ways to make their money go further.

“There are a number of things people can do to reduce the cost of their household bills. From installing home energy monitors to analysing their energy usage or changing their electricity supplier or mobile provider, people can save a small fortune. Santander’s 1|2|3 and 1|2|3 Lite current account pays up to 3% cashback on essential household bills and these factors combined could create significant additional savings over time.”

Santander’s 1|2|3 Current Account offers an interest rate of 1.50 per cent on balances up to £20,000 – customers can earn up to £298 per annum in interest, plus up to three per cent cashback on selected household bills, for a £5 monthly account fee. The 1|2|3 Lite Current Account offers the same cashback and no credit interest for a £1 monthly fee (see eligibility in editors’ notes).

1|2|3 and 1|2|3 Lite Current Accounts pay cashback on household direct debits

  • 1% cashback on water, council tax and Santander mortgages
  • 2% cashback on electricity, gas and Santander home insurance premiums
  • 3% on mobile, home phone, broadband and paid-for TV packages

The account can be opened online at santander.co.uk, by telephone on 0800 707 6692 or in any Santander branch. 1|2|3 and 1|2|3 Lite Current Account customers also have exclusive access to 1|2|3 World, which offers a range of preferential rates and special deals.

- ENDS -

The information contained in our press releases is intended solely for journalists and should not be used by consumers to make financial decisions.

Notes to Editors

  1. Household bills include Council Tax, TV, phone, broadband, gas, water and electricity. Rent and mortgage payments were excluded from the analysis.
  2. Figures based on the ONS Family Spending Report 2016, published 16 February 2017, and the ONS Annual Survey of Hours and Earnings 2016, published 26 October 2016.
  3. Inflation is reported as a year-on-year percentage change as taken from the Retail Price Index. As such, the percentage increase between 2006 and 2016 is calculated by adding up the annual percentage changes over this timeframe instead of the standard percentage change calculation used for wage and bill inflation (i.e. (“2016 data” – “2006 data”) / “2006 data”). Annual inflation data courtesy of the ONS’s RPI percentage change over 12 months data series

     

    Year Retail Price Index year-on-year percentage change
    2006 3.2%
    2007 4.3%
    2008 4.0%
    2009 -0.5%
    2010 4.6%
    2011 5.2%
    2012 3.2%
    2013 3.0%
    2014 2.4%
    2015 1.0%
    2016 1.8%
    Inflation, 2006-2016 32.2%

  4. Assuming average household bills over a period of 63 years from the age of 18 to 81 (the estimated life expectancy in the UK). All figures based on an anticipated annual inflation rate of 2.7% starting in 2016, which is the average annual inflation rate for the past 20 years (1997-2016) as calculated on the Bank of England’s inflation calculator.

Santander 1|2|3 Current Accounts
1|2|3 Current Account:
For interest and cashback, pay in £500 a month and set up two active Direct Debits. A £5 monthly fee applies.
1|2|3 Lite Current Account: For cashback, pay in £500 a month, set up two active Direct Debits and log on to Online or Mobile Banking at least once every three months. A £1 monthly fee applies.

Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. It has brought real competition to the UK, through its innovative products for retail customers and relationship banking model for UK SMEs. At 31 December 2016, the bank serves around 14 million active customers with c20,000 employees and operates through 841 branches (which includes 60 university branches) and 67 regional Corporate Business Centres. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.

Banco Santander (SAN SM, STD US, BNC LN) is a leading retail and commercial bank, headquartered in Spain, with a meaningful market share in 10 core countries in Europe and the Americas. It is among the world’s top banks by market capitalization. The bank’s purpose is to help people and businesses prosper, in a way that is simple, personal and fair. Founded in 1857, Santander had EUR 1.52 trillion in managed funds, 125 million customers, 12,200 branches and 188,000 employees at the close of 2016. Santander made attributable profit of EUR 6,204 million in 2016, an increase of 4% compared to the previous year.

Media Enquiries

Miranda Seymour T: 020 7756 4189      M: 07860 857999 E: miranda.seymour@santander.co.uk

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