Council tax up and energy bills down: The changes to your household bills coming on April 1
Ofgem announced the energy price cap will be reduced from April, seeing average bills fall by around £238, ITV News' Consumer Editor Chris Choi reports
Words by ITV News Producer, Lauren Aarons
The average household energy bill is to fall to its lowest point in two years from April after Ofgem lowered its price cap in response to wholesale prices.
The regulator, Ofgem, has announced it is dropping its price cap by 12.3%. In real terms that means a typical dual-fuel household in England, Scotland and Wales should see a drop of £238 over the course of a year or around £20 a month.
But energy is not the only household bill which is expected to change come April 1 - council tax and tax free childcare are also expected to be different in the new financial year.
What does the energy price cap drop mean?
Ofgem said the drop in the energy cap would see prices reach their lowest level since Russia’s invasion of Ukraine in February 2022, which caused a spike in an already turbulent wholesale energy market, driving up costs for suppliers and customers.
When will it drop?
The energy price cap will fall by 12% on 1 April 2024, to £1,690 a year for a typical dual-fuel household paying by Direct Debit (based on Ofgem's new, lower typical use figures). The price cap will last for three months. It is predicted to fall again in July 2024.
How does the Energy Price Cap work?
The price cap was first introduced by energy regulator Ofgem on January 1, 2019.
The price cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity you use, and sets a maximum daily standing charge.
There's no upper threshold for what you actually pay – if you use more energy, you'll pay more, use less and you'll pay less.
How does the price cap affect me?
If you are on a fixed-term energy agreement the cap won't apply to you. It only applies to providers' standard and default tariffs.
Council Tax
Millions of people across the UK will also be facing higher council tax bills from April 1, costing the average household an extra £100 a year.
According to the County Councils Network (CCN) - Birmingham, Woking and Slough will see the biggest increases in England with their council tax rising 9.94%, 10%, and 8.51%, respectively.
Council tax in Pembrokeshire, Wales will increase up to 12.5%. In Northern Ireland, Mid and East Antrim were hit with a 9.78% increase.
Council tax for those living in Scotland have theirs frozen for 2024.
The Band D average has increased in every local authority in England, with two exceptions: Harlow district council, where the average is unchanged from 2023/24, and Lancaster district council, where the average is down 0.24% from 2023/24.
Why are council tax bills going up?
Spikes in energy costs, high inflation and increases to the National Living Wage have pushed up the cost of delivering services, according to the Local Government Association. The government made an extra £600m available to councils for the 2024/25 tax year, but the County Councils Network said they still face a budget shortfall of £1.1bn over the next two years.
What does your council tax cover?
Council tax is a fee you pay which helps councils pay for the services they provide.
Examples include bin collection, libraries, maintaining parks and sports centres, highway services, including street lighting and cleaning, and road maintenance.
The amount of council tax you pay is decided on which valuation band your property is, your personal circumstances and how much the council needs to fund its services.
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Childcare
Chancellor Jeremy Hunt announced last March, that families in England would be entitled to a tax-free childcare scheme which will offer up to £2,000 a year per child towards childcare costs.
The offer includes nursery and childminder fees and even some holiday camps.
From April, two-year old's in households where parents work at least 16 hours a week will be able to access 15 hours of free childcare.
This will be extended to working parents of all children older than nine months from September.
In Scotland, Wales and Northern Ireland there are similar childcare schemes.
Household Support Fund
The Household Support Fund has supported millions of people during the cost of living crisis, but it is likely to be scrapped.
Grants from the fund have been awarded to struggling families to help pay for food, heating and other essentials.
The current phase of the fund will finish at the end of March, and it doesn't look likely to be renewed.
The pot of funding comes from government, but the money is distributed by local councils.
A number of councils have called on the government for the scheme to be extended, as financial pressures remain heavy on many households.
More than 170 local government leaders have called on Chancellor Jeremy Hunt to extend the fund at the Budget on Wednesday.
Eight millions households received their final Cost of Living Payment in February.
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