How the big squeeze is battering our budgets

Mother-of-three Emma Bradley and her family will be nearly £4,700 poorer this year thanks to the cost-of-living crunch and extra tax burdens.

Emma, 46, has combed through her bills and bank statements for Money Mail to put a figure on how much the big squeeze of 2022 will cost them.

She and husband Lee, who live in a four-bed home in Gloucestershire, are one of millions of households bracing themselves for a tough year for family finances.

Bills barrage: Mother-of-three Emma Bradley and her family will be more than £4,000 poorer this year thanks to the cost-of-living crunch and extra tax burdens

Money Mail today speaks to parents, young professionals and pensioners who will feel the pinch this year owing to a relentless combination of inflation, soaring energy bills and the Government’s new National Insurance hike.

National insurance

Emma, a money blogger, and Lee, an assistant headteacher, earn £36,000 and £48,000 respectively.

However, the Government’s controversial 1.25 percentage-point hike in National Insurance in April will cost the family £668 each tax year.

Emma and husband Lee worked out they will be some £4,500 worse of this year compared to 2021

Emma, who is self-employed and runs mumssavvysavings.com, will pay £1,997 in National Insurance this tax year. 

But this rises to £2,226 for the coming year, £229 more than in 2021/2022 and just over 6 per cent of her pre-tax income.

Meanwhile, her husband Lee, 47, will pay £4,612 in National Insurance this tax year — with £38,432 of his £48,000 income taxed at 12 per cent. 

From April, his National Insurance bill will rise by £439 to reach £5,051.

So while the couple will pay £6,609 this year, they will owe £7,277 in 2022. And neither of them has had a pay rise to keep up.

The Mail has been calling on the Government to ‘spike the hike’. Sarah Coles, of Hargreaves Lansdown, says: ‘Now is not the time for a tax hike. The spring is already going to be an agony of price rises, with every last penny being squeezed from our budgets.’

Energy prices 

More than four million households have seen their energy firm go bust in the past year as the price of wholesale gas soars.

In September, Lee and Emma’s supplier, Green, folded. At the time, the couple had another six months left on their cheap, fixed-rate deal. 

But they have been moved on to Shell Energy’s standard variable tariff, which will see their monthly bills rise from £120 to £180.

Comparison site TheEnergyShop.com is predicting Ofgem’s price cap will rise from £1,277 a year to £1,900 in April, before climbing to £2,300 in October.

If this is the case, the family will have to pay £3,040 next year to heat their detached home — more than double last year’s bill.

Emma says the family is trying to keep costs down by wearing hooded blankets inside.

Food shop costs

With inflation at its highest rate in almost 30 years — 5.4 per cent — shoppers are already counting the cost at supermarket checkouts.

A weekly Tesco shop cost Emma £120 this time last year. But she is now spending £150. She used to be able to buy four pints of milk for £1 — the cost is now £1.15.

Eating out is also more expensive. A fish and chips takeaway at the family’s local chippie used to cost £16.50 — but now it’s £18.30.

Emma says: ‘It’s not luxury foods that have become more expensive, it’s the basic things that you notice have gone up.’

Inflation has also hit fuel. Filling up the family car every fortnight now costs £60 rather than £50.

And from September, Lee and Emma will have to pay £79 a month for their youngest child Erin’s school bus, up from £64 last year.

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Dartford couple James Banerjee and Sharne Moore, both 29, fear their plans to start a family may have to wait.

The couple, who run money blog smarter finances.co.uk, were previously paying £36 a month for their fixed energy deal with E.on. 

That ended last spring and they then had to settle for a £56-a-month one-year fix with Shell.

As Ofgem’s price cap is expected to be lifted shortly before that deal ends, their annual bill could rise by hundreds of pounds. 

Since January 2021, their monthly shopping bill has also risen from £225 to £259, and their council tax has gone up by £96 a year.

James says: ‘We want to start a family, but if costs keep increasing, we may have to wait.’  

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Plans on hold: James Banerjee and Sharne Moore face spiralling energy and shopping bills

Dartford couple James Banerjee and Sharne Moore, both 29, fear their plans to start a family may have to wait.

The couple, who run money blog smarter finances.co.uk, were previously paying £36 a month for their fixed energy deal with E.on. 

That ended last spring and they then had to settle for a £56-a-month one-year fix with Shell.

As Ofgem’s price cap is expected to be lifted shortly before that deal ends, their annual bill could rise by hundreds of pounds. Since January 2021, their monthly shopping bill has also risen from £225 to £259, and their council tax has gone up by £96 a year.

James says: ‘We want to start a family, but if costs keep increasing, we may have to wait.’

THE RETIREES: State pension isn’t keeping up with bills

Colin Page expects his bills to bills to go up by between £2000 and £3000 over the next year

Colin Page and his wife Jean estimate their bills will rise by between £2,000 and £3,000 over the next year, while their state pension will only increase by 3.1 pc.

Colin, 70, says he feels ‘very lucky’ as he also has a private pension which is linked to inflation. 

But he worries how other state pensioners will cope.

The couple, from Caterham, Surrey, are expecting to pay at least £100 a month more for their energy from February, and £3 a month more for their broadband contract with TalkTalk.

This, added to increased grocery bills and insurance premiums, will mean their outgoings rise by more than £2,000.   

Council tax

Cash-strapped councils are expected to increase tax bills for households across the country. And around one in three councils already charge families an average of more than £2,000 each year.

Emma and Lee pay £2,311 per year to Gloucestershire County Council. However, from April the couple will probably be paying £67 more every year. Lee and Emma will also see their water bill increase by 8.1 per cent, to £486 a year.

Broadband

Mobile phone and broadband companies have hit customers with a series of inflation-busting hikes. But Emma and Lee are yet to find out how much more they will be charged by Sky — their mobile, broadband and landline provider.

Last year, they were paying £96 for the family’s four mobiles. This rose to £119 when their eldest, Chloe, 22, upgraded her device.

Meanwhile, they pay £28 a month for their broadband and landline package. If Sky was to increase this in line with inflation, it would rise to £29.51 — £18.14 more over a year.

Mobile phone customers of Plusnet, BT, EE and Vodafone will see their bills hiked by 9.3 per cent – taking the cost of a £37.50-a-month contract to £40.98, according to comparison site USwitch. Sky does not increase prices for mobile customers mid-contract

Mortgage fees

Fortunately the family’s mortgage is fixed at £1,100 a month for another two years. However, homeowners on variable rates will not be so lucky, as experts believe the base rate will rise four times this year.

In December, the base rate was hiked from 0.1 per cent to 0.25 per cent. A typical borrower with a £250,000 25-year mortgage on a standard variable rate of 2.47 per cent would have seen their monthly repayments rise by £19, according to AJ Bell.

Laura Suter, from the investment platform, says the same borrower would pay £384 more a year if the base rate was hiked to 0.5 per cent tomorrow. 

And if it climbs to 1.25 per cent by the end of the year, variable-rate borrowers will have to pay an extra £1,560 a year.

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This post first appeared on Dailymail.co.uk