How to cut the cost of your utility bills
Utility bills can be costly – especially during the colder months, which is more often than not in the UK!
In this article we’ll show you how you can reduce your energy and water bills, along with some interesting information you may not have known about council tax.
YouGov research found that 60% of people find energy bills confusing. That’s not surprising, considering the continual price changes. According to uswitch, gas and electricity bills have increased by £800 (nearly 151%) during 2004 – 2012.
Despite the big six suppliers having decreased their prices by approximately 5% in February 2016, it’s little consolation considering wholesale gas costs had dropped 23% - meaning much more profit for the suppliers.
Whilst we can’t choose whether to pay our energy bills or not, we can choose who to pay and how. When it comes to costs, and considering that the average household spends 5.1% of their income on household energy (research conducted by the ONS), a little saving could make all the difference.
If you’ve been with the same provider for years, it can be easy to continue staying with them. However, you could be paying way over the odds.
We decided to try the comparison sites for ourselves, to see how much we could save. Using Which, we found quotes for between £81 to £151 for a three bed semi-detached house, using gas and electricity, with four people living there (date compared: Thursday 12th May 2016).
The situation was exactly the same for the same property using just electricity. Quoted between £46 and £94, you could cut your energy costs in half just by switching providers.
If you’re renting a property and are responsible for directly paying your bills, you are able to switch suppliers. The only exception is if your landlord pays the energy company directly, and then charges you. In this case, whilst you can ask your landlord to change, they don’t have to agree.
It’s important to bear in mind that if you do decide to switch energy providers whilst you’re renting, your landlord may want you to switch back when you move out, with any related costs chargeable to you. Nevertheless, if you’re renting long-term (i.e. at least one year) and find a cheaper provider, then the savings you’ll make could be substantial.
Switch to direct debit
So now we’ve discovered that choosing who to pay for your energy usage can save you money, it’s time to find out how choosing which payment method can cut costs further.
According to Money Saving Expert, paying by monthly direct debits can cut bills by £75 a year, effectively making them 6% cheaper. In fact, Eon and Southern Electric both state on their websites that by setting up a direct debit, you could save up to £70 and £80 annually, respectively.
The reason for this is providers prefer receiving frequent payments, so reward customers who choose this option with better deals. The smaller payments can benefit you as well, as their fixed monthly amounts make them easier to budget for. Whilst quarterly payments mean you pay less frequently, the bill is effectively three times higher, which can make a big dent in your bank account.
Monthly direct debits mean providers will estimate your usage over 12 months, so you’ll pay a fixed amount. In theory, that you’ll pay out more during the summer months, which will cover the extra costs you’ve used in winter.
However, an estimate is not correct, and it could lead you to paying more overall, or having a nasty surprise in the form of a huge bill at the end of the year. That’s why taking meter readings regularly yourself is so important.
Estimated bills can work one of two ways. Either you end up paying more over the 12 months, resulting in a credit that you can get transferred to your bank account (the ideal situation out of the two).
The alternative is that your provider could have undercharged you over the year, and send you an extra bill that you have to pay. If money is already tight, then any unexpected bill – no matter how small – can through you off track.
Taking a meter reading yourself and submitting off to your provider gives them an accurate reading. Frequent readings means if they’ve set the direct debit to the wrong amount, they can amend accordingly with less fluctuations as it’s going on actual usage.
If you’ve never submitted a meter reading before, you can find out instructions in this step-by-step guide.
Turn your thermostat down a degree
The average thermostat is set to a warming 23 degrees Celsius, but one in 20 people admit to turning theirs up to 30 degrees!
The government has advised that the ideal temperature is 21 degrees for your living room, and 18 degrees for everywhere else. Whilst you don’t need to take this information as exact (if you feel the cold more, then it’s more important for your health to turn your dial up a degree or two), it’s certainly something to think about as it could save us stacks on heating costs.
Energy Saving Trust reported that just by turning your thermostat down a degree, you could save around £80-£85 a year. For those basking in temperatures of 30 degrees, a drop to the recommended 21 degrees means they could be shaving off £560 a year – enough for a week’s break in the actual sun!
Trap the heat
There are other, savvy ways that you can trap the heat in your housing so you stay warm without having the central heating on longer, or at a higher temperature.
It sounds simple, but by shutting your doors and windows when your heating on means that the heat is confined to the room you’re in, warming it up quicker.
Another way to trap the heat is by insulating your home. Your house may already have been insulated, but if not, you could be losing the heat through your walls, making the temperature drop.
Essentially, wall insulation is a blanket that prevents heat from escaping. Whether you have cavity walls or solid walls will depend on the type of insulation you can get, but the outcome is the same.
There will be an initial cost for insulating your home, but you’ll make much greater savings over the year. As calculated by Which, the cost of installing the insulation for a three bed semi-detached house will cost £475, but £160 will be saved each year. Whilst it takes three year to pay back the cost, from then on you’ll constantly be making savings.
Double glazing (again, another initial cost, but results in savings) and door draughts are other ways to trap the heat, meaning you don’t have to spend as much on heating.
Hive is a clever app owned by British Gas that allows you to control your heating wherever you are.
Before you can start using the app, you need a thermostat installed in your home, which British Gas will fit for you, regardless of who your energy supplier is.
The app means that you can check to see if your heating is on when you’re out of the house, and you can turn it off if you need to, or lower the temperature. There is an initial installation cost of £249, but with users claiming to save up to £150 on heating bills because of Hive, it’s a long-term investment that will see you saving a substantial amount on your heating over the years.
Apps can be a great way to budget your spending in general - find out they can help you manage your money here!
Claim your benefits
Last year, the government paid out £2.1 billion in winter fuel benefits to more than 12 million people.
If you’re over 61, regardless of how much you earn, you’re entitled to Winter Fuel Payment, which is an annual, tax-free benefit. Currently, those between 61 and 70 can claim up to £200, and those over 80 can claim the full £300. You can find out exactly what you’re entitled to here.
The qualifying age for the both men and women rises in line with the increase in women’s state pension age, so it could go up in the future.
There is a separate benefit that runs from November to March, called the Cold Weather Payment. This is where £25 is awarded to those eligible, who live in an area where the temperature has reached zero degrees for seven days in a row. Eligibility rules are different to the Winter Fuel Payment, and you can find out if you’ll be entitled to next year’s scheme here.
Embrace the dark
A government-funded survey found that half of UK households confess to leaving the lights on in a room they’re not in.
Realistically, you don’t need to leave lights switched on when you’re not using the room. Whilst a single lightbulb doesn’t use much electricity, the cost increases with the more bulbs you have. Lighting costs equate to one fifth of the average UK household’s electricity bill, so by switching off your bulbs in rooms you’re not using will help lower this percentage and save you money.
You’ll probably know that energy-saving lightbulbs are much more cost-effective when it comes to lighting up your home. In fact, these LED bulbs are recommended, claiming to save you up to £240 a year.
The research was conducted by The Telegraph, based on the fact that you had ten bulbs in your house, which were left on for ten hours a day. Standard 60W bulbs would cost £266.45 a year left on, whereas these 6W LED bulbs would cost a mere £26.65.
With an average lifespan of 6,000 hours (approximately 18 months if left on for ten hours a day), they last up to six times longer than incandescent bulbs, with a 1,000 hour lifespan, so you won’t have to replace them as frequently.
In April 2016, water bills across England and Wales increased by an average of 1% - that’s around £2 extra a year. It may not sound a lot, but every penny counts…
Whilst you can’t change providers like you can with energy, there are still ways in which you can cut the cost of your water bills.
Get a water meter
The most effective way is with a water meter, and these are fitted free on request, with the exception of Scotland, who will need to pay approximately £300.
Without a water meter, your bills are based on the rateable value of your property, not your water usage. This means that if you live on your own or are a small family, you could well be paying too much.
According to research from Ofwat, 46% of England and Wales had water meters and paid on average, £100 less for water over the year, compared to when they had fixed charges.
If you’re unsure about how much you could save with a water meter, try out this calculator. If you decide to make the switch, you can still opt back to your previous fixed charges method within 12 months, so it’s worthwhile trialling.
Moderate your usage
The average British person uses 150 litres of water every day – a figure that has steadily risen since 1930.
You might find small changes such as turning off the tap when you brush your teeth trivial, but it can save you significant amounts of money in the long term.
A running tap whilst brushing your teeth wastes 12-18 litres every time. For a family of four brushing their teeth twice a day, a minimum of 96 litres is wasted. In financial terms, that’s £10.11 you’re pouring down the drain (literally) every month.
It’s a similar situation when you compare having a bath to a shower. The average shower uses 35 litres of water (11.9p). An average bath on the other hand, uses around 80 litres (27.2p). Whilst one-off usages are only a matter of pennies, if you’re a regular bath-taker switching to showers, over the year you’d save £54.60.
Another water-saving switch to make is stopping the dishwasher in favour of washing the pots yourself! A washing up bowl holds around six litres of water (2.04p); compared to the 55 litres of water (18.7p) a dishwasher uses. That’s a weekly saving of £1.16, or an annual saving of £60.32.
As your council tax bills are fixed, you’re unable to reduce the costs on a day-to-day basis. Nevertheless, you could be entitled to a reduced rate.
Council tax bills are sent out every April. The cost differs depending on which band you fall in (A being the cheapest, and H being the most expensive). Bands are determined by the value of your property in 1991.
As such, the cost of each council tax band will vary from county to county. For instance, a property rated council tax band C in Manchester will have an annual bill of £1,275.65. Across the border in Salford, that yearly bill increases to £1,415.22.
If you live by yourself, you’re entitled to a 25% discount of your council tax bill. For someone living in a band C property in Manchester, that’s £318.91 saved every year.
If you’re a full-time student or postgraduate, you’re exempt from paying council tax altogether. Whilst you may receive a bill initially, all you need to do is apply for an exemption, providing a certificate of proof of your student status from your University.
For properties containing a mixture of students and non-students, only students will be exempt from paying council tax.
For those of you who are required to pay council tax, you have two options: spread your payments across twelve months, or ten months.
Whilst spreading payment over twelve months means instalments will be smaller; if you opt for ten months, in February and March you can transfer the money you would have spent into your savings account. Having a larger amount to put away is much more motivating, and you’re more likely to keep it in your savings as opposed to putting away a few pounds at the end of each month!
Essentially, paying bills are non-negotiable. However, there are steps you can take to reduce your costs, enabling you to save extra. For more money-saving tips, head on over to our blog.