Hacking your bills

This is an audio transcript of the Money Clinic podcast episode: ‘Hacking your bills’

[MUSIC PLAYING].

Conor
People are living in a world where you just see bills going up everywhere, and we’re talking bills in a sort of housing context, you know, your water and your energy and everything. But you think there’s going up because the cost of that is going up. Any class of leisure activity that you might want to do in your spare time, in your spare money, if anyone’s got any left, the cost of that is going through the roof.

[MUSIC PLAYING]

Claer Barrett
Welcome to Money Clinic, the weekly podcast from the Financial Times about personal finance and investing. I’m Claer Barrett, the FT’s consumer editor. Coming up: Hacking your bills. Is there anything you can do to get your bills down? It’s not just energy bills that have been shooting up this spring. Everything from council tax to water bills and even transport costs have been rising as higher inflation is passed on to customers. So is there any way that we can beat the system and keep these increases to a minimum? Well, the short answer is yes. And this episode is packed with practical tips to help you do just that. We’ll be looking at the energy market and how to get ready for the return of switching as international energy prices fall. How you can dial up savings on broadband and mobile bills. Ways that some could save on their water and council tax bills. On today’s show, I’ve enlisted the help of my FT colleague Leah Quinn, who has been out and about finding out just how tight people’s personal finance are right now. And she’ll be talking me through some of her findings and I’ll be answering the questions that our listeners have put to her. Well, Leah, welcome to Money Clinic.

Leah Quinn
Thank you so much. Hi, Claer. Thanks for having me.

Claer Barrett
Well, it’s great to have you here. So, Leah, you’ve been looking into why bills are so high over the past few weeks now. What kinds of stories have you been hearing during your research?

Leah Quinn
Yeah, absolutely. So the mood out there has been pretty dire. I’ve been hearing so many stories from different people. The general mood seems to be that there’s stress and confusion. And as we’ve discussed, Claer, this is something that really affects me as well. So although I really want to do some reporting on this, this also has a really first-hand impact on my life. So I’ve been hearing people who’ve been really anxious about rising energy bills, about rising water bills, council tax, on the cost of living more generally. As I say, I think there’s a lot of anxiety around this problem. So I thought, who better to come to me for clarity than FT’s Claer Barrett?

Claer Barrett
Well, thank you, Leah. That’s really kind of you to say. And obviously I’m noticing on my own bills that the costs are going up month by month. But then I have an advantage over you here because I’m a homeowner, so I’ve got more control over what I can do about it compared to people who are renting, as you have been hearing from people this week.

Leah Quinn
Yep. So one of the people I spoke to was a guy called Conor. He’s 26 and he lives in a flat share in London with three of his friends. The reason I spoke to him is because he actually works for a tenants campaign group called Generation Rent. So he’s really clued up on how renters are struggling with the rising costs. I met up with him in his offices and he’d written up all of his monthly bills to share with me.

Conor
So we moved in April 21 when I think the bills were nowhere near what they are now. And we are now experiencing the well-spoken about cost of living crisis, and they’re higher than we could have possibly anticipated before, and it has been a shock for us.

Leah Quinn
So could you just talk me through the bills we’ve got here? You’ve written down all of your monthly expenses in your notebook. So what are some of these?

Conor
So for the gas and electric, what I’ve done is I’ve shown what the most recent payment was, and that’s £256. But then we’ve also backdated it. So the last few months beforehand they’re decreasing so ones to 17 and 178, then 158. And to be perfectly honest with you, those two earlier figures are from times when we really weren’t putting the heating on. We were listening to this sort of scaremongering, if that’s the right word, about the heating costs and not putting it on as much. And then when it became really cold and when we thought that the situation would be slightly better, we started putting it on more. And that’s why you see the higher numbers there.

Leah Quinn
So Claer, we can come to some of his other bills later on. But for energy, Conor and his housemates are paying £256 each . . .

Claer Barrett
Each!

Leah Quinn
. . . a month, a crippling amount.

Claer Barrett
Well, it is a really obscene amount to be paying for your energy, but with older, draughty, less well-insulated properties in the coldest months of the year. I mean, it’s not beyond the winter month to be paying those kinds of amounts. But what I would stress to anyone listening is that you need to make sure you’re being charged the right amount. Now, I have a constant battle with my own energy company over the estimation of bills. It’s never once estimated my bills correctly. It’s always estimated that I’ve used more power than I have. But getting a smart metre fitted could really help you monitor your energy usage. Day by day, week on week. As with all of the energy-saving measures that you can find online to cut your usage, and there’s a link to those in today’s show notes.

Leah Quinn
Lots of people will be expecting their monthly energy bills to come down because we’re told energy prices on international markets are getting cheaper. What bearing will this have on our bills?

Claer Barrett
In the short term, I fear that lots of us could see our energy bills get more expensive. Now, in March we had the last of those £66 a month payments that every single household in the UK has been entitled to under the government’s energy support system. That’s now ended. So hardly a coincidence that the energy firms are thinking, “Wow, we’ll be getting a little bit more from our customers to cover the gap.” So again, the lesson here is make sure your metre readings are up to date. If you know what you’re using, then you can challenge any requests that you get to increase your bills. If you think that’s out of kilter with what you’re actually using. Plus, if you are on benefits or low income or have a disability, check if you’re entitled to the new government energy payment scheme. Now again, there’s a link in today’s show notes with the full info for that.

Leah Quinn
And what about energy price caps and guarantees? What protection do these give us?

Claer Barrett
Well, time to dispel a myth. Price caps don’t cap your bills below a certain levels. They just cap the maximum amount that providers can charge us per unit of energy we use. So if you use more energy, then your bills are going to be higher. But that said, the government’s extended what it calls the energy price guarantee until June, which means the average household will pay around two and a half thousand pounds per year for their energy bills. Now, after June, we’ll go back to the energy price cap that Ofgem, the energy regulator, sets. That’s updated every three months, but by June, energy analysts expect that prices could have come down by as much as 15 or even 20 per cent. So there’s hope that from the summer our bills will get cheaper. It’s less cold, we’re losing less energy, more opportunity perhaps to cut our usage further. But we might need to be more proactive to make sure that we’re on the best possible deal.

Leah Quinn
So do you think people will be actually able to save anything by switching providers?

Claer Barrett
In time, yes. I think we need to get ready to get back into the switching mindset. I mean, for well over a year now, the energy switching market has been broken. The best deal in town has been the energy price cap tariff. That’s what the vast majority of consumers are on. But in the last few weeks, the first fixed-price energy contracts has come back on to the markets. It’s where you sign up for a set period of time, you get your power to set price. But whether that’s a good deal for you or not is what we’re now going to have to learn how to assess.

Leah Quinn
Due to how competitive the rental market is at the moment, we’ve heard that so many renters feel disempowered to do anything to reduce their bills. Are renters in that much of a worse position to challenge their bills than homeowners?

Claer Barrett
I definitely think they are. Now, letting agents tell me that they’re getting a lot more questions from renters about EPCs — energy performance certificates — because they will indicate whether bills on a certain property like a draughty Victorian home, could be really through the roof or on a modern flat, whether they be more affordable. The other disadvantage is that most rental contracts are three-year, but often you’ve got to sign up for an 18-month or a two-year deal to get the best price, particularly with energy and broadband. So there’s no guarantee that you’ll be able to stay in the property that long. So that’s like a structural issue. And then you’ve got what I call the admin woe of getting all of your housemates to sign up or switch to a particular provider straight after you move in, which can be a real hassle. And there’s generally one person in the house share who grimly accepts the responsibility of doing this, which I sense is both of us.

Leah Quinn
(Chuckles) Yup, guilty. But it’s not just energy bills that’s been increasing. In April, water bills rose too, and council tax bills have gone up by 5 per cent for many people. This has also been affecting Conor.

Conor
Council tax we pay £210 a month, which is a lot.

Leah Quinn
(Inaudible) of that house, sorry.

Conor
That one, I think, is for the house.

Leah Quinn
OK, cool. So that’s between three of you, you said? 

Conor
Four of us.

Leah Quinn
Four of you, right.

Conor
But it’s Islington. We know that it’s one of the most expensive council tax boroughs in the country. But we have had problems with our home because it’s a split house. So it’s a house that split into two flats. The ground floor flat is somebody else’s. And we have the next three floors. And because of the classifications of how the council tax was done, it’s in quite a high band and that is difficult for us. We also found this with the water. So essentially it was valued off of when it was one whole house and we disputed our ridiculously high water bill. Everybody around in our lives that we were checking, we’d verified said, “Oh yes, we pay way less than that for water”, “We pay way less than that for water.” People’s parents, who live in much larger houses, pay way less than that for water.

Leah Quinn
We’ve just heard about Conor’s situation with his water bills. On April 1st, what the water companies could charge us shot up in the south-east. Thames Water’s charges went up on average by 11.6 per cent. Why are water prices going up if the issue is with the gas and electricity?

Claer Barrett
Well, the short answer is because our water bills are linked to inflation. Now, the water regulator allows water companies to increase their charges once a year. Inflation is up, their costs are up. Then they can pass that on to us in the form of higher bills.

Leah Quinn
How can renters and homeowners reduce their water bills? Are water metres helpful? And how could people get one?

Claer Barrett
So at the moment, water bills are based on the rateable value of your property. So bigger properties like Conor’s are going to have bigger bills. And as a rule of thumb, if the number of bedrooms in your property is the same or greater than the number of people living there, you’re almost certainly saved. But the next problem is getting a water metre fitted, as we’ve been hearing from Conor. Now, the cost of living crisis means that people are desperate to save money on their bills. And I have heard from people up and down the nation, customers of all water companies, saying that they’re having trouble getting an appointment with companies to see whether a metre can be fitted in their home. Now there are many properties where you can’t fit water metres, but if that is the case, then you should have the third option of being moved on to a special tariff that recognises the facts that if you were on a water metre you would be charged less. Now in Thames Water’s case, it’s called the assessed household charge. I happen to know this because I’m on it. I asked if I could have a water metre fitted in my flat. I live in an older block of flats. It wasn’t possible and they said, “Well, you can save some money by being moved over to the assessed household charge.” So that has knocked about, I’d say, between £130-£150 off my annual bills. So I’d urge people like Conor who feel like they’re being fobbed off by their water company to just keep up the pressure and keep going.

Leah Quinn
Well, Clare, what about council tax? Is there anything we can do about rising bills?

Claer Barrett
With council tax, most people know that students don’t have to pay it. You get a 100 per cent discount. But if even one of your housemates is a student, you could potentially get 25 per cent off your bill. So maybe something for Conor to bear in mind when he next interviews for a flatmate. But the same goes for people who are living alone. They can normally get a 25 per cent single person’s discount. And of course, if you’re on a low income, if you’ve got disabilities or a severe mental impairment — that’s the official language there — you could be eligible for a council tax reduction. So always worth checking your local council’s website.

Leah Quinn
And if you challenge your council tax band, will you definitely pay less? What if you get put in a higher band?

Claer Barrett
Well, it’s always a risk that you could end up paying more. So I would say if you know your neighbours well, check with them and see what they might be paying to get more of an idea about whether your bills are out of whack or not. And I’d also recommend reading the Martin Lewis council tax band guide on the Money Saving Expert website. There’s a link in today’s show notes, contains some really important questions to think about before going in and asking for your bills to be reassessed.

Leah Quinn
Great tips there, Claer. Now, another area of bills that people have been struggling with is WiFi. For Conor, the cost of his WiFi has spiralled after the one-year contract he was on expired.

Conor
It went from 33 quid a month total to I think it’s now 65 or something. It’s just a crazy amount of money to be paying for broadband because that protected period ran out. And obviously in this work from home universe, everybody requires broadband. It has to be good. It has to be a certain standard.

Leah Quinn
How many of you do work from home or hybrid office?

Conor
There’s three of the four of us that have got to work from home. One is a teacher, but everybody else does use it at some points. And everybody else has found that is professionally difficult when the WiFi is on the blink. You know, that’s something that I’m sure a lot of people listening to this will have experienced. You have to find a way to get back online because you’ve got a meeting at four o’clock, for example. So the WiFi is such an important part of what happens. And when it’s in your own hands, you just have to pay whatever it is for the high-quality WiFi that enables you to do your job.

Leah Quinn
And in terms of rising those, what support would you like to see coming in to support people with their bills?

Conor
In the medium term, I think there has to be an energy-efficiency conversation in this country. We have to find ways to improve the energy efficiency of the homes that people, so we’re not literally spending astonishing amounts of money on gas and electricity for it to fly out of your windows and your roof. For many, many reasons. Public health being, you know, not the least of those that situation really does have to change.

Leah Quinn
So, Claer, we heard what happened to Conor. Is that any way to reduce broadband bills?

Claer Barrett
Yes. Now, millions of people like Conor are out of contracts and are paying too much. So if you don’t know when your broadband contract expires, find out and make a note so you’re ready to shop around when that happens. Now, before you do that, it pays to look at what you’re currently paying for, TV channel packages that you might not be using. Data as we can hear from Conor’s experience, people are using a lot more data. So is it worth than moving on to a package where they get more data included? And are there things that you could live without? Then you’re in a position to shop around knowing what you need and haggle with your existing provider when you can see what other deals are out there. Now there is a bit of an art to doing this, but if you have got the confidence of knowing exactly what you’re using, what you want, and the kind of deals that you could get from another provider, honestly negotiating with your current supplier is a win-win. You won’t have to wait in for an engineer to switch things over and you could get a substantial monthly saving and be actually using things that matter to you.

Leah Quinn
How helpful are broadband social tariffs and who has access to these?

Claer Barrett
I’m pleased you mentioned this, Leah, because 4mn people who are in receipt of some kind of means-tested benefit with universal credit, tax credit, pensions credit could be on one of these cheaper tariffs. Every provider pretty much has got one of these deals. So if you’re eligible to get access to it and they really are cheap from between 12 and £20 per month. And it’s not just broadband, it’s mobile phone contracts as well, then phone up and see if you can be switched. Now, I’ve been on a big sort of public awareness campaign about social tariffs for the last couple of weeks, and I have been contacted by lots of people who’ve said, “Well, I am on universal credit and I haven’t heard about this. I phoned up my supplier and I asked to be switched only to be met with warnings that my speeds would be much lower. I might not be able to stream movies without them buffering”, and this is really put them off switching to a cheaper plan. Now, I have to say I’ve reported some of these concerns to Ofcom, the telecoms regulator, because so many people have said it. I fear that it’s just another tool in the salesman’s belt to say, “Well, you’d be better off paying more money for a more expensive plan.” And there is a list of the different providers in the minimum space that they offer on social tariffs on the Ofcom website. And I have to say some of them are quite generous. So yet again, it pays to do your research before making these calls. But if you know anyone who’s claiming universal credit for any of your relatives who are in pension credit, it really is worth mentioning because 4mn people who could be making savings on bills but aren’t. And the people who really need to watch the pennies at that is disgraceful.

Leah Quinn
What should people keep an eye out for with mobile phone contracts?

Claer Barrett
Again, there’s a big risk of paying far too much if you go out of contract. The way that mobile phone contracts work is you’re normally paying for the cost of the handset, divide it up over 12, 24 or 36 months, and when that period runs out, you can move to a much cheaper SIM-only deal and your bills could be £20-£30 a month less when that happens. Now providers should send you a text message warning you that your contract’s about to expire, but you might not see it. And also you might phone them up and they might sell you a brand new mobile phone contract with the latest smartphone. So I would say to yourself, I think, do I really need this? Is this phone OK? Could I just keep it, go on to a SIM-only deal. Will the savings be worth it? And then my final tip is that the best investment in your phone is buying a shockproof case and a decent screen protector. It really does pay off.

Leah Quinn
Well, Claer, there are loads of tips there as to how Money Clinic listeners can potentially cut some of their costs when it comes to bills. I know I would definitely be going home and calling around some of my providers later today.

Claer Barrett
Well, I’m glad to hear it. Thank you for joining me on the episode today. And thanks to everyone who’s been listening because that is it. The Money Clinic with me, Claer Barrett, this week. If you like what you’ve heard, spread the word and leave us a review. We’re always looking to chat with people about their money issues for the show. If you’re interested in being part of the future episode, then email us: money@ft.com. You could also take a peek at our website: ft.com/money. Grab a copy of the FT Weekend newspaper or follow me on Instagram, @ClaerB.

Money Clinic was produced in London by Persis Love. Our sound engineer is Jake Fielding and our editor is Manuela Saragosa. You heard original tunes this week by Metaphor Music. And finally, my usual disclaimer: the Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that, you’ll need to find an independent financial adviser. That’s all the small print for now. See you back here next week. Goodbye.