HOUSEHOLD BILLS FALL MARGINALLY IN 2021 BUT SIGNIFICANT INCREASE EXPECTED IN YEAR AHEAD

Published: 28/01/2022
  • Average household bills cost £1,968 in 2021 vs £2,005 in 2020
  • Energy bills rose the most, typically costing £1,149 this year, rising from £1,109  in 2020
  • FCA changes to insurance rules and the upcoming energy price cap could push up costs for households across the board in 2022
  • Households could save an average of £130 if they switch to the cheapest motor and home insurance providers

28 January 2022 – Household bills fell marginally over 2021, with annual costs falling by £37 during the past 12 months, according to new data from comparethemarket.com.

This new research which analyses the cost of energy, home, and motor insurance, based on comparethemarket.com’s switching data, shows that household bills were cheaper last year than the two years prior. A typical household spent £1,968 on these three services over the past year – falling from £2,005 in 2020.

However, a sharp increase in the cost of household bills is expected in 2022 with the energy price cap expected to rise by hundreds of pounds due to the energy crisis at the end of 2021, and insurance premiums being increased by insurers following changes introduced by the FCA to tackle the loyalty penalty. With a current rise in inflation and cost of living, this potential hike in household bills could tip many families into significant financial difficulty this year.

Ursula Gibbs, director at comparethemarket.com, said:

“Overall, bills fell for the average household last year, but this comes in the face of rising costs towards the end of the year. The outlook for 2022 is not as positive but our data suggests there are still savings to be made for those who shop around for certain products. Instead of wasting £130 paying more than they need on car and home insurance, people could use that money on something more enjoyable. The money saved on those bills could be put towards many things which have been harder to do in the last couple of years, such as taking a holiday, booking experiences with friends and family or treating the kids.”

Household Bill Breakdown

The average household energy bill now stands at £1,149, up from £1,109 in 2020 – an increase of £40 year-on-year. The sharp rise in gas prices towards the end of 2021 may likely cause the energy price cap to be raised by hundreds of pounds in April 2022.

The decrease in household bills was driven by a drop in motor insurance costs, as 2021 saw motor premiums fall by £80. The average cost of motor insurance across 2021 stood at £644. The cost of car insurance tumbled compared to previous years, suggesting insurers spent 2021 keeping the cost of policies low to attract new customers ahead of the introduction of the Financial Conduct Authority (FCA) pricing regulations in January 2022. While the regulations are designed to stop existing customers from being penalised for loyalty, insurers have already begun to increase premiums for new customers.

The cost of home insurance increased marginally to £175 in 2021 and premiums have been steadily increasing over the last three years.

Year Energy Home insurance Car insurance Total
2019 £1,170 £165 £734 £2,069
2020 £1,109 £172 £724 £2,005
2021 £1,149 £175 £644 £1,968

Switching to the cheapest deals on the market for motor and home insurance could save households a significant £130 per year. This includes a £103 saving on motor insurance and £27 saving on home insurance.

Given the uncertainty in the energy market, it may not currently be cost effective for customers to switch to another fixed tariff when their current deal comes to an end. Customers at comparethemarket.com can set up an automatic energy savings alert which helps to do the legwork. This service provides regular alerts when cheaper energy tariffs become available to them, as well as sending notifications when a household’s fixed deal is about to expire.

Ursula Gibbs continued:

“Households are teetering on the brink of considerable increases to their household bills particularly from their energy providers. It is estimated that the energy price cap is likely to rise by hundreds of pounds in April for many consumers, especially as inflation creeps up and the cost of living continues to climb. However, there are ways to help keep your finances in check. Switching provider on household bills could save you money and we would encourage anyone worried about higher energy costs to set up savings alerts so that they can benefit if cheaper deals become available to them. As ever, it’s worth shopping around to see if significant savings can be made through switching provider.”

ENDS

Notes to editors:

All data sourced from comparethemarket.com for motor and home insurance. Energy data was sourced from Ofgem and the average price was calculated across the price paid for the energy price cap over the year.

2021 Average Cost - Regional table:

Region Name Energy Home Car Total
East Anglia £1,149 £192 £595 £1,936
East Midlands £1,149 £165 £607 £1,923
Greater London £1,149 £236 £977 £2,364
Northern Ireland £1,149 £231 £589 £1,924
North East £1,149 £139 £729 £2,018
North West £1,149 £163 £647 £1,959
Scotland £1,149 £172 £499 £1,820
South East £1,149 £194 £567 £1,911
South West £1,149 £166 £479 £1,795
Wales £1,149 £165 £524 £1,840
West Midlands £1,149 £159 £721 £2,030
Yorkshire and the Humber £1,149 £167 £692 £2,008
Average £1,149 £175 £644 £1,968

About comparethemarket.com

comparethemarket.com was launched in 2006 and has grown rapidly over the past sixteen years to become one of the UK’s leading price comparison websites.

comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as credit cards and loans.

comparethemarket.com actively works with its brand partners to help provide great services to customers.

comparethemarket.com is a trading name of Compare The Market Limited. Registered in England No. 10636682. Registered Office: Pegasus House, Bakewell Road, Orton Southgate, Peterborough, PE2 6YS. Compare The Market Limited is authorised and regulated by the Financial Conduct Authority for insurance distribution (Firm Reference Number: 778488). Energy and Digital products are not regulated by the FCA.