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Cost-a-lot Brittannia

While our incomes may have been going up, so have taxes and essential living costs leaving UK households with the lowest disposable income levels for 10 years.

A study by uSwitch.com has shown that we are now handing over even more of our hard earned money as taxes, bills and other living costs have risen faster than our wages. With taxes having risen by 85% and social contributions by 77%, net household income as a proportion of gross household income has fallen by 5% . Ten years ago, net household income accounted for 68% of gross income, whereas today it accounts for just 63%.

And we have even less money to spend on fun. The report also highlights that we now have an even smaller chunk to spend on ‘non-essential’ items than at any other time during the last decade. Disposable household income in 1997 accounted for 35% of gross household income (£12,000), but today, at £17,000, it accounts for just 33% .

Mike Naylor, Personal Finance expert at uSwitch.com, said: “Cool Britannia is now Cost-a-lot Britannia. Our pay cheques may be getting fatter, but the chunk that we have to hand over to pay taxes, bills and other living costs is growing even faster. We are working harder, but we are not getting any wealthier – we are running just to stand still.”

"The chunk that we have to hand over to pay taxes, bills and other living costs is growing even faster. We are working harder, but we are not getting any wealthier – we are running just to stand still."

Where’s your money going?
The four areas where our pockets are feeling the tightest squeeze is housing, transport, recreation and utility costs.

A roof over your head
Houses prices have shot up by over 213% in 10 years and while some people have made a lot of money from their property, others particularly young, first time buyers can’t afford to get a step on the housing ladder. Housing costs take up a huge 19% of our gross household expenditure.

Day to day travel
Transport accounts for 15% of our expenditure, from the general upkeep of a car, to spending on fuel and public transport. These costs have risen by 43%, 55% and 49% respectively .

Work hard, play hard
With longer working hours many of us feel we need to treat ourselves and enjoy our limited leisure time to the max. We’re spending 55% more on hotels and restaurants and recreation now accounts for nearly 24% of our expenditure. However costs in this area have seen an overall rise of 46% in the last 10 years.

Bills, bills, bills
The explosion in broadband mobile phone usage has seen communication costs rocket by 77% since 1997. Water costs have risen by 33% in the same decade, with particularly steep increases since 2003. Electricity now costs 17% more than it did in 1997 and between 2002 and 2006 electricity prices increased by 50% .

Disposable income by postcode
10 years on the traditional North – South divide on income may no longer exist, but it has been replaced by a broader regional difference in disposable income.

68% of towns in the South East have prospered in the last 10 years and have disposable incomes above the national average .

However Nottingham residents spend 64% of their net income on bills, running a car, food, gas and electricity and insurance – more than anywhere else in the country. While households in Blackpool, Stoke-on-Trent and Sunderland see 60% of their take home pay being spent on bills.

Bottom 10 towns for disposable income
Nottingham, Stoke-on-Trentm, Hull, Blackpool, Glasgow, Sunderland, Southampton, Liverpool, Blackburn, Newport, Swansea. Source: Office of National Statistics, defra.gov.uk

How to raise your disposable income
Putting more money in your pocket is easier than you think and doesn’t mean you have to feel deprived or hard-done by.

Get these bills down
Save up to £325 on energy. Gas and electricity bills are a major household expense, yet nearly 50% of UK households continue to pay a premium price because they have not switched. Switch with uSwitch and you could save up to £325.

Switch your gas and electricity plans
Communicate for less cost. With even more time being spent online or texting and calling on the go, you need to ensure you are on the right broadband, home phone and mobile deal. Take advantage of huge supplier competition by comparing deals and switching to a better priced product. You could save up to £120 a year on your broadband and £113 on your mobile.

Tip
Look at bundles packages where one supplier provides all your communication products for a discounted price or with extra services.

Switch your broadband
Switch your mobile
Switch your home phone
Save up to £400 on your credit card

Switch your credit card
If you have an outstanding balance on your credit card you need to pay it off. To help you do this, transfer your balance to a credit card with 0% interest for a set period. This could save you up to £400 over 18 months.

Switch your car insurance
Save up to £150 on your car insurance. Comparing your car insurance could get you a better policy at a lower price. Plus comparing online could save you a huge amount of time too. You just give your details once and you can compare hundreds of policies to find the right deal, with the right cover.

Benefit from a financial makeover
1. Saving on your outgoings is an opportunity to increase your disposable income.
2. Be proactive, not reactive. Don’t wait for your big winter gas bill before you switch. Keep an eye on prices and rates for all your bills through the year. Remember comparing deals doesn’t cost you a penny!
3. Imagine the amount you could save by switching as giving yourself a pay rise. Never forget that every saving made is a boost to your disposable income.

As Mike Naylor from uSwitch.com concludes: “With less spending money than at any time over the last 10 years, it’s more important than ever to take control of your finances. By acting smarter and shopping around for the best deals on the market, consumers can spend more of their hard-earned salaries on the nicer things in life.”

Related links
Switch your broadband
Switch your mobile
Switch your home phone
Save up to £400 on your credit card
Switch your gas and electricity plans

uSwitch.com