Stress test

Consumers say bills are their biggest worry. Graham Callaghan challenges utilities to treat them sympathetically and sensitively

Paying the bills has never been more front of mind for utility customers. According to Bacs’ Family Finance Tracker, which surveys 4,600 British adults each year to research consumer payment behaviour, many families are looking at various ways to cut their costs. Data for last year shows 17 per cent had changed energy supplier in the first half the year and another 14 per cent indicated they were likely to move supplier in the second half. On average, families believe they can save more than £100 by switching.

Every saving helps – our research shows that regular outgoings add up to £7,400 for the average British household. This factors in bills such as council tax, water, mortgage, TV subscription, landline and energy. Another £4,000-plus is spent on each adult’s personal bills. These individual commitments are linked to a person rather than a house, so more than one of these bills may be sent to the same household but to separate people within it. Personal bills include those for mobile phones, personal insurances such as life or car, club memberships or personal loans.

With outgoings at such high levels, it is hardly surprising that families everywhere will be scurrying for their calculators to scrutinise every cost and make sure they get the best deal available, particularly if their main source of income is dependent on a sector that is struggling.

Data from Bacs Direct Credit, which is used to pay 90 per cent of the country’s workforce, shows salary and wage payments are declining in key employment areas. The construction industry was one of the hardest hit sectors, seeing a 25 per cent drop in salaries processed in the four years to May 2011. Although the manufacturing sector’s performance surprised economists during the downturn with steady outputs and increased activity, it still endured a salary decrease of 14 per cent over the same period. In all, 72 per cent of consumers are now cautious about how they spend their money.

Despite shopping around to save money on bills, many consumers often find themselves overcommitted financially. This could explain why the consumer’s biggest worry is not having enough money to pay the bills. Bacs research among 2,000 British consumers at the start of it’s The Big Break campaign (which offered customers switching to pay by direct debit a chance to win £10,000) discovered one in four cited bills as their biggest concern.

As the cost of bills continues to rise, it is more important than ever that utility companies try to understand the pressures facing families. Being armed with the right information about how customers are spending and where they are looking to save is a key way to help and retain them.

Graham Callaghan, utilities senior market sector manager at Bacs

This article first appeared in Utility Week’s print edition of 3 August 2012.