Millions of UK households are facing what's been dubbed "awful April" after rising council tax, water bills and broadband costs coincided with the new tax year. It could all start to hurt quite quickly. And it has led many people to ponder whether they're genuinely worse off than previous generations - or simply experiencing a temporary pinch.
Author
- Marcel Lukas
Senior Lecturer in Banking and Finance and Director of Executive Education, University of St Andrews
Council tax has risen by an average of 5% across England (some rises in Scotland and Wales are even greater). Water bills are up by £10 per month on average , while many broadband and mobile providers have imposed rises several percentage points above the rate of inflation.
This comes after years of economic volatility, from the 2008 financial crisis through Brexit, the COVID pandemic and the subsequent inflation surge .
But beyond the immediate pain of these April increases, there's a deeper question. Has there been a fundamental shift in British prosperity over the past two decades?
Data from the UK's Office for National Statistics (ONS) reveals a complex picture around real household disposable income (RHDI). This is the amount of money from all income that households have available for spending or saving after taxes and benefits, adjusted for inflation. As such, it's a reliable way to see how much money people have to spend right now, compared to previous years or decades.
Between 2000 and 2008, RHDI grew steadily at approximately 3% per year. The financial crisis brought this growth to an abrupt halt, with the period between 2008 and 2023 characterised by unprecedented stagnation .
While there have been periods of modest recovery in 2023 and 2024, the overall trajectory shows sustained minimal growth in disposable income ever since the 2008 financial crisis.
When broken down by income groups, the data tell a more nuanced story. The bottom 20% of households have experienced virtually no growth in real disposable income since 2008, while the top 20% recovered more quickly after initial setbacks. Income inequality , which narrowed slightly during the early 2010s, has widened again in recent years.
Underlying the income stagnation is Britain's productivity problem. Labour productivity growth, which averaged around 2% annually in the five decades before 2008, has grown at less than 1% per year since. This has directly impacted wage growth.
Several factors contribute to this productivity puzzle - under-investment in infrastructure and skills, a shift toward service-sector jobs with traditionally lower productivity growth, and economic uncertainty discouraging business investment.
Housing - the great divider
Perhaps the most significant factor in understanding why people might feel poorer is housing costs. The ratio of average house prices to average earnings has nearly doubled over the past 20 years. In 2002, a typical house cost around five times the average salary. But by 2023, this had risen to approximately nine times.
For renters, the situation is also very challenging. Private rental costs increased faster than wages in the year to January 2025 in most regions, particularly in London. The proportion of income spent on rent increased from roughly 25% to more than 30% ) for the average renter between 2022 and 2024.
This housing cost burden creates a stark divide between generations. Those who bought property before the mid-2000s housing boom have generally seen their housing costs decline as a proportion of income as their mortgages were paid down. Meanwhile, younger generations face significantly higher barriers to home-ownership and higher ongoing costs.
Another important part of the overall picture is the consumer experience - and how the quality and variety of goods and services have changed. Technology has made many products more affordable and accessible. Smartphones, computers and TVs were significantly more expensive (or didn't even exist in current forms) 20 years ago.
But essential services such as childcare have seen costs rise faster than general inflation. The same is true for grocery costs, which have seen a substantial increase since the onset of the COVID-19 pandemic. This has created a confusing dual experience where discretionary purchases may feel more affordable while essential costs consume a greater proportion of income.
So are Britons actually poorer? The facts suggest that while the average Briton isn't necessarily worse off in absolute terms than 20 years ago, many are certainly no better off. This in itself is a stark contrast to the expectation of continual improvement that characterised previous generations.
When accounting for housing costs, younger generations are demonstrably worse off than their predecessors at the same life stage. For many, the combination of stagnant incomes and rising costs for essentials has created a genuine decline in living standards and financial security.
"Awful April" isn't just a seasonal discomfort. It is a manifestation of long-term economic trends that have fundamentally altered Britain's prosperity trajectory. The coming local and mayoral elections in England will no doubt see these issues take centre stage. There will likely be a thorny debate around the expectation that each generation should be better off than the last.
Marcel Lukas receives funding from The British Academy.
