April Changes: National Living Wage, ISAs and Energy

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Higher pay, cheaper energy and more free childcare from April the 1st. No, it's not an April fool. April the 1st really is the day of many changes in our finances in this Need to Know Moneybox podcast. bills fall for most households, what action should you take now? More help with childcare, and is there time to boost your tax-free savings? But first...

Higher pay for people on the various minimum wages begins on Monday, April 1st. For the first time, 21- and 22-year-olds join people aged 23 and more in getting what's called the National Living Wage. It's going up to 11%. £144 an hour, a near 10% rise more for the younger ones. 18 to 20-year-olds get a bigger boost, with a minimum wage up nearly 15% to £8.60 an hour. 16 and 17-year-olds and those in the first year...

of an apprenticeship get the largest increase of more than 21%, taking their minimum hourly pay to £6.40. Money Watch reporter Dan Whitworth has been to Titherington Sixth Form College in Macclesfield in Cheshire to hear what students... there think of the changes. I'm Anya, I'm 16 and I currently work in a noodle shop.

I'm Amelie, I'm 17 years old and I currently work in both a cafe and a restaurant local to my house. I'm Fionn, I'm 18. I'm not working currently, having the past and I will be looking for something after my exams. In terms of money, I'm currently... currently either on the minimum wage or just above.

How long have you been working and what do you do with that money? I've been working there for about three weeks now. I use some of it just for regular purchases and going out and that sort of thing. And some of it, I've been trying to put half of every paycheck into my savings.

Let me ask you, what do you think of the increase? You will be getting quite an increase. As from the 1st of April, what do you think about that in the context of rising prices, rising costs of everything? Personally, for me, I think that it's a benefit.

But I'm speaking as someone who... I'm speaking from quite a superficial perspective where I don't have much that I need to spend the money on because I obviously live with my parents and I have the relationship with my parents where they will provide for me and I don't have to worry about...

paying for every single non-essential thing. But I know that that's not the case for other 16-year-olds and there will be people who, first of all, aren't in the economic position with their families or don't have the relationship with their families where they can sort of rely on them.

Same questions to you. When you did work and the work you'll be looking to do this summer, what sort of work is it? What do you do with the money? What do you think of the rate of increase? Now I'm 18, I'll be looking to work in a bar, hopefully, sort of work like that. In terms of money, at least half of it. like usually more goes into my savings for uni.

And I'll have contribution from my parents too. But even with all that, I still need to do considerable savings. So you're 18, so you're going to be getting a rise of nearly 15%. Minimum wage should be around, well, should be at least £8.60 an hour.

Do you think that's enough, given the context of where prices are at the moment, with the fact everything's going up? I'm saving for the future, so my uni course will be four years long, and I don't know how much prices are going to rise in that time. Like, I don't know if the money that... is not even going to be able to cover what I need to cover in the future because prices are just going to continue to go up. So talk to me about your work, your paid work. I'm actually quite lucky, so I'm...

got quite a close relationship with both my employers so they've made the decision to treat me as an 18 year old because they understand that the minimum wage simply isn't enough to support ourselves. I think what would be interesting to see is next month whether my...

pay will increase along with the increase of minimum wage. So if it goes up proportionally as much of the increase of the minimum wage goes up. Have you had that conversation yet? I've not had the conversation so I'd really like to see where that goes. And Emily, talk to me about the money. What do you do with your money? I roughly get about three...

$2.50 from my cafe job and $1.50 from my restaurant job. But I find by the end of each month I've got zero in my account because of my driving lessons. So previously it was... Just doing hour-long lessons, £40 an hour. But considering my test is coming up, my driving instructor recommended that I increase by half an hour. I'm sure they did. I'm sure they did. £60 an hour, which has completely rinsed.

me out. I mean that is a lot of money and that's presumably what most of your wages are going on right now is it? Yeah and at the moment I'm really struggling to put money aside for savings which I've had the conversation with my parents about finances for uni and I am in a... fortunate position where they will support me but and alongside maintenance loans but it's still not enough and I will have to get a part-time job and I worry for people who don't have the same support of their families.

students at Macclesfields.

Titherington, Sixth Form College, talking to Dan Whitworth. The proposals for reducing the age to get the highest rate came from the Low Pay Commission and were accepted by the government. Laura Jane Rawlings is Chief Executive of Youth Employment UK, who gave evidence to the commission. It was a really significant decision for the Low Pay Commission and, of course, for government to adopt these recommendations to bring that threshold down, that age threshold down to 21s. A really big move.

We would still probably argue, as would young people, that actually at 18 you're classed as an adult in this country and so the discrepancy still between the 18 and the 21 rates could be argued. Possibly still some work to do on that age rate, but a great step forward, certainly for young people. Listening to all that is Alfie Stirling. He's Chief Economist at the Joseph Roundtree Foundation, which works to help low-income households. Alfie Stirling, the student...

Students were pleased using the money for very sensible things, saving for university, driving lessons. But for millions of working age people, minimum wage is their only income. And with many household bills rising on April the 1st, is an extra pound or so an hour. Yeah, that's right. I mean, I think that it's incredibly positive to see rising minimum wages again. It's really positive to see the age threshold lower so that more people are getting those higher.

And look, national minimum wages are among the most successful policies in terms of economic policy that we've seen in Western economies for several decades now. But they are not a panacea and they are not actually the most effective way. of helping the most low-income families who are really struggling right now when it comes to rising prices, energy, food that are all 20, 30% higher than they were a couple of years ago.

Yes. So what is the way that you'd like to see help for those people? I mean, is it different from the minimum wage? These are non-working people, are they? Well, not just non-working people, actually. So one of the problems is that if you are working age and you're on low income and you have some income support, if your wages go up, you'll have benefits withdrawn alongside that. So actually...

For low-income families, they will benefit less from minimum wage rises than a high-income family, where there's perhaps a second earner. um or a child um you know an adolescent on minimum wage rates so it's partly that many people on low incomes are not um in work and it's also partly that those that are in work

don't see the full benefit because their welfare payments are withdrawn alongside pay increases. Yes, and some will pay tax as well. Though, of course, benefits have gone up, or will go up, I should say, by 6.7% from April, won't they?

unfortunately so they have gone up in that and it's um welcome that they have and they've been pegged to inflation right earlier this year but unfortunately if you step back and look across you know a couple of years now two three years we've had this cost of living crisis you've still got this fundamental problem

where incomes overall, both because benefits and earnings have not risen as fast as inflation over the last two and a half years or so. So it's going to take several years now for both benefits and earnings to catch up with the price shock. that the whole country has experienced.

Now, despite what you say, that it's not quite enough, as I gather what you're saying generally, some businesses do express the concern, don't they, that they have to pay these pay rises. Do higher wages mean fewer people in employment?

And just to be clear, I'm not necessarily just saying that minimum wages aren't high enough. I'm just saying that we need to be careful to attribute the right sort of focus for them. So they're not a panacea for all low-income problems. But what about the business point? Businesses actually have to pay this extra. How do they manage that?

Well, actually, you know, economists have spent the last 20 years now trying to find ways in which higher minimum wages are having adverse effects on employment. It was, of course, hypothesized through the 90s and they said it would be a complete disaster to have a minimum wage.

at all and we just simply haven't seen those effects we've seen that as pay has increased employment effects have not been adverse we haven't seen fewer people in work and the reason for that is twofold really one is that There have been productivity gains. So the value of work has been able to increase alongside the rate of pay. And that's because there was room in the economy to improve.

the way that we delivered goods and services. But another reason is that in the UK, actually, employers still have a lot of bargaining power. They can reduce their cost of labour in other ways, whether it's reducing hours. making hours more flexible. And actually in the UK, while we have high minimum wage rates, we have very poor employment protection compared to many other European and North European countries, which also makes work cheaper for employers.

That's why we haven't seen jobs go down. And in a word, almost literally, Alfie, when will people who've been listening to this see the difference in their pay packets? In a word. Monday. We'll see when my rate is going up from this week.

Everything you earn from Monday. Alfie Sterling from Joseph Roundtree Foundation, thanks. And also from Monday, the cost of electricity and gas will... Thank you. But still a lot higher than it was a few years before that. Some suppliers now are beginning to offer fixed price deals. But with prices forecast to fall in July and still be lower in October than they will be in April, is it worth switching?

supplier to get a guaranteed price for next year or not. Well Dan Whitworth has also been to Swansea. He asked people there if they were thinking of finding a cheaper energy deal. i'm not honestly a big switcher or shopper around not because i don't know you can make savings like that but because like the standing charges and things are so much of my bill that it's kind of like the energy prices just a huge bill all the time i work a lot of hours and switch in energy

More time on a computer comparing things is not my thing. And life's too busy as it is, right? Exactly, yeah. Will you bother shopping around? Could it make... Oh, now tell me why. Well, I'm always looking for a better deal, basically. I'm always going to go for what's the best deal. oh yeah i mean i pay um at the moment 60 pound a week for gas and electric and he lives on his own and i'm a pensioner living on my own i've got to find that you see

So if you have the chance, a cheaper deal will make a big difference to you. Oh, yeah. Well, the thing is, everything's going up. You get an increase in pension, but also an increase in council tax, an increase in rent. Everything goes up, doesn't it? better off. I've never shopped around. I've stayed with the same electrical supplier and gas supplier probably for some 25, 30 years. Why haven't you shopped around? Sometimes I was hoping to get some kind of reward from being a loyal customer.

That hasn't transpired. But yeah, if I'm comfortable with something, I stay with it. I've actually found I've got quite a good energy provider at the moment and they offer rewards if I... turn off my energy and things like that so not only save the planet save a bit of money so i probably won't because i'm happy with them um but i think it's always worth shopping around in case you might get a better deal

People in Swansea. Well, joining us now is Harry Kind, consumer expert from Which. Harry Kind, the new off-gen price cap comes in next week on Monday. How does the cap work? Yes, this is the very misleadingly entitled price cap. It's not a cap on the total amount you use. It's on the unit price. So you use more, you pay more. It's not an all you can eat buffet of electricity, if only it were.

And so really for most of us, it's just going to look like our price is coming down by 12% for what we use. However, we're seeing that standing charge go up. And so if you're a low energy user like some of those folks in Swansea, you're actually not going to see the same savings that you might have.

Yes, I mean, gas and electricity are coming down slightly more than 12%. The cap's going up. So the overall change over the year for a typical user, all of which is fairly meaningless in a way, is 12%. So low users may do worse. million people, aren't there, who pay quarterly when they get the bill, either by cheque or credit card, and they face big rises, a standing charge now £30 a year more than other people's, and their unit costs are highest too.

That's right. So this is one of the first times we're going to see the equalisation of... the prepayment meter folks and those who are paying by direct debit it used to be that you were paying quite a bit more if you paid for your energy with a prepayment meter now because those are equalized you're not going to be losing

out with one of those meters but you are losing out if you pay for your electricity or your gas after use so you use it you get a bill saying this is what you used in the last quarter and then you pay up those folks will have a much higher price cap than other people. And so probably one of the easiest kind of quickest ways to save money would be to make that switch either to prepayment or to direct debit.

Yes, and bearing all that in mind, how to save money, some fixed tariff deals are being offered as a way to save money. Is it a good time now to get a guaranteed price for a year, given that prices may well go down again this year? That's right. The prediction is that after this 12% decrease on Monday, we...

The best bet is another 8% decrease in July till September. And then after that, it's going to maybe go up a bit. But basically, you're looking at the average household spending around £1,600 a year. for the next. 12 months, there's not going to be any major changes. And so if you're looking at switching to a fixed tariff, you really need to be sure that you're not going to be locking in at a price above what everyone else is going to be paying on the price

cap from July. And so we say about 15% less than the current price cap. You've got to be paying less than the price cap that's coming in on Monday. And so for a lot of people, a fix may not be worth it.

doesn't mean that they shouldn't switch that there are some great variable deals that promise to be 50 pounds below the the price cap for a continuous period it may well be that you want to switch because you can get a very good smart tariff that allows you to have very cheap off peak power in the evenings so that you can charge your electric car or you can heat your house with a heat pump very nicely but then also you might want to switch because as those folks in Swansea said

Customer service is crucial. Making sure that you have a good energy provider who is always at the end of the phone to solve your problems is worth its weight in gold. Yes, and of course we've all been paying for a lot of switching in the past when suppliers went bust. It cost us all billions. Hopefully lessons have been learnt from that. And literally in a word then, just summarise that, switch now or not.

I would say look at switching but not necessarily fixing. It's got to be cheaper than that price cap. Thanks, Harry, kind of which. Now, we heard from the people Dan spoke to in Swansea that they still feel all prices were rising and many household bills will actually rise from Monday. And on Wednesday...

Felicity Hanna's here with Moneybox Live on the biggest expense for many people, rent, which rose by 9% on average last year. Send us your questions, thoughts, experiences, moneybox at bbc.co.uk and leave a phone number. if you can. Now, there are lots of other things happening this week that are worth a mention, and Sandra Hardiel's here with the Roundup, starting with childcare, Sandra.

Yes, from next week, eligible working parents of two-year-olds in England will start to benefit from 15 hours a week of subsidised childcare in term time. Parents should have got a code via their childcare account which goes directly to the officially registered nursery or childminder.

This offer is being extended to parents of nine-month-olds for the September term. Applications for that open in May, but demand is high and there are no guarantees you'll be able to get a place for your child. So, worth checking. Also, different schemes operate in Scotland, Wales and Northern Ireland. Yes, indeed they do. And we covered all those differences in Moneybox Live on Child Care a few weeks ago, available, of course, on BBC Sounds. And Sandra, we talked about...

energy bills a few minutes ago, but there's something people can do now to make sure they benefit straight away from that price drop we heard about. Yes. households need to submit their meter readings this bank holiday to make sure they benefit fully from lower energy rates from the 1st of April. Households on standard variable tariffs will start paying cheaper rates for their electricity and gas from Monday when the new price cap comes into effect.

So if you're not on a smart meter, it is important to send a meter reading to your supplier late on Sunday night so they know to charge you the lower rates from Monday. Easter Sunday job late in the night. But Sandra, also, as we've been hearing, not all... Prices are falling, are they? No, many household bills will rise from Monday, including the cost of water, the TV licence, phone and broadband contracts and posting letters and parcels.

Also, council tax is rising in most parts of Britain. Thanks, Sandra. And next week, we will be looking at council tax bills. Now it's also 25 years since the introduction of tax-free individual savings accounts, or ISAs. So in order to encourage personal savings, the government will, as promised, introduce from 1999...

individual savings accounts. Gordon Brown there in his first budget as Chancellor in July 1997. The maximum amount that could be put into the tax-free account then was £7,000. That's grown to... £20,000 a year, and you have just a few days to make use of this year's allowance if you haven't done so already. Next Saturday is the start of the new tax year, so another £20,000 can be put in then.

If you've got it, chance would be a fine thing, I'm sure some of you are thinking. And there'll also be some changes in the rules. Alice Hain is with us. She's personal finance analyst at Best Invest. And Alice Hain, a quarter of a century now of this tax-free... When all gains, dividends, interest, free of tax, how well is it used? It is used quite well. I mean, people are pretty familiar with ISIS these days. And what we saw, the latest figures that we have.

are from 2021 to 2022 and around 11.8 million adults paid into ices that tax year and what we found is that cash ices are still that they're subscribed to the most but they're actually decreasing and that stocks and shares ices are on the up so we're finding that stocks and shares ices are growing in popularity because people are realizing it's very very important to protect your savings and investments

from tax. And that is something that is very, very important as we go into the run-up to the end of the tax year next Friday. Yes, I suppose cash ISIS became more popular when rates started rising and now people are thinking, well, maybe that will be reversed. And you have to use this year's allowance by Friday the 5th if you haven't already put...

20,000 into an ISA. We've got the bank holiday on Monday, of course. Is there still time to get money into an ISA this tax year? Absolutely. This is a use it or lose it allowance. You've got four days next week. But, you know, if you've already got an ISA... that's open you could pay into it today but you know there's obviously you have to allow time for money to clear so uh plenty of time to do it the one thing you need to be aware of is that if you haven't paid into an ISA

over the past tax year that you may need to reactivate it but that can be just a quick online form that needs to be filled in it can be a phone call it takes doesn't take very long don't see that as a hindrance make sure you use that allowance

Yes, make sure you use it. Now, we've had an email from one of our listeners who's told us he's accidentally paid in more than £20,000 into an ISA this year. I pay £100 into stocks and shares ISA on a monthly basis and came into a lump sum. I opened up a cash ISA and invested a full £20,000. I simply forgot about my stocks and shares, ISA, as it just comes out every month. What should I do? In some ways, Alice, a nice problem to have, isn't it? But what should he do? He's obviously worried.

You shouldn't panic. I mean, it's really just a call to HMRC's ISA helpline, and that's 0300 200 33 00. Explain the situation. They'll work out which ISA payment. breach the limit and they'll help you reclaim the money there may be some tax to pay but obviously sitting on the hmrc helpline it can be a worry but

Perhaps even try the web chat because you may find the top of the queue for that is much faster. Yes, well, at least we know the lines are going to be open now, don't we? Yes, that's always a positive. Now, until now, you could only open one of each cache. investment ISAs a year, but there are some changes, aren't there, coming in the next tax year from Saturday. What are those changes?

So it means that savers are going to be able to subscribe to multiple ISAs of the same type, except for the Lifetime ISA. But it means that you could open... two stocks and shares ISAs or two cash ISAs, or you might already have a cash ISA, you see a better rate, shop around, get a new one. And also ISA, stocks and shares ISA providers may have better fees or better offers. So you may think, well, I'll leave some of my investment.

here, but I might open another stocks and shares over there. So it's a lot more flexible. You're also going to be allowed to transfer part of your ISA account balance rather than having to transfer the full amount. And also the cash ISA age limit for younger people, that's going to be harmonized at 18 across the board. So you'll only be able to open an adult cash or stocks and shares ISA from the age of 18. There was talk about fractional shares, but that's still under consultation.

Yes, we won't go there, I don't think, just today anyway. So in a way, all those what you might call annoying or silly restrictions are going, which obviously is good news. And just time to ask you about the British ISA, which Chancellor Jeremy Hunt announced in his... budget will that begin in april briefly sadly not no it's an extra five thousand pounds allowance but we've got a consultation period going on that goes on till june the second then they've got a

you know, fine tune it and make sure it actually comes together. We have got a general election coming. So who knows? Is this actually going to happen? That's the big question. But potentially, we could have a nicer allowance of 25,000. Alice Hayner, best and best. Thanks.

Well, that was a Moneybox podcast full of chips, wasn't it? And there'll be more about the new tax year in the next podcast because Moneybox is always your trusted guide, isn't it? In this podcast, your trusted guides were reporter Dan Whitworth. researchers Sandra Hardiel and Joe Krasner, studio manager Joe Stickler, our editor is Jess Quayle. I'm Paul Lewis and this was a BBC News money and work production for BBC Sounds. And now, reliving your life, if only.

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