BT to hike prices in 'work from home tax' as cost of living continues to soar

20 January 2022, 22:54 | Updated: 29 January 2022, 12:46

BT has announced a big hike in prices as households in the UK struggle with a growing cost of living crisis.

The telecoms giant put its 9.3 per cent price rise down to a surge in demand over the past two years, as many people worked from home as a result of the pandemic.

Nick Lane, BT's managing director for consumer services, said: "Price rises are never popular, but are sometimes a necessary part of business, if we're to keep up with the rising costs we face."

Working from home, online education and increased TV streaming have increased demands on the company's network, with a 90 per cent rise in broadband usage since 2018, and a 79 per cent increase on mobile phones since 2019, he said.

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Martyn James from consumer advice company Resolver said the price hike could be perceived as a "tax" for working remotely.

"For many people, this will feel like a tax on working from home," he said, speaking to The Telegraph.

"The way we live and work has fundamentally changed and the business world has not fully caught up with it.

"The important thing to remember is that this is not just BT striking out by itself - this is going to happen with every broadband company."

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BT's price rise will affect most of its customers, with those impacted set to pay an average extra £3.50 per month - £42 over the year.

Financially vulnerable households and those on certain packages, including BT Home Essentials and BT Basic, will be exempt.

BT changed how it raised bills around two years ago, introducing a system of one increase a year at the end of every March.

According to the company, the hike this year will be 3.9 per cent plus inflation - which last month hit its highest figure since March 1992.

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It comes after figures from the Office for National Statistics (ONS) revealed two thirds of UK adults have seen their cost of living jump over the past month.

Some 66 per cent of people surveyed had been hit by increases including steeper energy bills and rising food prices, according to the ONS.

Experts have warned that the cost of living will continue to climb over the next few months as gas and electricity tariffs are expected to rise by around 50% in April.

The Bank of England raised interest rates from 0.1% to 0.25% last month as it said inflation would hit 6% in the spring - and more increases are expected to rein in rising prices.