Securing life’s essentials: Closing the gaps in social tariff take up

Policy in Practice’s flagship work on benefit take up tells us that social tariff take up is woefully poor. For broadband social tariffs, a staggering 95% of eligible households are missing out.

Meanwhile the digital divide is increasingly linked to poverty, impacting education, access to local services, and ironically, the details of social tariff support many families could and should be claiming.

Fragmentation and low take up of social tariffs doesn’t start or stop at broadband services. For water, energy, and even motor insurance, supporting a level playing field for people living on low incomes is a challenge for government and service providers alike.

In principle, social tariffs provide additional financial support to low-income households and people already claiming some benefits. For each example of a social tariff, policy design, eligibility criteria and funding mechanisms vary, as do application routes and proof of eligibility.

And depending on where you live and which provider you choose, if there is a choice, people’s experiences and awareness of social tariffs varies enormously. For vital services like water and energy, social tariffs epitomise the postcode lottery of a fragmented and disconnected approach, an approach we know can be made easier for residents and providers.

This is why Policy in Practice, in collaboration with Citizens Advice, the Institute for Public Policy Research (IPPR), and with funding from abrdn Financial Fairness Trust, is embarking on a new project to close the social tariff gap.

Read the report: Securing Life’s Essentials: Building a plan for targeted bill support in regulated markets

The motivation behind our involvement in this project stems from the recognition that the current system of support for low income households is failing to meet the needs of many.

While inflation may have eased somewhat from its peak, household budgets remain under extreme pressure, especially for those on the lowest incomes.

According to recent figures , half of all households in Great Britain have had to cut back on two or more essential services in the past year, and over one in seven have reduced their spending on at least one essential to the point where it negatively impacts their daily lives.

Source: https://www.citizensadvice.org.uk/policy/publications/securing-lifes-essentials/

This precarious situation has revealed the inadequacy of existing bill support schemes. Social tariffs, designed to offer discounted rates for essential services to vulnerable groups, have developed in an inconsistent and fragmented manner.

Across sectors such as energy, water, broadband, and motor insurance, these schemes differ widely in terms of eligibility, take up, and the level of support offered, resulting in a postcode lottery where households in similar financial situations may receive vastly different levels of assistance depending on where they live.

For example, water social tariffs vary significantly from company to company, while broadband social tariffs suffer from low take up, with only 5% of eligible households taking advantage of them. Even more stark is the fact that motor insurance, despite being a legal requirement for drivers, lacks any formal bill support scheme.

The financial consequences of these disparities are profound.

It is estimated that £1.9 billion of support for water and broadband services alone goes unclaimed each year . This means that millions of households are missing out on help they are eligible for, simply because the system is too complicated, poorly targeted, or not well advertised.

As a result, many families are forced to make tough choices between heating their homes, staying connected to the internet, or keeping their cars insured, with serious consequences for their financial and personal wellbeing.

In response to these challenges this collaborative project seeks to design a coherent, well targeted system of social tariffs that can be implemented across multiple essential service markets. The project aims to streamline and standardise the delivery of social tariffs, making it easier for low-income households to access the support they need, when they need it.

At the heart of this effort is a commitment to ensuring that social tariffs are both adequate and accessible. We will explore how current schemes can be improved and expanded, including the possibility of increasing the generosity of support in sectors like energy, where households continue to face historically high bills, and broadband, where take up of existing social tariffs has been abysmally low.

We also aim to tackle the inconsistency in water social tariffs, where eligibility and the level of support vary greatly depending on where a person lives.

By bringing together best practices from different sectors, such as the automation of the Warm Home Discount in energy, we hope to create a system that is easy for consumers to navigate and maximises the uptake of available support.

A key aspect of this project will be to address the systemic issues that have resulted in the current patchwork of support schemes.

By working closely with regulators and policymakers we will advocate for a unified approach to social tariffs, one that is based on principles of adequacy, targeting, standardisation and simplicity.

We believe that by taking a strategic, cross-sectoral approach, it is possible to create a system that not only shields low-income households from price shocks but also helps them build financial resilience for the future.

In the short term, the project will propose immediate actions that the government and service providers can take to improve the support currently on offer.

These recommendations include expanding the Warm Home Discount and introducing tiered discounts based on household needs, as well as urging water and broadband providers to proactively reach out to eligible customers with social tariffs, aided by data sharing from the Department for Work and Pensions (DWP).

The project’s guiding principles for improving social tariffs and bill support schemes across the four key markets

Policy in Practice’s contribution will focus on the practical implementation of social tariffs. Drawing on our expertise in social security and data-driven policy analysis, we will explore how data sharing can be used to drive the automation of social tariffs, ensuring that support reaches those who need it most.

We will look at ways to simplify the application process for consumers, such as creating single sign-up portals that allow individuals to access multiple support schemes through a single application.

Our role in this project reflects our broader mission of making government policy work for people, using data to drive decisions and improve outcomes. By developing practical solutions to improve the uptake and efficiency of social tariffs, we hope to make a tangible difference in the lives of those who are struggling most with the cost of living crisis.

This collaborative project represents a vital opportunity to address the gaps in social tariff support and ensure that low-income households are not left behind as the cost of essential services continues to rise.

Through our partnership with Citizens Advice, IPPR and abrdn Financial Fairness Trust, we aim to create a system of social tariffs that is fair, effective and easy to access.

By focusing on adequacy, targeting and simplicity, we believe that social tariffs can provide a lifeline to millions of households, helping them to stay connected to the services they need without being pushed further into financial hardship.

Endnotes

Yonder Data Solutions surveyed 2,093 18+ GB adults between June 24th-25th 2024. All data unless otherwise stated is from this polling omnibus. 14.8%,  just over 1 in 7, of polling participants said they have stopped spending or cut it back to a level that has had a detrimental impact on their lives. This has been scaled up to GB population to equal 7,654,358 people. Great Britain population figure is based on ONS Census data from 2021. The total adult population for GB was calculated as 51.7 million based on this dataset extracted on 1 July 2024. This was then used as a basis to extrapolate the Yonder polling
Calculation for unclaimed social tariffs based on: £1.68 billion going unclaimed in the broadband market according to estimates from Policy in Practice (April 2024). Nearly £300 million of total support scheme funding went unclaimed in 2022/23, according to data provided to Citizens Advice by the Consumer Council for Water