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With UK families bracing themselves for huge rises in utility bills over the next few months, some relief in the cost-of-living crisis could emerge from the possibility of consumers, especially those in low-income households, having their broadband bills cut under government plans to encourage “social tariffs”.
Recent studies have found that with UK economic growth under threat from inflation rises, there has been further pressure on consumers to afford rising broadband prices. A July 2021 study from EY warned that following a digital home boom during Covid-19 lockdowns, consumers were retreating on connectivity as they prioritised financial wellbeing, with a potential knock-on effect of limiting efforts to break the digital divide.
In the survey, 61% of UK households expressed concern that their broadband provider would increase subscription rates. As the UK emerges from the pandemic, the study also indicated that digital usage is normalising, with many looking to downsize their online exposure. Some 35% said they plan to spend less time online, 27% want to cut the number of streaming platforms they use, and 24% are open to reducing the number of connected devices in their home.
EY called on broadband service providers to help their customers by making packages easier to interpret and understand, and clearly detail the value they are providing to consumers.
The UK government has now called on all broadband providers to offer and promote what it calls social tariffs – discounted broadband and mobile deals for people on Universal Credit and other benefits – with statistics showing that only 1.2% of those eligible have taken advantage of such a package. The new scheme – scheduled to go live from the week beginning 22 August 2022 and to be run by the Department for Work and Pensions (DWP) – is designed to allow the UK’s internet service providers to verify – with their customers’ permission – whether they are in receipt of a relevant benefit and therefore eligible for extra financial support.
The government believes that some customers on social tariffs could save more than £100 a year. The new system will also simplify the process by removing the need for customers to prove their entitlement to broadband providers as regularly as every month.
Social tariffs are available to eligible customers in 99% of the country following government-led negotiations with broadband companies. Internet service providers will be required to gain customers’ consent before speaking to the DWP about their eligibility. The DWP will minimise the information provided, sharing nothing other than confirmation that the person is entitled to a qualifying benefit at the time of contact. This ensures that claimants’ data remains as safe as possible.
The scheme is already supported by Virgin Media O2, which, following discussions with the government, has announced that it will use the system to verify eligible customers signing up to its Essential Broadband tariff. The company will also waive early termination fees for people moving from existing tariffs.
“Connectivity is a lifeline that people can’t go without, and as one of the first providers to have introduced a social broadband tariff in 2020, we are committed to making it as easy as possible for customers to get support with the cost-of-living crisis,” said Virgin Media O2 chief executive officer Lutz Schüler. “We’re working to implement the API as soon as possible, making it faster and easier to sign up for our social tariff as part of a comprehensive plan to boost the awareness, availability and attractiveness of Essential Broadband.”
UK cost of living business tsar David Buttress welcomed the scheme and said the government would continue working with industry to scale up and promote existing social tariffs, as well as encourage all providers to offer a discounted tariff.
“Times are tough and families across the country are feeling the pinch, so we’re making it easier for companies to reduce phone and broadband bills for struggling families,” he said. “Some of the biggest network operators have already committed to take advantage of this new scheme and we want to see other providers follow their lead, so that everyone eligible for a social tariff can access one. This is just one of the ways that we’re working with businesses to offer help through our Help for Households campaign.”