Better social tariffs – helping families escape the difficulties of life on a low income
In a postscript to our Navigating Energy Challenges series we highlight new research showing how better social tariffs for essential services could significantly reduce poverty in the UK.
Research & Campaigns Team
Persuasive new research (1) from Citizens Advice in partnership with think tanks IPPR and Policy in Practice shows that:
- Low-income households urgently need support affording their essential bills, and
- Social tariffs across essential markets could make a huge difference.
Proven need
From the start of the cost-of-living crisis Citizens Advice has drawn public and policy-makers’ attention to the plight of those on the lowest incomes.
Sky-rocketing energy prices made the problem obvious, but CA data has since revealed the effect of relentless rises in all essentials. Indeed the charity’s efforts have established the phrase negative budget (2) in social policy debate.
Official figures quoted in the new research confirm the urgent need for action.
‘Households in the lowest 10% for income are spending around two fifths (41%) of their disposable income (after housing costs) on energy, water, broadband and car insurance bills.’
This compares to 11% for those halfway up the income tree and just 5% for those in the highest branches.
Social tariffs
Better social tariffs across essential markets could make a real difference in a system that disadvantages millions through no fault of their own.
Many work hard, often in more than one job. Many have a disability or long-term health problem. The IPPR shows how a 25% discount on energy, water, broadband and car insurance would save the average low-income household £680 a year.
Targeting
But such a progressive improvement could still fail people without other changes. Effective targeting is essential. Poorly targeted eligibility, for example based on anyone receiving means-tested benefits, would miss over 30% of the lowest 10% of the income distribution (IPPR).
Barriers
And improvements would be futile if the new tariffs were not easily or automatically available to eligible people. It has long been known that billions of pounds people need and should receive go unclaimed.
Last year CAEE called for ‘accessible compassionate reforms’ to barriers such as digital exclusion and emotional or cognitive challenges. Now Citizens Advice says every step consumers have to take to access support means lower uptake – especially for vulnerable consumers.
Apply Once!
The new research shows it doesn’t have to be like this; ‘Automation can cut through this by eliminating the need for most consumers to take action.’
Better yet, some suppliers are already using innovative tools to deliver social tariffs more effectively.
Policy in Practice identifies ‘targeted, personalised communications and streamlined ‘Apply Once’ processes ’to overcome key barriers including low awareness and burdensome application processes’.
1) Fairer Bills, Smarter Systems: Designing targeted social tariffs with automation in mind, Citizens Advice, 31/03/25
2) When the cost of household essentials exceeds household income. Citizens Advice says more than half of clients asking for help with debts are in this unhappy position.