Households are living on empty - can social tariffs reduce the pressure?

Low-income households are living on empty. Could thinking big with social tariffs help policy makers to tackle the problem of negative budgets? 1.23 MB

This is an exploratory piece to start the conversation about cross-sector social tariffs. It’s the first in a series of outputs from Citizens Advice exploring this theme. In this short discussion paper, we use client budget data from our local Citizens Advice to model the impact of a set of social tariffs across a number of essential markets. 

More and more of our debt clients have less money coming in than going out. They’re living on empty. Our modelling shows social tariffs are a powerful tool policymakers can use to tackle the growing problem of essential living costs outstripping low incomes:

  • An automatic 20% social tariff for water, mobile, broadband and insurance would move the average budget of eligible Citizens Advice debt clients from a monthly deficit of £16 to a position of breaking even each month with a few pounds to spare.

  • Moving from a negative to even a very modest positive budget means people being able to balance their budgets day-to-day without going without essentials. It means families not having to choose between heating and eating, their broadband contract or their car insurance - without having to borrow money to cover these costs.

  • A 20% social tariff for water, mobile, broadband and insurance would bring negative budget rates among eligible clients back to where they were at the start of 2022, before the acute cost-of-living hardship of the past 18 months. A negative budget can quickly spiral into unsustainable borrowing and debt. So undoing 18 months of cost-of-living pressure for those living on empty would be a big step in the right direction.

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