Half of adults have cut back spending on two or more essentials, including energy, water, broadband and car insurance, in the last year according to latest research by the Citizens Advice.

The data has also revealed that people are in the dark about almost £2 billion of available financial support.

Social tariff schemes, which reduce essential bills for people struggling the most, are currently available in markets like water, energy and broadband.

But a lack of consistency, sufficiency and promotion of schemes by suppliers has created an unfair postcode lottery in which identical households receive completely different levels of support, simply because of where they live. And with £1.9bn sitting unclaimed in social tariffs across water and broadband, a low income household could be missing out on an average saving of at least £350 every year.

Citizens Advice says the government could take an immediate step to improve the support available through existing social tariff schemes without having to spend a penny by putting the onus on suppliers to make sure people eligible for social tariffs are rightfully receiving them.

In its new report, Citizens Advice found half of GB adults (25 million) cut back their spending on essential bills, such as water, broadband, car insurance and energy, in the last year.

And even more concerningly, almost 1 in 7 people say they have stopped their spending or cut it back to a level that has had a detrimental impact on their lives. This includes people disconnecting from home broadband and instead relying on public Wi-Fi, or cancelling car insurance and not being able to get to work.

With utility bills only expected to increase further over the coming years, research by one of Citizens Advice’s partners, the Institute for Public Policy Research (IPPR), has found that growing numbers of households will spend a disproportionate amount of their money on essentials.

The IPPR found an estimated 2.8m households are expected to spend a fifth or more of their disposable income on water, energy and broadband costs over the next 12 months. That’s 1 million more households since 2021-22.

Frontline staff at Citizens Advice say a lot of people in need of support have no idea that social tariff schemes even exist, and even those who are aware encounter difficulties accessing them. But when designed effectively, social tariffs can provide much-needed relief to people’s already stretched budgets.

Citizens Advice is warning that in their current form, badly designed social tariffs which have patchwork support available in different areas are falling short of the mark in keeping people connected to essential services. This needs to change as more people feel the pinch, according to the charity.

Citizens Advice argues there are steps the government can take right away to improve the support that’s currently available through existing social tariff schemes. These include Ensuring suppliers proactively offer social tariffs to their low-income customers, aided by better data-sharing between government departments and suppliers. It also says that there needs to be an end to the postcode lottery for water and broadband social tariffs, so that the support available to people doesn’t depend on where they live and is consistent across markets, bringing it in line with other schemes like in energy

But in the long term, the charity wants to see a broader commitment to improving social tariffs across a wider range of markets, including car insurance, to shield those on low incomes from increasingly unaffordable essentials.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said “Worrying numbers of people continue to be forced to take drastic measures, like cutting back their spending on water and energy, in the face of unmanageable essential costs.

“Social tariffs have a crucial role to play in shielding low-income households from unaffordable bills. But, for too long, people have been in the dark about extra financial support available to them, which could ultimately affect if someone keeps warm, or falls into debt on their water bill.

“Solutions to this are hiding in plain sight. Putting money back into the pockets of people who need it most starts with the government ending unfair postcode lotteries in social tariffs and putting the onus on suppliers to ensure that people are getting the help they’re entitled to.”

Henry Parkes, Principal Economist at the IPPR, said “Growing numbers of households are spending inordinate amounts on the essentials –  highlighting that although inflation may have slowed, higher prices are here to stay, with those on the lowest-incomes squeezed the most. Alongside other bold policy action, effective social tariffs could make a real difference in tackling this crisis in living standards.”

Source: Credit Connect