Bare necessities

Think tank: Social Market Foundation

Author(s): Sam Robinson; John Asthana Gibson

September 29, 2023

This report by UK think tank the Social Market Foundation looks at an improved framework for social tariffs in the UK.

The cost of living crisis has left many households struggling to afford essential goods and services. This SMF report explores the case for social tariffs (discounts offered to vulnerable customers), the goods they are best suited to and how they should be designed to deliver for all. At present, the existing social security system is insufficiently generous to help vulnerable households. Social tariffs are a useful tool to help them afford the basics, with the case for them being strongest in utilities like water and energy, broadband, public transport and car insurance. Yet the existing offering of social tariffs suffers from poor targeting, inconsistent eligibility and generosity and low take-up. A new social tariff framework should be based on a bills-to-income ratio using data from HMRC, DWP and service providers; it should be identify households automatically rather than relying on households to apply for them; and it should be funded through general taxation to spread the burden progressively. Other steps are also needed to improve the existing social tariff system in the short-term. These include minimising differences between social tariff schemes offered by providers, reducing barriers to accessing social tariffs and developing cross-subsidies to pool risk between providers.