Almost 6 million UK households are struggling to pay their mobile, landline and broadband bills, with the cost of living squeeze forcing many to cut back on essentials such as food and clothes, cancel or change a service, or miss payments to stay connected.
A report from the consumer group Which? estimates that 5.7 million households have experienced at least one “affordability issue” in April, as cash-strapped homes struggle to cope with soaring bills and other costs.
Consumers are increasingly coming under pressure from the cost of living crisis – inflation is at a 40-year high and energy bills are forecast to soar to £3,600 annually this winter – more households are finding it harder to afford the essential telecoms services they previously took for granted.
Analysing data from the regulator Ofcom, Which? found that 3.5 million homes reduced spending on other essential items such as food and clothes in April to afford their telecoms bills. This is up from 2.2 million in February.
“The fact that millions of households have made sacrifices to prioritise their broadband and mobile connections during the cost of living crisis demonstrates just how essential these services are for day-to-day modern life,” said Rocio Concha, the director of policy and advocacy at Which?.
The affordability crunch is disproportionately affecting those on the lowest incomes: households with an annual income of up to £25,999.
The report found that 22% of lower-income households were forced to reduce spending elsewhere to afford connectivity services in April. This figure was 13% among middle-income homes – those with an annual income of £51,999 – up from 7% in February.
Which? said the government should cut the 20% VAT rate on telecoms bills to 5%, in line with other essentials such as gas and electricity. The organisation points out that even the most financially vulnerable customers, those eligible to be on specially discounted social tariffs, are charged 20% VAT.
“To help cut bill costs, the nextprime minister should reduce the VAT paid on telecoms in line with other essential services,” Concha said. “Businesses must support anyone struggling to afford their bills and ensure consumers are aware of and able to access the best deals.”
Earlier this year, the UK’s biggest telecoms companies increased bills by almost 10% – the consumer prices index rate of inflation in January plus 3.9%. While telecoms companies came in for some criticism for pushing through this year’s rise, it came before inflation hit a 40-year high and the real impact of soaring food and energy prices had begun to be felt by households.
Last week, BT said higher prices for broadband and mobile phone contracts helped the company return to sales growth in the first quarter. It pledged to continue to implement above-inflation increases next year to cover rising costs and investment in rolling out fibre broadband across the country.
In June, the UK’s biggest mobile and broadband companies – including BT, Virgin Media O2, Vodafone, Three, Sky and TalkTalk – agreed a plan at a government-led summit to help customers struggling to pay bills, including moves to allow switching to cheaper deals without paying a penalty.
