Paying for essential services like mobile phones, broadband and telephone landlines has become a struggle for almost six million UK households.
That's according to a warning from leading consumer rights group Which? suggesting that the cost of living crisis is having a crippling impact on telecoms costs for families. This comes on the back of Ofcom data which highlighted that 5.7 million households either reduced spending on essentials, cancelled or changed the services they use, or missed payments in April.
Which? said the Government now needed to cut VAT on household telecoms bills to help those in need. According to the Ofcom data, the number of households that experienced multiple affordability issues – for example, who had struggled to afford more than one telecoms service or made more than one financial adjustment to afford their telecoms – increased by 56% from February to April.
Beyond that, an estimated 3.5 million households reduced their spending on essentials like food and clothes in order to pay for their phone or broadband. That's up from an estimated 2.2 million in February – a 59% increase. One in five lower income households (22%) reduced spending elsewhere to afford connectivity services in April. This figure was one in eight (13%) for middle income households – almost doubling from seven per cent in February.
Which? said this data “further demonstrates just how essential these services are to modern life”. Unlike gas and electricity bills, connectivity bills are subject to 20% VAT. Gas and electric are charged just five per cent. Which? wants to see this change. The group noted that even the most financially vulnerable consumers were charged 20% VAT for social tariffs. It estimated that reducing the VAT rate on telecoms to five per cent would save the average household £120 per year.
Which? has also urged telecoms providers to support those struggling to afford their bills and to highlight discounts they may be eligible for.
Which? director of policy and advocacy Rocio Concha said: "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.
"To help cut bill costs, the next Prime Minister should reduce the VAT paid on telecoms in line with other essential services. Businesses must support anyone struggling to afford their bills and ensure consumers are aware of and able to access the best deals."
A Government spokesman said: “We understand that people are struggling with rising prices which is why we have acted to protect the eight million most vulnerable British families through at least £1,200 of direct payments this year with additional support for pensioners and those claiming disability benefits.
“Through our £37 billion support package, we are also saving the typical employee over £330 a year through a tax cut in July, allowing people on Universal Credit to keep £1,000 more of what they earn and cutting fuel duty by 5p, saving a typical family £100.
“We have also secured strong commitments from broadband and mobile companies to help those worried about their bills during this difficult time such as allowing them to move to cheaper packages without charge or penalty, or agreeing manageable payment plans.”
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