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