Cut low-cost broadband VAT to help more online, peers say

Special internet deals for those on benefits should be free of VAT to get more people online, peers have urged.

Those without internet are at a disadvantage when looking for jobs, for example, a report by a Lords committee said.

The government “does not have a credible strategy to tackle digital exclusion” the report said.

But the government said it is committed to ensuring no one is left behind in the digital age.

It says it has worked “to bring a range of social broadband and mobile tariffs, available across 99% of the UK and starting from as low as £10 per month”.

Social tariffs are discounted deals offered by firms to people on benefits.

But 1.7 million households have no mobile or broadband internet at home, and up to a million people have cut back or cancelled internet packages in the past year, the House of Lords communications and digital committee said.

Services from benefits to banking are increasingly moving online and 90% of jobs are only advertised online.

Bella, who is 18, grew up in a single parent household which struggled for money, “especially during this cost-of-living crisis and Covid”.

She told the BBC that for some of her time in school she didn’t have a laptop of her own to do homework on – “so I had to spend a lot of time in the library at the weekends”.

Matt, who spent time in care, and now works and also helps raise awareness of the issues care-leavers face, told the BBC he had never lived in a home with broadband internet.

Katherine Sacks-Jones, chief executive of children-in-care charity Become said many care-leavers face “a real struggle”

Many can’t afford wi-fi “or they can’t buy the data on their phone, because they’re having to pay for other things like feeding themselves, like keeping the electricity on,” she said.

People who can’t afford data have told the BBC of struggles managing benefits claims, or having to juggle work hours with library opening hours to fill in forms or print things out.

Lewa had to make savings after her husband passed away.

She decided to “cut back on the wi-fi to focus on gas and electricity and water costs,” but she didn’t realise how data dependant her family had become.

“Life is a struggle. If you want data for four people it costs a lot and I was always overdrawn,” she said.

“There were times when I was literally crying because it was a struggle, especially when your doctor says fill in the form online.”

“You need that data. It’s vital. I have days when I can’t go out and I need to do shopping online. How do you get by if you can’t access the internet? It’s hard.”

“I had to send my kids to my neighbour so they could do their homework. I felt embarrassed.”

Eventually the Good Things Foundation, which works to end digital exclusion, provided the family with a tablet and data.

The chair of the committee, Baroness Stowell, told the BBC that people without internet often missed out on online deals “so in a cost-of-living type situation, they are also not getting the full advantage of any savings”, she said.

The report accused the government of taking its “eye off the ball”.

It said the government’s ambition to make the UK a “technology superpower” and boost economic growth is being undermined by high levels of digital exclusion.

That includes people who can’t afford internet, who can’t access it, or lack key digital skills.

It said the scale of the problem is a “direct consequence of political lethargy”.

The increasing use of AI in the delivery of public services may also mean that digitally excluded people may face bias.

People who do not post online often may be poorly represented in the datasets – often drawn from material on the internet – used to train such systems, the report said.

Peers want to see more use of social tariffs. At the moment just 5% of the 4.3 million who are eligible use them.

The Lords also called for the Chancellor remove VAT from social tariffs “straight away”, Baroness Stowell said, adding that she wanted Ofcom to do better in forcing companies to advertise these tariffs.

The report comes as the Chancellor met with regulators including Ofcom about the cost-of-living crisis.

Following that meeting Dame Melanie Dawes, Ofcom’s chief executive, said it would be “urging telecoms firms to take immediate steps to raise awareness of social tariffs”.

Till Sommer from the Internet Service Providers Association agreed with the committee that a new digital inclusion strategy was “long overdue”.

He said there was a “real commitment” across the broadband sector to help more people get online through social tariffs and support for people struggling.

But he said there were areas where “only the government can move the dial – including reviewing VAT on broadband.”