Which? calls for telco VAT cut amid cost of living crisis

Tech

UK consumer champion Which? warned on Thursday that nearly 6 million households are struggling to pay their telecoms bills.

It has called on the government to reduce the VAT rate on mobile, broadband and fixed-line phone services from 20 percent to 5 percent. Doing so would bring the rate on telecoms into line with essential utilities like electricity and gas, and would reduce costs by an average of £120 per year, it said.

Which?’s call for intervention was prompted by an analysis it carried out of Ofcom’s latest Communications Affordability Tracker, which revealed the sacrifices an increasing number of households are making in order to pay for what are seen these days as essential telecoms services.

According to its analysis, Which? estimates that 5.7 million households experienced at least one affordability issue in April, such as missing payments, cancelling or changing their service, or cutting back on other spending. On that note, Which? reckons 3.5 million households reduced spending on other essentials like food and clothing in order to afford connectivity services, up from 2.2 million in February. Three percent said they had been forced to cancel services in April, up from two percent in February. In addition, the number of households that experienced multiple affordability issues – which means struggling to pay for more than one telecom service, or made more than one financial adjustment to be able to afford their telecom services – increased by 56 percent from February to April.

“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,” noted Rocio Concha, director of policy and advocacy at Which?, in a statement.

Which? also called on the industry to support struggling households by making them aware of – and making it easy to switch to – cheaper tariffs, including social and discounted price plans.

“Businesses must support anyone struggling to afford their bills and ensure consumers are aware of and able to access the best deals,” said Concha.

Fortunately the government is already on the case when it comes to this. In June, the Department for Digital, Culture, Media and Sport (DCMS) met the leaders of BT, Openreach, Virgin Media O2, Vodafone, Three, TalkTalk, and Sky, among others, and agreed a range of measures to help households afford to stay connected.

They include allowing struggling customers to switch to cheaper tariffs without incurring any charges or penalties. Telcos have also agreed to raise awareness of low-cost products to customers who are on Universal Credit.

Which?’s intervention this week could exert more pressure on the industry to ramp up its efforts to help customers cope with the cost of living crisis. The crisis is in danger of spiralling out of control in October, when energy regulator Ofgem is expected to once again raise the price cap on gas and energy bills. When that happens, telcos could find out just how essential their services really are.

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