Universal Credit: Telecom industry pushed for ‘social tariffs’ following Ofcom & BT update

Coffey questioned on Universal Credit uplift and legacy benefits

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Universal Credit and other means-tested benefit claimants will benefit from a new deal announced by BT in early May. BT will launch “BT Home Essentials” in June, a social tariff for those on low incomes, and following a recent report from Ofcom, BT warned it does not go far enough and the Government have been urged to act.

On May 7, Ofcom published its Fairness for Customers review, which laid out the communications regulator’s progress towards its six fairness commitments.

These commitments are designed to help ensure people are always treated fairly by providers and they are as follows:

  • Customers get a fair deal, which is right for their needs
  • Customers get the support they need when their circumstances make them vulnerable
  • Customers are supported to make well-informed decisions with clear information about their options before, during, and at the end of their contract
  • Customers’ services work as promised, reliably over time. If things go wrong providers give a prompt response to fix problems and take appropriate action to help their customers, which may include providing compensation where relevant
  • Customers can sign up to, change and leave their services quickly and smoothly
  • Customers can be confident that fair treatment is a central part of their provider’s culture

In response to the latest update from Ofcom, Marc Allera, BT’s Consumer Division CEO, welcomed the efforts but called for more urgent action: “Ofcom’s fairness principles should not be seen as the ceiling of ambition; we want to go above and beyond the guidance published in last week’s review.

“Last week we announced the launch of BT Home Essentials, which we will introduce in late June.

“This is BT’s at-cost social tariff to connect those who need it most with affordable fibre broadband and calls. We are proud to be extending eligibility to all customers on Universal Credit and other means-tested benefits, helping a potential 4.6 million households.

“BT alone cannot make our society digitally inclusive, even as we continue to invest in our networks to keep up with unprecedented customer demand for data in this new world of connectivity.

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“So, we are calling on all fixed broadband operators to implement a social tariff costing no more than £200 per year, which offers speeds of up to 10mb upload/40mb download where available, for customers on low incomes and Universal Credit.

“We are offering BT Home Essentials at cost price to help those who might struggle to afford broadband and landline. At the same time, we know that for some families £15 per month is still a stretch.

“If, as a society, we want to do more to help those people, Government support will be crucial.

“Funding or subsidies for social tariffs could make a very significant difference, in the same way that winter fuel payments help vulnerable people with their energy costs. Removing the VAT from bills for those on social tariffs could also be a big help to those who need it most.

“Across our industry, we all need to step up to the challenges facing an increasingly connected but fractured society – with far too many vulnerable people falling between the gaps. As we focus on building back better, we must also build back together.”

BT Home Essentials will not just be available to those on Universal Credit, the new tariff can also be utilised by those on the guarantee credit element of pension credit, jobseeker’s allowance, income support, and employment and support allowance.

As the new social tariff was announced, Matt Warman, the Digital Infrastructure Minister, also called for other providers to take similar steps.

He said: “In today’s digital world, everyone should be able to access fast, reliable and affordable internet, so I’m thrilled that BT is the latest provider to launch new deals for low income households.

“We have been working with internet providers to offer affordable broadband tariffs for those struggling with bills to help the UK build back fairer from the pandemic.

“I hope to see others taking similar action soon.”

Universal Credit itself is designed to help cover essential bills and this can include rent, services charges and utility bills.

Utility bills/debt can be paid directly from benefit payments through third party deductions.

For Universal Credit, the amount deducted will depend on what’s being covered, as detailed below:

  • Five percent for gas, electricity and water
  • At least five percent but not more than £108.35 per month for fines
  • Between 10 and 20 percent for rent

To be eligible for Universal Credit initially, claimants must be on a low income or out of work entirely and be aged between 18 and state pension age.

Additionally, they must have less than £16,000 in savings and be living in the UK.

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