Digital Poverty Alliance Calls on UK Gov to Cut VAT on Broadband to 5%

The Digital Poverty Alliance (DPA) has published their 2023 National Delivery Plan, which calls on the UK Government to help support ISPs to get more people in disadvantaged groups online, such as by cutting Value Added Tax on broadband ISP and mobile bills to just 5% (currently 20%) – similar to other utility services.

According to the DPA, around 1.7 million households (6% of the UK) are currently without home internet access and around 10 million adults (20%) lack foundational essential digital skills. But in fairness not everybody wants to have an internet connection at home, although the problem for such groups these days is that it’s rapidly becoming essential for many important tasks.

The DPA says that “digital access is a basic right“, and lack of access to essential digital skills, devices and connectivity “prevents people from accessing essential services, managing their healthcare, learning new skills and applying for jobs” (we’d say it inhibits, rather than prevents).

The new plan, which is based around six core missions, thus sets out a roadmap to ensure that everyone can access the “life changing benefits of digital and that local organisations are empowered to support people to get online.”

The Six Core Missions

➤ Increase awareness across society about the need for sustainable and strategic action to end digital poverty.

➤ Ensure affordable connectivity and guarantee full digital access for those in need on a sustainable basis.

➤ Improve standards of accessibility, safety, and inclusiveness across all digital products and services.

➤ By 2030, significantly reduce the proportion of individuals without essential digital skills and ensure the sustainability and expansion of these skills in response to changing technologies and needs.

➤ Enhance knowledge and understanding of digital poverty among all stakeholders, including citizens, governments, and the public and private sectors, through the development and utilisation of research.

➤ Increase local capacity to provide joined-up digital inclusion support to individuals and communities.

The VAT pledge forms part of the second mission – ensuring affordable connectivity and guaranteeing full digital access for those in need on a sustainable basis. The second mission is split into two phases, which seem to constitute recommendations that they’d like the UK Government and industry to follow by 2030.

Actions for the Second Mission

Actions for 2023/24 (Phase 1)

2.1 Raise awareness among all employers and tech users about donating devices for reuse.
2.2 Improve signposting to available schemes for support with devices and connectivity.
2.3 Promote awareness of sources of support for local groups or organisations wanting to address data poverty and device poverty.
2.4 Internet service providers pledge to expand data donation initiatives to help those in need.
2.5 Scale up the provision of centres for facilitated digital access funded by new government investment.

Actions needed by 2030 (Phase 2-4)
2.6 UK Government must ensure all communities can access a strong, reliable internet connection.
2.7 Investigate options for reducing VAT on broadband and mobile bills to 5% and implementing a digital inclusion levy.
2.8 Advocate for the removal of VAT on social tariffs.
2.9 Agreement between Government and ISPs for a co-funded industry-wide social tariff.
2.10 Creation of a government entitlement to free connectivity, devices and support to priority groups at the highest risk of exclusion.
2.11 Develop proposals to ensure universal access to 1:1 devices within the education system.
2.12 Advocate for DfE to conduct an evaluation of the Get Help with Technology scheme.

The eagle-eyed may notice that mention of implementing a “digital inclusion levy” alongside the VAT change, as well as all that talk of introducing a co-funded “industry-wide social tariff“, which we don’t think is currently necessary (a lot of ISPs now offer cheaper social tariffs and take-up is growing) and would place strain on the smallest providers.

The report goes on to recommend supporting an industry-wide social tariff with a discount scheme (i.e. part subsidised by the government). “The subsidy would be provided at a fixed amount and would be used to offset most of the costs that internet service providers incur for network rental,” said the DPA.

The DPA suggests that the Government should “consider going further with VAT” by cutting the rate charged on “all broadband and mobile bills” from 20% to 5%.  However, a wider cut in VAT could then, it states, “be replaced by a digital inclusion levy that would be applied to broadband and mobile bills and used to subsidise social tariffs.” But all of this is very hypothetical, and it’s not entirely clear how such a levy would even work.

Paul Finnis, CEO of the DPA and Learning Foundation, said:

“The National Delivery Plan is a unique and revolutionary strategy to tackle the issue of digital poverty, calling on an urgent and collaborative effort between the Digital Poverty Alliance, government, industry leaders, and community organisations. Together, we can work towards ending digital poverty and ensuring that everyone has the skills, resources, and access they need to thrive in the digital age. This flagship strategy set out by the DPA is designed to have a tangible impact on those most impacted by a lack of essential access to the digital world and the alliance is committed to delivering this support alongside our partners and fellow community.”

In the past, Ofcom has warned of further action if providers fail to put more effort into launching cheaper social tariffs for those on state benefits, which they said could include the potential introduction of an industry-wide regulated social tariff. But so far quite a few ISPs have launched such tariffs and the regulator has instead focused on nudging providers to tackle the awareness problem (53% of eligible households don’t know they exist).

As for the proposed VAT change, more than a few ISPs, MPs and other organisations have called on the UK Government to cut the rate of VAT on social tariffs to just 5% (here), but so far there’s been no solid movement on that front.

Once again, it’s worth remembering that the price we all pay for communication services is largely dwarfed by the colossal hikes in energy (e.g. gas and electricity), petrol, food and other bills. If people are struggling to afford even a fairly basic internet or mobile plan, which doesn’t typically form a large chunk of household bills, then they’ve probably got much more serious concerns in those other areas.

Finally, a quick reminder – we know social tariffs can be divisive for some, but that is not an excuse to abuse the comment system in order to post offensive remarks toward those who take state benefits. Such posts are against our rules and will be removed.