Citizens Advice, the Institute for Public Policy Research (IPPR) and Policy in Practice published three reports on 31 March 2025 examining the design and delivery of social tariffs across essential markets, produced as part of a partnership with abrdn Financial Fairness Trust1. The reports cover affordability, the barriers households face in accessing existing schemes, and the use of data to automate delivery1.
IPPR analysis of Living Costs and Food Survey data found that households in the lowest equivalised income decile spend around two fifths (41%) of their disposable income after housing costs on energy, water, broadband and car insurance, compared with 11% for those in the fifth decile and 5% for those in the tenth decile1. The reports note that bills are set to rise again in April, including a 6.5% rise in the energy price cap and a 26% increase to the average water bill1. IPPR modelling found that a 25% discount on energy, water, broadband and car insurance bills would save the average low income household £13 a week, or £680 per year, equivalent to a boost of disposable income of around a tenth for a typical household in that group1.
On targeting, IPPR found that defining eligibility as anyone in receipt of means-tested benefits would make almost one in five middle income households (19%) eligible, while around a third (32%) of households in the lowest 10% of the income distribution would miss out1. The reports state that using Pension Credit receipt or the £7,400 earnings threshold used for free school meals eligibility in England would target support more effectively, but would still leave significant numbers in the second and third income deciles ineligible, and suggest a hybrid approach using both an income threshold and means-tested benefit receipt may be most appropriate1.
Citizens Advice identified 11 barriers across four stages of the consumer journey: awareness, availability, eligibility and sign-up1. It cites the Warm Home Discount as a model for automated delivery, having reached the vast majority of eligible households (92% in 2023-24) using DWP data1. Policy in Practice profiled companies already using data to increase take-up and set out steps for scaling these approaches1.
"Ensure that a single social tariff is both built around a principle of 'automation by design' and targeted effectively to those who need support. Where there are tensions between automation and targeting, automation should take precedence"
| Measure | Figure |
|---|---|
| Share of disposable income spent on the four bills, lowest income decile | 41% |
| Fifth decile | 11% |
| Tenth decile | 5% |
| Energy price cap rise, April | 6.5% |
| Average water bill rise, April | 26% |
| Saving from a 25% discount on all four bills | £13 a week, or £680 a year |
| Warm Home Discount automatic reach, 2023-24 | 92% of eligible households |
Why it matters for households
The reports frame social tariffs as support delivered through the tariffs a household already holds, rather than a product a household must find and choose. For energy, the Warm Home Discount shows that support can be applied without an application, while water and broadband schemes currently depend on households discovering and applying for them1. The reports state that billions of pounds in existing social tariff support is potentially going unclaimed every year1. For a household on a low income, the difference between automatic and application-based delivery is the difference between receiving a discount and missing it, and the reports note that people who are digitally excluded, have English as an additional language, or are experiencing mental health issues or significant stress are disproportionately affected by application processes1. The reports also note that expenditure on water and energy varies more within income groups than across them, suggesting low income households have limited ability to reduce these bills by cutting usage when prices rise1.
What happens next
The reports set out a series of steps. These include a national water social tariff with automatic enrolment for people known to be eligible and in need by April 2026, with Defra implementing a single social tariff using powers in the Water (Special Measures) Act, described as achievable by 20261. Other steps include beginning with an approach using DWP data to automate eligibility assessments and awards for those in receipt of means-tested benefits, simple processes to capture eligible households not receiving a passported benefit, all water, energy and broadband companies implementing Apply Once with GOV.UK endorsed benefits calculators, and water companies piloting Auto Enrol for customers in arrears1. The reports also call for a review of WaterSure, the Warm Home Discount and the broadband social tariffs1. No implementation dates beyond April 2026 have been reported.