In this engaging discussion, Dan Whitworth, a Money Box reporter, sheds light on the staggering two billion pounds worth of discounts on water bills that low-income individuals are missing out on, with insights from Citizens Advice author Dave Mendes de Costa on the low uptake of social tariffs. David Sturrock addresses potential reforms in pension tax relief that could impact 11 million users of open banking, explained by John Somerville, who highlights its advantages and the concerns surrounding data sharing.
Many low-income households are missing out on nearly £2 billion in discounts on water and broadband due to lack of awareness of social tariffs.
Open banking is rapidly growing, with over 11 million users, yet many remain uninformed about its benefits and security measures.
Deep dives
The Importance of Social Tariffs
Many individuals are missing out on nearly £2 billion in unclaimed discounts on water and broadband bills, primarily due to a lack of awareness about social tariffs designed for low-income households. These tariffs provide significantly reduced rates, but only a small percentage of eligible people are taking advantage of them, with broadband uptake particularly low at just 5%. Real-life examples, such as one man who saved £13 per month on his broadband after losing his job, highlight how these discounts can have a crucial impact on financial stability. This situation raises concerns about a 'postcode lottery,' where assistance varies widely based on location and eligibility rules.
Challenges with Pension Tax Relief
Pension tax relief currently costs the Treasury £43 billion annually, predominantly benefiting higher-income earners, which has led to calls for reform. The system allows individuals to contribute to pensions tax-free, resulting in a disproportionate advantage for wealthier taxpayers who receive the most significant tax breaks. Opinions from the public indicate a growing concern that any potential cuts to these reliefs could demotivate individuals from saving for retirement. Adjustments to the pension tax structure could focus on more equitable distribution of benefits to ensure that lower-income individuals are incentivized to save adequately.
The Rise of Open Banking
Open banking has seen a surge in popularity, with over 11 million users across the UK, enabling customers to access multiple financial services using their data securely. Despite its growth, a significant portion of the population remains unaware of what open banking entails, reflecting a need for better education on the topic. The system's benefits include enhanced financial management through budgeting apps and personalized services, though concerns about data security persist among users. Regulatory measures and strong consumer authentication protocols are in place to ensure safety, fostering confidence in the evolving landscape of digital banking.
People are missing out on nearly two billion pounds' worth of discounts on water bills and broadband, according to Citizen's Advice. Social tariffs give lower prices to people on low incomes, but the charity says there's a "postcode lottery" when it comes to what people can get. The government says more than 1.3 million households in England and Wales benefitted from £200m worth of help with water bills in 2022/23 and that it's working with broadband providers to raise awareness of social tariffs.
Industry groups say many customers choose low-cost broadband over social tariffs and the number of households getting help paying for water should double by 2030.
How might the Chancellor change tax relief on pensions in the upcoming budget?
More than 11 million people used Open Banking in July - that figure was up by 12 percent on the month before. We'll discuss how it works.
And, have you been affected by a scam? Ahead of a special programme on October 5th we'd like to know your experiences - email moneybox@bbc.co.uk.
Presenter: Paul Lewis
Reporter: Dan Whitworth
Researchers: Jo Krasner and Emma Smith
Editor: Jess Quayle
(First broadcast 12pm Saturday 21st September 2024)
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