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Digital Divide preventing thousands of Families from receiving Tax Breaks

Posted by Dan Pope on Nov 21, 2014 9:03:32 AM

Here at Fluidata we often write about the issues the digital divide causes here in the UK, including SMEs failing to compete on the open market and house prices decreasing in rural areas. However, a recent report has highlighted yet another problem caused by the digital divide as thousands of families may soon be unable to claim child tax breaks due to the fact that they do not have access to the Internet.


This is one of the biggest issues with the digital divide as it harms those that need the most help. Families that are currently struggling with the cost of living are often unable to afford Internet connectivity and now they could lose out even further as they will not be able to receive child tax breaks. The Labour party has already challenged the coalition government over the Government’s Childcare Payments Bill and have claimed that due to the digital divide almost 200,000 families will not be able to apply.

The Labour party has recently put forward proposals to increase the amount families receive in child support, with Shadow Treasury minister Catherine McKinnell saying: "Childcare costs have gone up by 30% since 2010, but David Cameron has cut childcare support for families in this Parliament. Labour's economic plan will make work pay and back families struggling with the cost-of-living crisis. We will expand free childcare places for working parents of three and four-year-olds from 15 to 25 hours per week.

“This will help nearly half-a-million families. And we'll pay for it by increasing the bank levy by £800 million. This will be on top of the Government's plans for tax-free childcare and will be worth over £1,500 per child a year.” Ms McKinnell went on to slam the government over its plans to make applying for child tax breaks digital and added: “It's outrageous that nearly one in 10 parents who don't have access to the Internet could lose out. Ministers need to fix this."

Max Stoner, Senior Consultant at Fluidata, added: “The issue raised by Catherine Mckinnell is a salient one – child tax credit, and indeed a number of other benefits included under the new Universal Credit, require claimants to have access to the Internet, but in the UK there are 8 million of us who have never used the Internet and 4 million homes who don’t have an Internet connection. Data tells us that these people are ‘digitally disenfranchised’ – they lose out on the social, financial, educational and employment benefits that the World Wide Web delivers.

“Of course there are a whole host of reasons why we aren’t all online; for some it might be cost, for others it’s a lack of digital skills, in remote locations poor, unusable connectivity is often the problem. The current government does appear to be committed to ‘Digital Inclusion’; money is going into improve the UK’s connectivity infrastructure both through the BDUK schemes’ and the ‘Connected Cities’ voucher scheme, whilst the decision to allow schools to make purchasing decisions outside of the county council framework has enhanced the digital infrastructures within UK schools.

“Universal Credit represents a challenge for the reasons McKinnel outlines, but the forced shift online just might be the catalyst needed for more people to use the Internet and benefit from it. Housing Associations specifically are set to play a key role in these developments - as many of the population without Internet access reside within social housing.”

Exchequer secretary Priti Patel has already recognised the issue the digital divide will pose under the new scheme, and in a letter to the Independent on Sunday wrote: “HMRC does not have exact figures but estimates that around 9 per cent of parents that will be eligible for the scheme do not have access to the Internet. HMRC is committed to helping people use its services online and will make assisted digital options available for those currently not able to access the Internet. These will help all parents register for the scheme, reconfirm their details and operate their account digitally.”

At the moment it’s not clear whether the Government’s Childcare Payments Bill will be approved, let alone how the hundreds of thousands of families without Internet access will be able to apply for tax breaks. This issue perfectly summarises how the UK digital divide is affecting people around the country, and how in the future this issue will only become worse as more and more companies and services move online.

Even now most companies request their customers to go online to find out more information about certain services, with some even providing cheaper quotes for those that buy online. This means that families on the lower end of the digital divide are losing out as well as those who are trying to help society including schools and Housing Associations.

Max Stoner explains: “The task of potentially providing Internet access to all residents and also helping them to develop digital skills is a daunting one, but backed by the Governments Digital Deals scheme and with organisations like Fluidata offering advice and options on ways to tackle it; it is by no mean insurmountable. More importantly it promises transformative change – better quality of life for residents and a range of efficiency advantages to the Housing Associations provided by a digital customer base.

“The one gripe most of our industry has with the existing government is while much energy is going into the digital sphere there remains a lack of conviction around redressing the monopoly advantage afforded to BT when it comes to last mile connectivity access projects. For true transformative change to be felt, better access and choice of connectivity across the whole country is needed. The government must stop treating BT with kid’s gloves if they are serious about delivering this part of their agenda.”

Fluidata realised that the digital divide was only going to widen back in 2009, which is why since then we have been working on our Service Exchange Platform (SEP). Today, we work closely with over sixty Internet Service Providers (ISPs) in order to provide those in rural areas high speed, reliable Internet connectivity. However, without the support of even more businesses and the government those that could benefit from the Internet will still go without, which is why the government should use this opportunity to tackle the digital divide once and for all.

Topics: Internet Service Providers, digital divide, government, News, Service Exchange Platform