Peers have suggested that to encourage more people to go online, special internet deals for those receiving benefits should be VAT-free.
People without internet are at a disadvantage, for instance, when looking for jobs, according to a Lords committee report.
The report claimed that the government "does not have a credible strategy to tackle digital exclusion.".
However, the government affirmed that it is dedicated to making sure that no one is left behind in the digital age.
According to the statement, "to bring a range of social broadband and mobile tariffs, available across 99 percent of the UK, starting from as low as £10 per month.".
Social tariffs are reduced rates that businesses provide to people for benefits.
However, 17% of households lack access to mobile or broadband internet at home, and up to a million people have reduced or canceled their internet subscriptions in the last year, according to the House of Lords communications and digital committee.
90 percent of jobs are only advertised online, and more services, including banking and benefits, are moving online.
18-year-old Bella was raised in a single-parent home that struggled financially, "especially during this cost-of-living crisis and Covid.".
She admitted to the BBC that she didn't have a laptop of her own for some of her time in school, forcing her to spend a lot of weekends in the library.
Matt, who was once in foster care, is now employed, and also works to increase public awareness of the problems care-leavers face, admitted to the BBC that he had never lived in a house with broadband internet.
Many care-leavers face "a real struggle," according to Katherine Sacks-Jones, CEO of the children-in-care charity Become.
Many people can't afford wi-fi "or they can't buy the data on their phone because they have to pay for other things like feeding themselves, like keeping the electricity on," the speaker said.
People without access to data have complained to the BBC about difficulties managing their benefits claims or juggling their work schedules with library hours in order to print or fill out paperwork.
After her husband died, Lewa had to start saving.
To focus on gas, electricity, and water costs, she made the decision to "cut back on the wi-fi," but she was unaware of how dependent her family had become on data.
Life is a battle. Data for four people is expensive, and I was frequently in debt, the woman claimed.
It was a struggle, especially when your doctor tells you to fill out the form online, and there were times when I was literally crying. ".
You need that information. You must do it. On some days, I'm unable to leave the house and must conduct my shopping online. It's difficult to survive if you can't access the internet. ".
My kids had to go to my neighbor to finish their homework, so I had to send them there. Embarrassed, I felt. " .
The Good Things Foundation, a group that works to end digital exclusion, eventually gave the family a tablet and internet access.
Baroness Stowell, the committee's chair, explained to the BBC that those without internet frequently missed out on online deals. "So in a cost-of-living type situation, they are also not getting the full advantage of any savings," she said.
The government was charged in the report with "eyeing off the ball.".
It claimed that the high rates of digital exclusion are undermining the government's goals of making the UK a "technology superpower" and fostering economic growth.
That includes individuals who lack necessary digital skills, cannot access the internet, or cannot afford it.
It stated that the size of the issue is a "direct result of political lethargy.".
People who are digitally excluded may experience bias as a result of the growing use of AI in public service delivery.
The datasets, which are frequently derived from online content, used to train such systems may not adequately represent people who do not post frequently online, the report warned.
Social tariffs should be used more, according to peers. Currently, only 5% of the eligible 4.3 million people use them.
Baroness Stowell noted that the Lords also demanded that the Chancellor immediately abolish the VAT on social tariffs and urged Ofcom to improve its efforts to compel businesses to publicize these tariffs.
Reporting on the cost-of-living crisis coincides with the Chancellor's meeting with regulators, including Ofcom.
After that meeting, Dame Melanie Dawes, the CEO of Ofcom, declared that the organization would "urge telecoms firms to take immediate steps to raise awareness of social tariffs.".
A new digital inclusion strategy was, in the committee's words, "long overdue," according to Till Sommer of the Internet Service Providers Association.
According to him, the broadband industry as a whole has a "real commitment" to support those who are having trouble getting online by offering social tariffs.
However, he acknowledged that in some instances "only the government can move the dial, including reviewing VAT on broadband.
. "
