The Poverty Premium: How poor households pay more for essential goods and services

This briefing calls for action to stop poor households paying more for basic goods and services.

March 2007 0.00

Poor families have to pay on average a £1,000 annual poverty premium for the most essential goods and services such as gas, electricity and insurance, according to a new report published today.

The Poverty Premium by Save the Children and the Family Welfare Association, shows that low income families can pay around:

  • 150% more for basic goods such as an oven bought on credit
  • 10% more on gas bills paid through pre-payment meters rather than by direct debit.

Other areas where poor families end up paying more is for electricity bills (8% more) and for home and car insurance in deprived areas.

Save the Children and the Family Welfare Association outline seven steps in the report to eradicate the poverty premium. These steps include calls on gas and electricity providers to match prepayment meter rates with direct debit rates, improving access to financial advice for low income families and vital reform of the Social Fund which could deliver affordable credit to those who need it most. However, the report also calls for the government to tackle the fundamental problem of income poverty by investing the necessary £4.5 billion to meet the 2010 target of halving child poverty in the UK.

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