What is the poverty premium?


The poverty premium is the idea that the poor pay more for essential goods and services.

In the UK, the premium costs the average low income household £490 a year. However, it can be as much as £1,190 for some people.

This unfair premium is a penalty for living in poverty and only exacerbates the difficulties of managing on a low income

The poverty premium can affect people in many ways but there are eight main areas where its impact can be most felt:

  • Using more expensive pre-payment meters

  • Not paying by the cheapest billing method

  • Unable to move to the best fuel tariff

  • Paying to receive paper bills due to lack of internet access

  • Geographical premiums

  • Insurance

  • Paying to access money

  • Using higher-cost credit.

Living Without

As part of our #LivingWithout campaign, we have been investigating the poverty premium in relation to the extra costs faced by those living without basic household appliances such as a fridge, freezer, oven or washing machine.

If you live without a fridge or freezer, you have little option but to rely on expensive take-away meals or buying small amounts daily from the supermarket. Shopping every day is approximately 48% more expensive than buying in bulk.

For people living without a washing machine and relying on laundrettes, it is 2,561% more expensive than doing your washing at home.

We have also found that people with old and faulty household appliances may be spending upwards of £100 extra every year, compared to those with efficient appliances.

Additionally, if you use high-cost credit to purchase home appliances you may end up paying more than double.

Use the Turn2us Grants Search to find out if you are eligible for a grant before you take out a high-cost loan.