A new report has revealed that Britain’s poorest households are paying 10p more in every £1 for everyday goods and services. A study found that the poor are harder hit by rising prices and low income families are unable to pay through direct debit or online and need credit and pre-payment meters for utility bills.
The report, compiled by Rowntree Foundation and Consumer Futures, admits that some consumers may be ‘costlier to serve’ than others and called for the government to focus on making firms drive down costs for these consumers and help them access better value deals in the markets.
Katie Schumecker, policy and research manager at the Foundation feels that the poor pay more is a well-worn phrase but the report drives home the real impact of the poverty premium on the living standards of low-income families. Such households fall short of acceptable standard of living, this being further compounded by the poverty premium, risking increased hardship.
Low income households usually need to relegate between a fifth and a third of all spending on utilities and on buying larger items mostly on credit – raising the cost of a minimum household budget by around 10 per cent. For a single person on a low wage – a third above the minimum wage level – the extra costs can make the difference between being £9 a week short and being £34 a week short of meeting their needs, the report said.
The report laid out three possible ways in which government can intervene to improve things for low income households: ensure fair trading and promote competition; intervene in product and pricing structures and by offering direct help to consumers in vulnerable positions, either in using the market or compensating them for its outcomes.