The poorest are unjustly forced to pay higher prices for basic goods and services
It costs an extra £1,300 a year to be poor in the UK. People on low incomes pay a ‘Poverty Premium’ for:
- Fuel because people on low incomes often use prepayment meters, which charge a higher rate.
- Insurance because people in poorer communities are viewed as a higher risk.
- Food because people in poor communities often have limited access to shops selling affordable, fresh and healthy food.
Credit and banking are particularly important issues in this respect:
- People on low incomes often cannot get credit from banks. They’re forced to use doorstep lenders, payday lenders and hire-purchase companies.
- There is no legal limit on the fees and interest charged by these companies. Interest rates can be 180%APR or more.
- People become trapped in poverty, unable to pay their debts. It perpetuates the gap between poor people and the wealthy, who are able to borrow money at much fairer rates. In the vidoe below, Kath and Maureen from Satockton-on-Tees explain how it feels to be trapped in debt:
We can Close the Price Gap
- Businesses must stop charging higher prices to their poorest customers.
We will campaign for this - either by targeting companies directly, or by calling on government to regulate them. Energy companies, insurers and others can change their business model to offer ‘social tariffs’ for their poorer customers, or ‘equitable tariffs’ where everyone pays the same. We know it can be done because many companies already do so!
- Government can put a cap on the charges made by lending companies.
Nearly every other developed country in the world regulates the cost of credit in some way. We are campaigning for the UK government to do the same.
We're also working with lending companies, their customers and the Office of Fair Trading to develop regulations which would require lenders to behave more responsibly.
- We can promote fairer alternatives, like Ebico, the Co-operative and credit unions.
- We can save poor families up to £1,300 a year!
Our current programme working for Fair Prices
Our 2011 report on the Poverty Premium
See posts about Fair Prices on our blog
We are part of the End Fuel Poverty Coalition.
We helped found and run this campaign for fair finance