Paying to be poor

The Poverty Premium: when low-income households pay more for essential goods and services

In the UK the poverty premium – the idea that the poor pay more for essential goods and services – is an important social policy concern for low-income families. Providing a timely update to earlier research, this study reflects markets and household behaviour as it exists today, and, for the first time, explores how many low-income households are actually affected by the poverty premium, and by how much.

Authored by the Personal Finance Research Centre, based at Bristol University, the report estimates that the average cost of the poverty premium is £490 per household per year. This is lower than the previous estimate of around £1,300 per year (Save the Children, 2010). The difference is largely explained by the fact that the report takes into account the proportion of households that incur each of the eight components that make up the report’s definition of the poverty premium.

Report authors: Sara Davies, Andrea Finney and Yvette Hartfree

Report was originally published at www.bristol.ac.uk/geography/research/pfrc/themes/finexc/poverty-premium/