People Living In Poverty End Up Paying Higher Prices Across The Board - That's The Poverty Premium

Being poor is not just about being unable to afford those 'nice to have' things - it's being forced to pay more for the absolute essentials, such as gas, electricity, banking, household goods and even groceries simply because you are living in poverty. It's called the 'poverty premium' and it is effectively a tax on the poor.
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Being poor is not just about being unable to afford those 'nice to have' things - it's being forced to pay more for the absolute essentials, such as gas, electricity, banking, household goods and even groceries simply because you are living in poverty. It's called the 'poverty premium' and it is effectively a tax on the poor.

According to the Joseph Rowntree Foundation (JRF), households in poverty are four times more likely to be behind with at least one bill and the poverty premium can add as much as 10% to a minimum household budget - that's about a £1,000 extra per year.

And it's not new - it's been around for a long time. What woke me up to this was back in my 20's and the shock of finding that a close friend had been pretending she wasn't hungry, or she was on a diet, so that her children could have more food. Opening her fridge door and seeing nothing there.

You could perhaps understand it when we used to have high transaction costs and cumbersome financial systems for small purchases: surely this shouldn't be an issue now in a digital age?

But we have a real will for change. There is massive public pressure to see off predatory companies and predatory credit rates. An overwhelming majority of the public want the UK to get to grips with high levels of poverty according to JRF's research. As social enterprises are booming, we know companies are looking for sustainable futures and solutions to some of the UK's toughest challenges.

The poverty premium can be solved - and as we partner with JRF to develop a new programme called 'Fair by Design: making life affordable' - we know it will be solved.

JRF have provided the evidence and the impetus and now other organisations are keen to play their part, from making grants to initiating corporate change and lobbying and regulation.

And our part at Big Society Capital will focus on social investment to help charities and social enterprises grow their work, and to take companies into social purpose. We need to provide the capital to help these enterprises scale up and change the market so that it truly is an inclusive, responsible market, a market that is fair by design.

That's why we are so keen to team up with the Joseph Rowntree Foundation, other foundations, investors and corporates to plan the creation of a social investment fund of up to £20m to catalyse the growth of enterprises.

Along the way we hope to bring in co-investors so that we can work in partnership to knock down big slices of the poverty premium. We are also reaching out to other partners who will use their skills and tools alongside our work on investment.

Individually we have one tool and that can help. Collectively we have many tools and can solve the problem.

This is not about palliative action. This is about a solution: a solution that will eliminate the poverty premium, and help the millions of people who struggle to keep their head above water.