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  • One in eight households in Britain experience at least one type of poverty premium. 
  • On average the poverty premium costs £430 per year for a low-income household. 
  • Each British constituency loses £4.5 million a year to the poverty premium. 
  • The North East of England has the highest proportion (14.7%) of households incurring the poverty premium. 
New research from Fair By Design (FBD), and The University of Bristol reveals for the first time the  economic impact of the poverty premium at a local level across Britain. The poverty premium is the extra costs people on low incomes and in poverty pay for essential products and services. Examples include using pre-payment meters for gas and electricity, paying more for home and car insurance due to where you live, and using high interest loans and credit cards.

The research shows that one in eight households experience at least one type of poverty premium. 
This costs each parliamentary constituency £4.5 million per year, equating to a total loss of £2.8 billion from the national economy.

The North East of England has the highest proportion of households incurring the poverty premium (14.7%), followed by the North West (13.4%), Yorkshire and the Humber (13.4%), London (13.1%) and Wales (13.1%). The South East of England has the lowest proportion of households experiencing the poverty premium (11%).

Martin Coppack, Director, Fair By Design, said:  

“As families across Britain struggle with the sharp rise in the cost of living, taking action to end the poverty premium has never been more important.”

“Tackling the poverty premium is an easy way for the government to put money back into people’s pockets and it wouldn’t require any additional money from the Treasury.”

“People shouldn’t have to pay more for life’s essentials because they are on a low income. Industry, government and regulators need to come together to make sure everyone can access the products and services they need at a price that is fair.”

“As families across Britain struggle with the cost of living crisis, taking action to end the poverty premium has never been more urgent. Government intervention to eliminate the poverty premium would put on average £430 back into the pockets of over 3.5 million low-income households without requiring any additional funding from the Treasury.”

Sara Davies, Senior Research Fellow, The University of Bristol Personal Finance Research Centre, said:  

“This research makes it easy to identify where the local focus of poverty premium elimination should be. By addressing these issues, millions of pounds could remain within local economies. This money could be spent locally, creating extra jobs and growing local businesses. Or it would ease financial difficulties for low-income households in the area and reduce the burden on local services.”    

A new report published by Business in the Community (BITC), The Prince’s Responsible Business Network, has today called on the Government to ensure that businesses are involved in all plans to level up the country. The report ‘The Business of Levelling Up’ comes as new legislation to support the levelling up agenda, the Levelling Up and Regeneration Bill was announced during the Queen’s Speech in Parliament on 10 May 2022.

The report follows a call for evidence to understand how businesses, national government and local authorities can work together to transform communities. Focusing on a variety of themes, the report highlights the importance of collaboration in addressing key issues within a community including employment, skills, housing and transport.

The report makes 14 recommendations for national government, local government and businesses to work together to create local ‘partnerships’ and bring opportunities and investment to communities across the UK. The recommendations include:

  1. Businesses need to secure senior-level buy-in to effectively participate in partnerships.
  2. Levelling up funding needs to be flexible, long-term, localised and aligned with the levelling up missions to maximise the engagement of business and deliver transformative change.
  3. All partnerships need to deliver early action, understand the local issues and opportunities, develop a vision and action plan, and measure their impact.
  4. Town Deal Boards have the potential to be further utilised to deliver the levelling up missions, but central government needs to ensure they are truly business-led and give them increased revenue funding to enable them to operate as an effective place-based partnership.
  5. Businesses should utilise their knowledge and assets to benefit the partnership and the wider community.
  6. Businesses should harness their supply chain to engage more organisations in a partnership.

To help understand the role of businesses in place-based transformation, BITC consulted with organisations in the public and private sectors through a call for evidence, interviews, roundtables and visits. This report is the beginning of a series of publications aimed at supporting businesses to work collaboratively in communities.