Addressing the poverty premium: approaches to regulation

Transforming responses to consumer vulnerability is a priority for Consumer Futures. This report, based on research by the Joseph Rowntree Foundation, is about how people on low incomes pay more for essential goods and services and what can be done about it. It is widely believed that consumers will best be served by encouraging competition on the basis that this drives efficiency and delivers innovation. However, competition does not always work this way and it is consumers on low income that often lose out, but so do others who are vulnerable for reasons other than low income. The fact that ‘the poor pay more’ is not news. This report updates the picture and shows that paying higher prices for utilities and credit can raise the cost of a minimum household budget by around 10 per cent – a ‘poverty premium’. The cost of many essentials such as energy and water are likely to rise and while we hope for a tide of economic growth which will lift all, poverty and vulnerability is not going to go away and indeed many people who are not seen as ‘poor’ will struggle to meet household bills.