'Poverty premium' hikes gas and electricity costs

09 March 2007
Some of the UK's lowest-income families are paying most for gas and electricity because buying utilities by meter is more expensive than paying by direct debit, according to a report from Save the Children and the Family Welfare Association.

Poor families can pay a £1,000 'poverty premium' on gas, electricity and insurance, the report warned, with a ten per cent premium on gas and an eight per cent premium on electricity bills paid by meter.

The direct debit option is only open to customers with current accounts, excluding many of those whose poor credit record or lack of financial awareness inhibits them from opening a basic bank account.

"It is a matter of gross injustice that the families who are struggling most to get by … are being forced to pay more for essential things like heating their homes," Colette Marshall, UK director of Save the Children, commented.

A National Debtline spokesperson this week confirmed that loan sharks remain at large in many low-income communities, where debtors borrow as little as £50 to live from week to week.

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