- New research reveals those on the lowest incomes are being forced to pay up to £736 more for essentials because they are unable to access deals and discounts available to more affluent households (known as the poverty premium). Up to one-in-ten households are affected.
- The poverty premium for shopping at local versions of many supermarkets has more than tripled since 2022, rising from £84 to £261 a year.
- People who pay for their energy bills by prepayment meter are being locked out of the best deals costing them an extra £129 each year.
New research from Fair By Design and the University of Bristol Personal Finance Research Centre reveals that 95% of low-income households in Britain are paying an average poverty premium of £380 a year. This means their bills are increasing by even more than wealthier households for the same essential goods and services. The poverty premium is an extra burden people on low incomes pay, not because of the choices they make, but because of the choices they don’t have.
Examples of poverty premiums the research found include:
- Paying monthly for car insurance, rather than annually, costs drivers on average £71 per year and if someone lives in a postcode in an area with high levels of deprivation they pay on average £153 per year more.
- More than one-in-four low-income households (27%) use some form of high-cost credit, paying an average premium of £178 a year. Those using payday loans or subprime personal loans face costs as high as £698 and £805 annually.
- Overall, ethnic minority households pay an average poverty premium of £488 per year. This is over £100 more than the £380 average across all groups.
Rebecca Deegan, Director, Fair By Design, said:
“This report is a stark reminder that the cost-of-living crisis is not experienced equally. The poverty premium means that those already under financial pressure are being charged more for essential goods and services and increasingly being forced to go without.”
“At a time when money is short for everyone, families on the lowest incomes have been charged more for the essentials like food on the tables and to keep their homes warm.”
“Government, regulators and industry must step in urgently to fix broken markets and make sure everyone can access essential goods and services at a fair price.”
Yvonne Fovargue, chair of Fair By Design and Labour MP for Makerfield from 2010 – 2024
“If the Labour Party is serious about tackling the cost-of-living crisis, fixing the poverty premium must be part of the answer. The poverty premium is forcing people to pay even more for life’s essentials. In Makerfield, where I was an MP and live, it costs households in poverty on average £387 each year. I’ve seen too many times how the system makes it even harder for the people with the least to make ends meet.”
S Rasheed, Fair By Design Lived Experience Panel Member please
“As a one parent family it feels unfair that living on a single low income means paying more for food, insurance and energy.”
“What hits hardest is knowing that families with the least are charged the most, whilst big companies are all about increasing their profits.”
“I feel this can be changed if the government and big businesses thought about putting people first rather than profiting through poverty.”
Sara Davies, Associate Professor, University of Bristol
“Our findings suggest that the poverty premium is primarily caused by structural factors rather than individual choices. To reduce or remove the poverty premium will therefore need markets to be designed to give fairer outcomes, rather than relying on behavioural change.”
ENDS
Notes to Editors
- Frankie Galvin, Campaign Communications Manager, Fair By Design, f.galvin@barrowcadbury.org.uk 07506776054
- The ‘poverty premium’ refers to the extra amount that low-income households pay for essential goods and services because of barriers that they face due to being on a low income.
- The research was conducted by Jamie Evans, Research Fellow at the Personal Finance Research Centre (PFRC), University of Bristol and Sara Davies, Research Co-Director of PFRC and an Associate Professor. The research was commissioned by Fair By Design and part-funded by the Aberdeen Group Charitable Trust, under the Trust’s prior charitable name, abrdn Financial Fairness Trust.
- The full report from the Personal Finance Research Centre (PFRC), University of Bristol can be found here. A summary can be found here.
- The research does not cover Northern Ireland because of significant differences in relevant markets and data sources which mean it is not directly comparable to the rest of the UK.
- The data for this research was collected between December 2025 and January 2026 with Ipsos conducted a representative telephone survey of 1,040 respondents whose household income was below 70% median income, adjusted for household size and housing costs.
- About Fair By Design: Fair By Design is dedicated to reshaping essential services such as energy, credit, insurance and payments so that they don’t cost more if you’re in poverty – also known as the poverty premium. Fair By Design works with regulators, Government, Parliament and industry to eliminate the poverty premium. Fair By Design is managed by the Barrow Cadbury Trust on behalf of a group of foundations.
Constituencies where low-income households face the highest average poverty premium
| # | Constituency | Avg Poverty Premium |
| 1 | East Ham | £573 |
| 2 | Birmingham Perry Barr | £562 |
| 3 | Leicester East | £556 |
| 4 | Birmingham Ladywood | £540 |
| 5 | Bethnal Green and Stepney | £539 |
| 6 | Ilford South | £534 |
| 7 | Ealing Southall | £529 |
| 8 | Poplar and Limehouse | £524 |
| 9 | Brent West | £523 |
| 10 | Feltham and Heston | £523 |
Constituencies with the highest amount of money leaving the constituency because of the poverty premium
| # | Constituency | Total constituency cost |
| 1 | Birmingham Ladywood | £9,835,804 |
| 2 | Leicester East | £7,876,250 |
| 3 | Birmingham Perry Barr | £7,483,213 |
| 4 | West Ham and Beckton | £7,387,264 |
| 5 | Poplar and Limehouse | £6,999,084 |
| 6 | Erith and Thamesmead | £6,892,310 |
| 7 | Barking | £6,869,679 |
| 8 | Brent East | £6,754,312 |
| 9 | Bethnal Green and Stepney | £6,744,634 |
| 10 | Tottenham | £6,737,247 |
Top 10 wards where low-income households face the highest average poverty premium
| # | Ward | Constituency | Avg Poverty Premium |
| 1 | Wycliffe | Leicester South | £658 |
| 2 | Birchfield | Birmingham Perry Barr | £620 |
| 3 | Lozells | Birmingham Perry Barr | £619 |
| 4 | Southall Broadway | Ealing Southall | £611 |
| 5 | Handsworth | Birmingham Perry Barr | £608 |
| 6 | North Evington | Leicester East | £606 |
| 7 | Bordesley Green | Birmingham Ladywood | £604 |
| 8 | Aston | Birmingham Perry Barr | £602 |
| 9 | Southall Green | Ealing Southall | £598 |
| 10 | Belgrave | Leicester East | £596 |
