The Poverty Premium
On average people on low incomes pay around £1,000 more than the rest of the country per year for goods and services. How come? Well for a start there's the higher cost of prepaid utilities, higher rates for loans and local ATM machines that charge a fee. If someone doesn't have access to a car, they may not be able to visit a supermarket or carry back a large bargain pack, instead they are stuck paying high costs at the local corner shop. The problem is compounded because people in poverty are also less able to compete for jobs due to poor mental and physical health, they don't have the financial resources to get to interviews, or buy smart clothes clothes, and they don't have access to IT.
The premium paid in Tower Hamlets
A report by the charity Toynbee Hall found that residents in the London Borough of Tower Hamlets pay an average of £1014 more than the rest of the populations for goods and services. Read the report here.
Save the Children
The Poverty Premium was estimated at £1300 by Save the Children and Moneysaving Expert in 2011, The reasons remain the same three years later. Read The Guardian's analysis and interviews here.
Do prepayments meters help people to budget?
MoneySupermarket examines to pros and cons of having a prepaid meter or card for gas and electricity. Read more here.
Credit Unions offer lower rates for loans, and in recent times they've become more flexible, offering loan to people who haven't previously saved with them. Quite a few offer affordable payday loans to provide an alternative to loan sharks. They can also offer 'jam jar' accounts to help people budget, but there is usually a fee for these accounts. Some housing associations will enrol new tenants in a scheme and pay the fee in order to make sure the rent gets paid. See Moneysavingexpert's page on credit unions.
Basic Bank Account
This is a good option for anyone who has been turned down for a regular account. It allows account holders to save money by paying bills by direct debit, and wages or benefits can be paid directly. There isn't usually a charge, but there would be no overdraft facility and charges could be incurred for returned cheques. See this useful page on the Money Advice Trust website. UK Bank Accounts website has a comparision of 25 basic banks accounts.
Having regular access to a computer can save people money in a number of ways, Online shopping is estimated to save households around £570 per year. Access to eBay or a local swapping site enables them to save money or to make some through sales. Nearly 50 organisations and services have committed to the UK Digital Inclusion Charter. But Ian Hembrow on The Guardian Blog asks why these include just five housing-related organisations, of which only one – Peabody – builds and manages affordable homes.
Once clients are online, they should be introduced to Freecycle, or the Furniture Reuse Network. Local churches may also be able to help furnish a new home.
Insurance can be expensive in areas where lower paid people can afford to live. Affordable home contents insurance policies designed for social tents are offered by Aon (underwritten by Aviva) and the National Housing Federation's My Home scheme.
Who can help?
Click on the image to download a comprehensive directory of schemes set up to help people struggling to pay their bills. Organised by region and supplier it is produced by Auriga.
If your clients are in difficulty, they should be encouraged to speak directly to their own utility supplier. Many have helpful schemes and grants available.
See Quids In! magazine's webpage about reducing energy bills.
See Quids In! magazine's page about borrowing money.
Help clients find a local credit union on the Find Your Credit Union page here.
My Home Finance is a social enterprise launched by the National Housing Federation to offer banking and credit at affordable rates. Read more.
The National Housing Federation gives information about Digital inclusion.
Barclays Digital Eagles are Barclays employees who have a passion for the internet – and are happy to share their expertise with anyone who needs it, free of charge. There are more than 7,000 Digital Eagles across the UK. Click here for more
These days there are almost as many switching sites as there are energy providers, clients should be encouraged to look for companies that adhere to the Ofgem Confidence Code. Ofgem has a list of key points to bear in mind when shopping around for a better deal.