Low-income families in the UK’s poorest neighbourhoods are paying up to £541 a year more than affluent households to access the same basic services such as energy and insurance, and buy essential items such as TVs and fridges, a study claims. The Fair by Design charity has called for the government and regulators to outlaw practices it says discriminate against the poorest families, costing them hundreds of pounds a year because of where they live, how much they earn, or how they are paid. One in eight households in the UK experiences at least one type of poverty premium, paying on average £430 a year in extra costs, though it is far more prevalent in deprived areas, especially in the north and Midlands regions of England. Low-income households in Birmingham Hodge Hill parliamentary constituency pay the highest average premium at £541 a year, followed by West Bromwich West (£522), Birmingham Erdington (£520), Bradford West (£518) and Birmingham Yardley (£517). Just under 20% of households in Liverpool Walton paid poverty premium costs, followed by Nottingham North (18.9%), Blackley and Broughton in north Manchester (18.4%), Hackney South and Shoreditch (18.3%) and Kingston upon Hull (18%). “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,” said Martin Coppack, the director of Fair by Design. He said introducing a series of measures to tackle the poverty premium – such as the introduction of a social tariff for low-income customers struggling with high energy bills – would be a straightforward way for the government to tackle the cost of living crisis, at no extra cost to the Treasury. Examples of poverty premium costs, cited by Fair by Design, include: Use of pre-payment meters to pay for gas and electricity, used primarily by people on the lowest incomes, typically costs £131 a year more than paying through cheaper direct debit methods. Car insurance for drivers living in the most deprived areas of the UK typically costs £298 a year more than in areas of median deprivation. The cost of buying a TV using rent-to-own methods is typically £182 more than if the same TV were to be brought outright. Coppack said people on low incomes could do little to avoid more expensive forms of payment for essential services and goods. He said: “People talk about how they feel really discriminated against. Industry calls it ‘risk-based pricing’ but people will say: ‘I’m discriminated against because of where I live.’” The average poverty premium cost for UK parliamentary constituencies was £4.5m. Those with the highest exposure to the poverty premium in cash terms were Leeds Central (£8,837,996), Manchester Central (£8,362,420) and West Ham (£8,323,734). The north-east of England had the highest proportion of households incurring the poverty premium at 14.7%, followed by the north-west of England (13.4%) and Yorkshire and the Humber (13.4%). At the other end of the scale was the south-east of England (11% of households). A spokesperson for the Association of British Insurers said: “With the cost of living crisis gripping the UK, now more than ever insurers are committed to helping all customers access affordable insurance and work closely with government, regulators and other organisations to address the different needs of customers and those in more vulnerable circumstances.” A HM Treasury spokesperson said: “We know that people are struggling with rising prices and are worried about the months ahead. That’s why we’ve stepped in to ease the burden, helping 8 million of the most vulnerable British families through at least £1,200 of direct payments this year – and giving every household £400 to help pay their energy bills. “It’s important that financially excluded people are able to access the products and services they need to get on in life – and that’s why the government has provided Fair4AllFinance with £100m to support their work on financial inclusion – and is piloting the No Interest Loans scheme which will give interest-free loans to almost 17,000 people, helping them to deal with unexpected costs.”