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Nearly seven million of Britain’s poorest people are paying extra for basic goods and services compared to the average person, a leading Westminster think-tank has found.

In its report Over the Odds, the Centre for Social Justice (CSJ) finds that in at least seven key areas the poorest face a ‘poverty premium’ rate, including areas such as the price of credit and prepayment meters, which could be costing such families around £480 a year. 

As part of its research the CSJ commissioned a poll of 4,000 adults in Great Britain with Opinium. Key findings include:

In its report, produced in partnership with Virgin Money, the CSJ explains how digital exclusion, whereby the poorest households are unable to shop around for the best deals or prices on the internet, is a critical issue that contributes towards poverty premiums. For example, a fifth of adults with a household income below £15,000 are digitally excluded, compared to one per cent of those with an income of above £50,000. 

The CSJ also polled respondents to find out the real-world consequences of having to pay a poverty premium. For example, 17 per cent of those paying at least one premium told the CSJ they face strained relationships with friends and family, rising to 18 per cent among those paying two or more premiums, compared to 10 per cent of all people.

Likewise, the CSJ find that those who face poverty premiums are substantially more likely to face addiction problems. Ten per cent of those who face two poverty premiums reported taking illicit substances, compared to 3 per cent of the general population. A striking 19 per cent who face at least two premiums gamble, compared to just 6 per cent generally.

Recommendations by the CSJ to help those who face poverty premiums include:

Sir Iain Duncan Smith, Chairman of the CSJ, said: “There is something deeply unsettling about those with the least having to pay more than those with the most for life’s most basic essentials. Seven million people are paying over the odds, blighted by multiple poverty premiums on things like energy, food and insurance.

“But it is also the British taxpayer who is footing the bill, having to pay more in benefits to cover the higher costs of these poverty premiums. The solutions proposed in this report require ambitious thinking by government and business. Given the intense cost of living pressures many people are facing today, I hope ministers and executive can work together to ensure fewer people are paying over the odds.”

Matthew Greenwood, the CSJ’s Head of Debt, said: “It’s not just the economic cost of the poverty premium that is so damning, it can also have a very bad effect on health, well-being and building the foundation of pathways out of poverty.” 

David Duffy, CEO of Virgin Money, said: ““We’re working hard to eliminate the poverty premium by 2030, but we know there's still some way to go before we can reach our goal. This report has shown there’s more we need to do to and it’s clear that working alone won’t cut it. We need all organisations and industries that can make a difference to step up and work as one to put the poverty premium to bed once and for all.”