New research quantifies poverty premium at up to £736 a year for low-income households

Low-income households in Britain pay an average of £380 a year more than wealthier households for the same essential goods and services, according to research published on 30 June 2026 by the anti-poverty charity Fair By Design and the University of Bristol Personal Finance Research Centre¹. The report, Paying More for Less, found that 95% of low-income households pay this "poverty premium", and that those on the lowest incomes pay up to £736 more a year for essentials because they cannot access deals and discounts available to more affluent households¹. Up to one in ten households are affected¹.

The research identifies several sources of the premium. Shopping at local versions of many supermarkets has more than tripled in cost since 2022, rising from £84 to £261 a year¹. Paying for energy by prepayment meter locks households out of the best deals, costing an extra £129 each year¹. Paying monthly for car insurance rather than annually costs drivers an average of £71 a year, and drivers in postcodes in areas with high levels of deprivation pay an average of £153 a year more¹. More than one in four low-income households (27%) use some form of high-cost credit, paying an average premium of £178 a year, while those using payday loans or subprime personal loans face costs as high as £698 and £805 annually¹.

Ethnic minority households pay an average poverty premium of £488 a year, over £100 more than the £380 average across all groups¹. The research does not cover Northern Ireland, because of significant differences in relevant markets and data sources that make it not directly comparable with the rest of the UK¹. The data was collected between December 2025 and January 2026 through an Ipsos telephone survey of 1,040 respondents whose household income was below 70% of median income, adjusted for household size and housing costs¹.

The constituencies with the highest average poverty premium are:

Source: Fair By Design¹

Rebecca Deegan, director of Fair By Design, said:

Sara Davies, associate professor at the University of Bristol, said the findings suggest the poverty premium is primarily caused by structural factors rather than individual choices, and that reducing it would need markets designed to give fairer outcomes rather than relying on behavioural change¹.

Why it matters for households

The research puts a figure on a cost that falls on households already on low incomes, and sets out where it arises: energy prepayment, monthly insurance payments, high-cost credit and food shopping at smaller local stores¹. The report says the premium is an extra burden people on low incomes pay not because of the choices they make but because of the choices they do not have¹. Yvonne Fovargue, chair of Fair By Design, said that in Makerfield, where she was an MP and lives, it costs households in poverty an average of £387 each year¹. The findings cover Britain only, and the report notes that Northern Ireland is excluded¹.

What happens next

Fair By Design has called on government, regulators and industry to "step in urgently to fix broken markets and make sure everyone can access essential goods and services at a fair price"¹. No further dated commitments from government or regulators are set out in the research. Households can read about their rights when buying financial services in our consumer protection guide.