The poorest in society often get a bad deal. Whether it’s living in food deserts (areas where access to affordable fresh food is limited) or facing limited access to green spaces. Being poor can also be pretty costly, and with around one fifth of the UK’s population living in poverty, it’s a bread and butter financial issue that matters to millions.
So what is the poverty premium? The poverty premium is the extra cost people have to pay for essential goods and services such as loans and energy or even just buying items for their homes. It’s estimated that some 10 million people here in the UK pay a poverty premium which averages some £490 per household every year.
In the 16 th episode of Money Bites by Smart Money People released in mid January, we delved into the poverty premium with the help of two guests, Carl Packman of Fair By Design and James Herbert of Hastee.
Fair By Design is aiming to eradicate the poverty premium. And while this may seem like mission impossible, Fair By Design is a the kind of peculiar organisation that may just be able to make inroads. While co-ordinating and advocating for policy change is part of their remit, they’ve also created the Fair By Design Fund that offers investment to for profit and non for profit companies that are building products and services that can help to tackle some of the drivers behind the poverty premium, be it digital exclusion or the models behind assessing creditworthiness.
Hastee is an app that offers earnings on demand. They’re part of a new wave of FinTech firms designing products and services that aim to improve our financial wellness. And with more of us falling into gig economy style working arrangements, and with limited rainy day savings, getting paid on demand could well be part of the solution.
So, can we end the poverty premium? You can listen to the full episode below: