Andy Burnham, the mayor of Greater Manchester and a leading contender to become Britain's next prime minister, built his regional reputation on intervening where markets failed to deliver fair outcomes. His approach to bus franchising, housing and homelessness relied on public authority stepping in when private provision fell short. A new report from the charity Fair By Design argues that the same logic must now apply nationally to what researchers call the poverty premium.
The poverty premium refers to the extra costs low-income households incur simply to access basic services. According to the latest research from Fair By Design, conducted with the University of Bristol, 95 percent of low-income households in Britain pay at least one such premium. That translates to roughly six million households. The average extra cost is £380 per year. One in four households pays £505 more. One in ten pays £736 more.
Not inflation but structural disadvantage
These figures sit on top of inflation. They reflect structural constraints rather than general price rises. Wealth brings flexibility: the ability to pay annually rather than monthly, to switch providers, to absorb shocks. Low income brings constraint. A single parent without a car relies on expensive local shops. A private renter cannot improve a home's energy efficiency. Households without reliable internet access are locked out of digital-only deals. The research also found that white households are less likely to experience poverty premiums than any other ethnic group.
Food has become the single largest driver of the premium. Rising food prices have widened the gap between large supermarkets and smaller local stores, where low-income households increasingly shop. Insurance remains the costliest premium. Paying monthly, living in a higher-risk postcode, or relying on single-item cover all increase costs. In energy, households that pay on receipt of a bill rather than by direct debit face a persistent standard credit premium, paying more for the same power.
Digital exclusion deepens the divide
Digital exclusion is becoming a more powerful determinant of cost. The best deals increasingly require online access, active switching and the confidence to navigate complex tariffs. For households without reliable internet or the time to engage, the risk is systematic exclusion rather than occasional missed savings.
Past interventions have blunted some of the sharpest edges. The energy price cap, action on high-cost credit, and the Financial Conduct Authority's Consumer Duty have all helped. But the report argues these measures treat symptoms rather than causes. They prevent the worst outcomes while leaving intact the market dynamics that produce them.
The charity advocates a shift toward what it calls default fairness. This would mean designing essential services so they work for people with the least resources rather than assuming fairness emerges when consumers are equipped to navigate markets. In energy, that could mean eliminating the payment method premium or introducing a social tariff. In insurance, it could mean re-examining how risk-based pricing interacts with deprivation. In credit, it could mean scaling no-interest loan schemes and placing stronger obligations on mainstream lenders to serve excluded groups.
Such interventions raise questions about market distortion, cross-subsidy and cost. The report argues those questions already exist but are currently resolved in ways that disadvantage those struggling most. A Burnham-led Labour Party government, the charity hopes, would be more explicit about this trade-off. It would not abandon competition but would not treat it as an end in itself. The test would be whether essential services work for people.
The poverty premium has not only grown but become more deeply embedded in how everyday markets operate. The report concludes that an economy where those with the least consistently pay more is the product of design, and therefore can be redesigned, if there is the political will to do so.
Related from New Statesman Canada
- British devolution plan needs more than structural reform to succeed
- UK devolution drive risks leaving domestic abuse survivors behind without national standards
- The UK wealth tax debate and what it signals for Canada
- French economist Gabriel Zucman pushes wealth tax as inequality deepens in Canada and abroad
- British Labour's surprise chancellor pick signals tighter Downing Street control