Poorer families 'pay more for gas and electricity'Prepayment meters increase fuel costs for poor

17 January 2011

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Families on low incomes are paying nearly £1,300 more each year for basic goods, services and heating their homes than the better off – an increase of more than a fifth since 2007 - according to research by Save the Children.

The research shows poorer families pay hundreds of pounds extra to keep their homes warm, with an average cost for gas and electricity of £1,135 annually, compared with £880 for other families.

The main reason for this discrepancy is prepayment meters. Low income families are often forced to use prepayment meters (smartcard, keys or token meters) as an easier way to manage their budget. 

Gas and electricity companies charge considerably more for prepayment meters than direct debits. If they were able to swap to direct debit they would save on average £250 a year.

Poorer families pay more

energy industry regulator Ofgem estimates that around five million people in the UK live in 'fuel poverty', where more than 10% of the household income is spent on fuel. Of those, 16% are families with children aged under 16 – compared to 11.8% in 2003.

Save the Children's head of UK policy Sally Copley says: 'There is a clear link between living in cold, damp conditions for long periods and children’s health being put at risk. We believe the poverty premium is totally unfair and is ripping off low-income families who are already struggling to make ends meet.'

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