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Poorer families ‘pay more for gas and electricity’

Prepayment meters increase fuel costs for poor

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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.’

Help from Which?

If you are struggling to pay your energy bills, help is available. Check out our financial help for energy customers guide to see what your options are and how and where to get assistance.

Plus, if you’re a Which? Member, join our team of energy experts on 27 January from 12.30pm in a special online Q&A session. They’ll be answering your energy questions – from finding the best tariff to troubleshooting problems with your supplier.

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You can compare energy prices and switch to a new gas and electricity supplier on Which? Switch. People who switched with us between 1 October and 31 December 2013 are predicted to save an average of £234 a year on their bills.

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