‘Paying More to be Poor’ Scotland report

Date: 6th September 2016
Category: Child poverty

Families on lower incomes pay more than average costs for basic goods and services, according to new research published by Citizens Advice Scotland.

Poverty in Scotland is one of the biggest challenges facing policymakers today. The Scottish Government has estimated that 18% of Scots now live in relative poverty after housing costs, a figure that has remained static in recent years. The broader effects of poverty on society are known to be wide ranging and damaging and can include lower educational attainment by children from less well-off backgrounds and reduced life chances stemming from poorer health and general wellbeing.

A further consequence of poverty - and something that inhibits the attempts of those to improve their financial situation - is that low income households often find that they pay more for basic goods and services simply due to their position in markets. This is known as the poverty premium.

The new CAS report, 'Paying More to be Poor' reveals some poorer Scots are paying a poverty premium for their energy, telecoms, credit, loans and insurance. This premium exacerbates the problems experienced by those living at or near the poverty line and can force those on a low income to cut back on essentials like food. This in turn adversely affected their health and relationships.

Among the findings:

• Low income families are more likely to use more expensive pre-payment meters (PPMs) and 24% of those using PPMs spent over £100 per month on their energy. Only 24% switched their energy supplier in the past three years, with those living in the most deprived areas of the country less likely to do so.
• Those with mobile phones tend to use more expensive Pay As You Go payment methods. They are also more likely to be without mobile phones, and so are hit hardest by the rise in landline costs. Low income consumers are also less likely to switch phone suppliers.
• 53% said they were not using credit or loans, indicating a possible difficulty in accessing these products. Of those who had used credit or loans, 11% were repaying over £100 per month. There is also evidence that low income consumers take out credit or loans without understanding the full costs involved. Others said they no home contents insurance, as they find it unaffordable, leaving their home vulnerable in case of accident or theft.
• Read more and download the report here.