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Press Release: The Poverty Premium in Tower Hamlets

Published: 12 May 2014


Residents in one of the UK's poorest areas pay a £1,014 ‘Poverty Premium’.

The report, based on research carried out with residents in the London Borough of Tower Hamlets, offers a snapshot into how some of the poorest in the UK are still paying more for everyday goods and services.  It gives a clear insight into the negative impact that the Poverty Premium has on the health, wellbeing and opportunities of both individuals and families, as it significantly effects their social mobility and economic development. The combination of unfair pricing policies, and inadequate financial services and payment mechanisms is shown to have a detrimental effect on those who can least afford it.

Other key findings include:

-  The Poverty Premium is caused by the financial services environment and payment mechanisms

-  A lack of free cash machines in areas of high poverty is exacerbating the Poverty Premium

-  Those with high financial capability but low incomes still pay a premium for goods and services

-  Those who are isolated are more likely to pay a premium

-  The impact of the Poverty Premium is highly localised and individualised

-  Fuel, car insurance and loans can create a Poverty Premium in Tower Hamlets totalling £786.74

The findings show that the Poverty Premium is an ongoing problem for communities throughout the UK and is stretching low incomes even further. The financial services and products available to those on a low income are limited because the financial services and payments environment restricts their choices.  For low income individuals and families finding the products and services they want, at the best price, and using the most cost-effective means of payment – including getting hold of cash – is a daily challenge and one that is often insurmountable even by the highly financially capable.

Graham Fisher, Chief Executive of Toynbee Hall, said “Effective financial education is something we take very seriously at Toynbee Hall. However, our research shows that the defining factor in the impact of the Poverty Premium is how service providers design, deliver and charge for their services. It is not acceptable that people who are poorer have less access to cheaper goods and services because they cannot take advantage of bulk offers or online discounts. Improvements in these environments will have the most impact on the poorest in our communities across the country.”

The report offers several national recommendations as to how the effects of the Poverty Premium can be mitigated, and include:

-  Service providers must offer better payment options and financial products to those on low incomes

-  Policy makers must prioritise supporting social networks when tackling financial social injustice

-  Financial capability programmes must demonstrate effective learning to make a practical difference

Read the report online.

Notes to editors:

  1. For more information contact Alexandra Wilkinson, Communications & Events Coordinator, on 020 7392 2925 or email
  2. The research was conducted within the London Borough of Tower Hamlets, with in-depth interviews with 28 Tower Hamlets residents who received at least one means tested benefit and were at least partly responsible for paying household expenses. Questionnaires were also conducted with a further 197 Tower Hamlets residents.
  3. The full report is available online: The Poverty Premium.
  4. Toynbee Hall, founded in 1884, is a community organisation that pioneers ways to reduce poverty and disadvantage.  Based in the East End of London, it gives some of the country’s most deprived communities a voice, providing access to free advice and support services and working with them to tackle social injustice. Toynbee Hall provides day-to-day support and assistance to people throughout London helping them escape the Poverty Premium.
  5. Toynbee Hall runs a Community Money Mentors scheme that works with people across the borough to improve their financial capability.
  6. Toynbee Halls’ debt advisors help some of the poorest people in the UK manage their financial issues and are always looking for bold and innovative ways to address the impact of poverty and help people live full and active lives.
  7. Toynbee Hall has been a catalyst for social reform in the UK for almost 130 years, and continues to bring together communities, organisations and policy makers to create new ways to help those who find themselves in poverty today.
  8. Toynbee Hall was research partner to the Tower Hamlets Fairness Commission, which was set up to tackle inequality in the borough. Graham Fisher, Toynbee Hall Chief Executive, is a Tower Hamlets Fairness Commissioner. Between November 2012 and March 2013 the Commissioners gathered evidence based on research and dialogue with residents, businesses, and voluntary and community groups. The Commission’s findings challenge the council, big business and government to adopt radical policies to stimulate housing, jobs and fair credit in boroughs like Tower Hamlets.