The poor are still paying more for basic utilities and financial services

Payment structures and price plans in utilities and financial services continue to inflict higher costs on the poorest in society. Regulators and the government need to do more.

The poor pay more. It is a well-worn phrase but we must not let that undermine the impact of what it means in real life for real people.
A new report, published today, calculates the premium paid by poor people on essential utilities and access to financial services is as much as 10p in the pound - a significant extra cost for those that are already struggling to make ends meet.

This has a hugely detrimental impact on people's living standards, risking hardship and poverty. Taking what the public determine as an acceptable minimum standard of living in the UK today as its basis, the research shows a single person working full-time earning the minimum wage already falls £52 a week short of having a sufficient income to reach an adequate standard of living. If they're living in a house with high energy needs and subject to a poverty premium, this shortfall increases to £77 per week.

The gap is even greater still for those out of work and in receipt of benefits. If they live in a house with high energy needs, their low-income and the poverty premium combines to leave them some £135 per week short of a socially acceptable standard of living.

These additional costs are driven by a number of factors. For example, in some instances general market failures result in uncompetitive or unfair practices that hit low income consumers particularly hard, as they are less likely to have access to good information and more likely to be risk averse. In particular, worse off consumers are often unable to access the best deals obtained by the most "active" consumers that suppliers are keen to attract. This generates a cross subsidy in favour of better-off groups that is hard to justify.

Specific market failures and lack of competition can also result in the failure to supply products to meet the needs of low income groups at competitive prices. Low-income households can find themselves disadvantaged by the payment methods they tend to favour, different patterns of usage or different credit needs. In some instances cost-reflective premiums - where there is an additional cost of supplying low-income families - result in them facing higher prices, but it is not always clear that the additional price is justified by the additional cost.

So while regulation aims generally to protect consumers by ensuring that markets work in a fair and transparent way, this report begs the question: do low-income consumers need additional protection? And if so, what should regulators and government do?

One response is to ensure fair trading and promote competition, with adequate information for the consumer: this is the central role of regulators. However, it cannot be assumed that this alone will provide sufficient protection to consumers in a weak market position.

At the very least, regulators should monitor the position of low income consumers, looking closely at the products they disproportionately use and whether they are fairly priced. Where problems are identified in the supply of essential services, regulators should have a remit to investigate the structure and level of pricing. In these instances regulators and the government should look together at the case for intervention to ensure basic products are available at affordable prices.

With the cost of living uppermost in many minds, and at a time when many incomes - whether from earnings or benefits - are either static or shrinking, regulators may find themselves with an increasingly important role to play in seeking out and removing poverty premiums. Tentative steps in this direction are already being taken in the financial services and energy markets. Where they are leading, others should follow.

Katie Schmuecker is a Policy and Research Manager for the Joseph Rowntree Foundation (JRF).

New research shows many already falling £52 short of an adequate standard of living. When in a house with high energy needs, this increases to £77. Photograph: Getty Images.
Photo: Getty Images
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The case for action against Isil in Syria outweighs the case for inaction

The decision is finely balanced: but I'm voting for intervention, says Dan Jarvis. 

The choice before Parliament is not whether our country enters into a new conflict – it is whether we extend our existing commitment in a conflict that we are already engaged in and cannot hide away from. Those who wish us harm will remain bent on our destruction whatever we decide.

Just over a year ago the House of Commons voted overwhelmingly to support airstrikes against Isil in Iraq. We did so because of the direct threat they posed to our safety and global security. The dangers have since multiplied as Isil have strengthened their foothold in Syria. We’ve seen British holidaymakers murdered on the beaches of Tunisia, bombings in Ankara, Beirut, on a Russian airliner, the horrors in Paris, and terror alerts across the world. Seven Isil-related plots have been foiled in the UK in the past year alone.

If I have learnt anything from my past experience it is that responding to these threats are always the most difficult judgements. There is never a perfect solution. It’s why I have reflected on this issue with care, conscious of what I heard at the National Security Council, and mindful of what is best for my constituents and our country.

That is why I made clear that I would only support extending military action against Isil if it was framed within a wider strategy. Having reflected upon the case for targeting their stronghold in Syria, I am persuaded that the case for action is stronger than the case for inaction.

I understand the voices cautioning against broadening our commitment. The test for them however must be to articulate an alternative strategy for Isil’s defeat. Realistically this cannot be done without targeting their command and control structures in Raqqa.

Answering the call of the United Nations and extending British airstrikes would bring unique capabilities to the struggle against Isil in Syria. The RAF are world leaders in precision targeting. As the French Socialist Defence Minister has said, "The use of these capabilities over Syria would put additional and extreme pressure on the ISIS terror network."

These tactics are working in Iraq. Airstrikes have weakened Isil and a third of their territory has been retaken with no civilian casualties.

Questions have rightly been asked of the Joint Intelligence Committee’s assessment that 75,000 moderate forces are available to help do the same in Syria. It reminds me of the dilemma I faced when commanding Afghan soldiers whose knowledge was invaluable but whose competencies were questionable in other areas. Sometimes you have to work with what you have, but the Prime Minister does need to provide greater clarity about how these troops would function as a coherent fighting force.

Everyone agrees that military action must be accompanied by a diplomatic effort to broker an end to the Syrian civil war. This will take time but a political process is now in place. The Vienna conference agreed a timetable for a political transition within 6 to 18 months. In an ideal world we would wait for this process to conclude, but I don’t believe the nature of the threat we face affords us that luxury.

No-one has argued that the political process would be derailed if Britain joined our allies in acting against Isil in Syria as well as Iraq. I am therefore satisfied that military action could effectively run in parallel to our diplomatic efforts. The government now needs to throw the UK’s full weight behind the negotiations and work with our partners to deliver a lasting peace settlement.

Constructive steps have been set out to address the wider tasks of undercutting Isil’s financial muscle, post-conflict reconstruction and tackling extremism here at home. Now Ministers must deliver on them.

There have been promises to enforce trade sanctions and crack down on the people smugglers that fund Isil’s bloodshed. It is vital that more pressure is put on Gulf States funneling money and arms to jihadist groups. But given much of Isil’s wealth comes from the territory they control, that is what most needs to be undermined.

On reconstruction, the government’s pledge to contribute a further £1bn in humanitarian relief is a significant guarantee. The upcoming Syrian donors conference in London will be crucial in holding the international community to their responsibilities to Syria.

The cancellation of police cuts is also important in our counter-terrorism effort. Further measures will be needed if we are to defeat Isil ideologically and drive radical voices out of our communities. With our security services monitoring hundreds of UK nationals who have returned from Syria however, we need to act to tackle the problem at source.

Overall, the government must strenuously pursue the priorities set out in its motion before Parliament. Isil will only be defeated if Ministers demonstrate the same focus on the wider diplomatic and humanitarian strategy that they have shown in advocating military action. The British public will expect nothing less and it is our job as a responsible Opposition to hold them to that.

Labour has a tradition of standing for the national interest when our country is under threat. When the War Cabinet met in 1939, it was Ministers from our party – Clement Attlee and Arthur Greenwood – that tipped the balance in favour of resisting Nazism. Isil are the fascists of our time. Our struggle against them will be more complex, but the basic judgment it demands of us is the same – the readiness to do what is necessary to keep the British people safe.

I take this decision having voted against airstrikes in Syria without a UN resolution two years ago, mindful of the risks and respectful of those who hold a different view. The mistakes made in Iraq from 2003 cast a long shadow, but we should not be paralysed by the past now that we have UN backing and the conditions of our party conference motion have been met.

When I look to my own conscience, I have to consider how I would feel if the worst happened on our streets and a terrorist atrocity succeeded after backing away from confronting the evil behind it. That is why I will be voting for action on Wednesday. 

Dan Jarvis is the Labour MP for Barnsley Central and a former Major in the Parachute Regiment.