Britons from black and ethnic minority backgrounds are among several groups facing disproportionately high living costs because of the likelihood of being hit by the “poverty premium”, academics have said.
A study found that the risk of people on low incomes being charged more for banking and credit, among other things, was greater among those with protected characteristics – such as race, age and disability, as well as health, migration history, sex and religion – than in those without.
“It is a scandal that disabled people, black, Asian and ethnic minority and low-income families are being penalised and paying more for essential services,” said the shadow equalities minister, Marsha de Cordova.
“The same groups are already being unequally impacted by this pandemic, facing higher death rates, higher unemployment rates and higher levels of poverty. Now we see creditors and corporations profiting from their precarity.
“The government is failing to uphold their duties set out in the Equality Act and to protect consumers from this kind of discrimination.”
The research, carried out by Bristol University academics and published on Tuesday by the campaign group Fair by Design, highlights the burden society places on some of those least equipped to shoulder it.
While all people on low incomes face being hit with the poverty premium, the study found the risk was greater among those with protected characteristics.
For example, the academics said, people of colour, single parents and others were over-represented in lower paid, less secure work – as well as in poorer neighbourhoods and the private rental sector. Consequently, they were less likely to be able to save money and more likely to face either restricted or more expensive access to banking, credit and insurance.
In practice, that means they were likely to be forced to pay more for their fuel because they were less likely to be able to pay by direct debit, which was usually cheaper, or because they were more likely to have to use a prepaid meter.
Moreover, such people were at greater risk of needing to resort to high-cost credit and were likely to be charged high premiums on their insurance. Consequently, they were more likely to go without cover, meaning they were at greater risk of being hit with one-off costs they could not afford when things go wrong.
And the researchers highlighted the significance of intersectionality – the interaction of several protected characteristics – saying they tended to compound the risk a person faced of being hit by the poverty premium.
Past research has shown that the Covid-19 pandemic has underscored the deep-running inequalities in British society – and exacerbated them.
Martin Coppack, Fair by Design’s director, said: “Covid-19 has thrown a light on links between insecure work, low incomes, and protected characteristics. But, even before the pandemic, some people were paying more for life’s essentials because of who they are, where they can afford to live, and the options they have when they have to pay for things.
“To level up our communities, regulators and policymakers should work together to make sure people on low incomes can access the products and services they need at a price they can afford.”
In respect of race, the researchers behind the latest work acknowledged huge disparities between the many groups collected under the BAME banner – as well as within the communities themselves. They used the term, they said, to be consistent with previous research in the area.
