If you live in poverty in this country, you’re more unlikely to have a bank account. And if you don’t have a bank account, you can’t get a direct debit discount for many of your everyday services and utilities. Is that fair? We don’t think so.
That’s why Joseph Rowntree Foundation (JRF) in partnership with Big Society Capital have set the daunting yet achievable task of bringing an end to the ‘poverty premium’ by 2027. The poverty premium is experienced by people living in poverty when they pay more for everyday goods and services than those with higher incomes. The poverty premium is often dubbed the ‘double penalty’: in addition to not being able to buy many goods and services, people in poverty also end up paying more for the ones they can buy.
According to the latest JRF research published in their strategy “We can Solve Poverty in the UK”, 13 million people in the UK are living in poverty, and 1.25 million people in the UK experienced destitution at some point during 2015. We estimate that the total poverty premium paid on household goods, financial services, energy and telecoms by a single household could add up to a total of £1,190 per year per household. For the poorest fifth of households in the UK - 5.4 million households earning £12,300 per year or less - the money spent on paying poverty premiums could amount up to about 10% of their budget.
In order to achieve our big hairy audacious goal, we are planning a two-pronged attack all under the banner of a programme called ‘Fair by Design – Making Life Affordable’. From a macro perspective, the programme will work closely with government and corporates to shift the dial on regulation and business models to ensure people in poverty and on low incomes are specifically designed for. To complement this, we will support challengers with innovative ideas on how to best serve this target market through a venture development programme. Today we are launching a call for fund managers to run the second half of this programme. It is not a typical role, as it will require strong venture skills alongside collaboration and the ability to manage partnerships across a wide range of different stakeholders. We would love to hear from you if you’re up to the challenge.