Most deprived areas paying £60 a year more for energy

The most deprived areas in Britain pay £60 per year more for their energy than the least deprived parts of the country, a report has claimed.

Those living in deprived areas pay more for energy than more affluent households.

Households with the lowest disposable income pay three times as much for their energy per week as a percentage of income than those with the highest disposable income.

The research shows that a greater proportion of poorer households are on standard variable tariffs or use prepayment plans. Both these methods of paying for energy usually mean higher unit costs and more expensive bills.

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It found that in the 10 per cent most deprived areas of Britain, the annual cost of energy is £1,123. This is £60 per year or 5.7 per cent more than the annual cost of energy in the 10 per cent most affluent areas.

Meanwhile, a higher percentage of those earning between £16,000 and £19,999 are on a standard variable tariff than those earning between £25,000 and £34,999.

The report said the difference is even more pronounced when those on the lowest incomes are considered, with more than half of all households on an income under £12,000 on a Standard Variable Tariff (SVT). By comparison, only 32 per cent of those with a household income between £45,000 and £59,999 are on an SVT.

The research analysed energy inequality across three specific metrics: deprived vs non-deprived areas of Britain; lower vs higher household incomes; and the percentage of income households spend on their energy bills.The report also found that for the 10 per cent of households with the lowest disposable income, energy spend makes up 7.8 per cent of total weekly expenditure. This is over three times more than the top 10 per cent of households’, who have the highest disposable incomes, relative spend on their energy bills.

Peter Earl, head of energy at comparethemarket.com, said: “These findings indicate a pattern of inequality at the heart of the energy market.

“It is regressive that those who are most disadvantaged by higher energy bills end up paying more than those who can more easily afford it. While the difference in prices may seem small to some, for those struggling to make ends meet it isn’t small change, and month-to-month can quickly add up.”

He added: “Encouragingly, there is a market solution to this issue, which is to urge all households with a standard meter to switch to a competitively priced fixed tariff deal. The energy price cap, far from being an affordable or good value price to pay for energy, is in fact hundreds of pounds more expensive than the cheapest tariff currently on the market.”

A year ago, Ofgem increased the energy price cap on standard tariffs just six weeks after the measure was introduced to £1,254 a year for someone with typical usage – £34 more than companies were charging in December when the cap was brought in and adding £117 to the average bill.