A report released today has revealed some of the UK’s most vulnerable families are struggling to afford essential items such as fridges and beds due to a ‘poverty penalty’.
Based on analysis of a Yougov poll, the report suggests low-income families are suffering from a ‘poverty penalty’ that forces them to pay more for essential goods and other services. They are more than twice as likely to buy goods from a rent-to-own shop due to them having poor credit ratings.
The report also highlights the impact of the changes to the Social Fund - ‘for 27 years the Social Fund provided interest-free loans and grants to help some of the country’s most vulnerable families buy basic items. In April 2013 the fund was devolved to local authorities, enabling them to administer discretionary funds including Crisis Loans and Community Care Grants.’ The report quoted previous research from The Children’s Society which showed many of the local authorities have stopped providing loans or grants, which removes another source of affordable finance for desperate families.
As a result, Family Action has recommended ‘following localisation of the Social Fund, the Government should review the operation of local support schemes to ensure that people who need support are still receive it’. It also recommends ‘tougher regulation should be implemented for the rent-to-own market to prevent interest rates to a reasonable level’.
David Holmes, Family Action chief executive, said this report ‘demonstrates the importance of providing information and budgeting support particularly to low-income families regarding credit and high interest loans and the impact they can have on families’ overall expenditure.’
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