20/10/2011 20:10 BST | Updated 20/12/2011 05:12 GMT

The Financial Crisis will Become a Financial Catastrophe for Poor Families This Winter

Fuel poverty is increasingly a worrying reality for millions of families in the UK - and if forecasters are right this winter is going to be one of the toughest in many years. For the vulnerable families we work with the financial crisis is fast becoming a financial catastrophe.

The current economic climate is hitting everyone's pockets, but for those families already living in poverty the icy conditions will mean children's health is being put at risk; for example, suffering from sickness caused by damp homes or going without hot and wholesome meals which during the winter can be more costly.

Poverty premium

Barnardo's unique research into child poverty found families on low incomes use pre-payment meters to make sure they only spend what they can afford on heating and fuel for cooking. However, sadly these families are being penalised for being prudent because the cost of fuel on pre-payment meters is more expensive than if paying by direct debit.

One-and-a-half million people in the UK - the poorest - live in homes without access to a bank account. When they run out of cash, which they do frequently when they need to pay the gas bill or indulge their children at Christmas, they borrow money at punitive rates of interest and they become locked in spiraling debt.

Basics cost more for our poorest families. As Gary, a father of a nine and a 13-year-old told us, 'I pay gas and electricity in cash...I get charged £280 a year more for having a key meter. People who pay by direct debit get a discount. But I pay in cash. I never get a bill so I should get a discount. They get the poor people all the time. People that can't afford to pay standing orders because they haven't got bank accounts, they're the people who get shafted'.

It's not that Gary and thousands more parents like him are stuck between a rock and hard place. High street banks don't want them. They are financially excluded and as a result end up paying a poverty premium.

The average family will have resources to draw on when it needs to overcome short-term deficits; an ISA to cash in, a car to sell, a house to 'downsize' or even friends and family to call on. The families Barnardo's works with often have a fundamental 'asset gap', meaning they lack any safety net when falling on hard times.

The Government must intervene now - energy suppliers must be challenged if they do not volunteer and the poorest should have access to direct debit to ease the plight in their fight to keep warm.