Start-up businesses with ideas for helping poorer households who are paying the “poverty premium” are being offered the chance to get support to scale up their innovations.

Launching a new start-ups challenge, Nationwide Building Society said it wants the “UK’s brightest talent” to step forward with winning ideas to help make markets fairer. They could receive £30,000 of initial investment to explore their ideas.

The poverty premium is the extra cost that low income households may pay for essentials.

People could end up paying more to borrow because past credit problems make their options narrower, for example. Or a lack of online access may make it harder to shop around for cheaper energy or insurance deals.

Nationwide is convening a group of charities and organisations to support the business challenge to tackle the poverty premium.

Its challenge will focus on issues such as affordable credit, housing, fair access to essential goods and services and the wider implications of a poor credit score.

Nationwide said some estimates suggest that nearly 700,000 additional people faced poverty during the winter of 2020 as a result of the coronavirus pandemic.

The mutual is investing £2.5 million in the Fair By Design (FBD) Fund, a venture fund managed by Ascension Ventures, to help grow businesses.

This was part of a £5 million fundraise extension to FBD’s existing £10 million fund.

The society is looking for applicants with ideas for start-up or scale-up businesses, which can tackle issues associated with living in poverty. Ideas can be at any stage, from prototype to a live solution.

Successful applicants will join the society’s “incubator” which has two phases – explore and build.

In explore, organisations will receive £30,000 of investment from Nationwide to support three months of investigation alongside support from experts.

Companies which complete the explore phase and deliver a tested, scalable solution will be considered by Nationwide and Fair By Design for the build phase, an additional six months to build and scale their solutions, for which funding will also be available.

Six organisations will make the explore stage and three will go on to build, it is envisaged. Nationwide also plans to run another programme next year.

Claire Tracey, Nationwide’s chief strategy and sustainability officer, said: “Individuals living on a financial knife-edge are forced to pay more for basic goods and services.

“This is simply not right, nor fair. Through providing meaningful support alongside funding, we are looking to help transform the lives of those living in poverty through scaling long-term solutions to help tackle the challenges this presents.

“It is more important than ever that we act now. The pandemic has, and will have, a significant impact on individuals and families across the country and without action risks millions more facing financial uncertainty and poverty. We hope that this programme will bring benefits to those who most need help.”

Jean de Fougerolles, CEO of Ascension Ventures, said: “Together, we can change lives and back formidable entrepreneurs to scale market-led solutions to correct incredibly unjust market failures.”

Further information is at www.nationwideincubator.co.uk. The deadline for applications is April 4 2021.