Low-income households in London are facing an additional burden of more than £600 a year to access standard goods and services, research suggests.
The study by Fair by Design, external, funded by Trust for London, found affected families in Peckham pay an average of £493 more annually than wealthier households for identical items.
This “poverty premium” rises to over £600 in the worst affected areas of the capital, driven by factors such as a higher reliance on high-interest credit and increased costs for non-direct debit billing.
A government spokesperson said ministers were “determined to turn the tide on poverty after years of rising hardship” and that their policies were working.
The report’s authors found the single largest driver of the so-called poverty premium was food shopping, with 39% of families forced to rely on local convenience stores instead of larger supermarkets with more competitive pricing.
The research also noted that despite recent regulatory changes, energy and insurance systems continued to penalise the poorest across Britain.
Prepayment meter users pay £129 more a year than those on competitive fixed direct debit tariffs, while drivers living in deprived postcodes faced an average of £153 extra on their motor insurance.
Manny Hothi, chief executive of Trust for London, called for regulators to take into account the effect of their markets on people in poverty.
He added it was vital to “end the unfairness of people having to pay more because they pay monthly or don’t sign up to direct debit.”
At a free cafe in Peckham run by the charity Pecan, visitor Josiah Lahai said he goes to the supermarket “and there are certain things I want but I can’t buy them.”
Doreen Davies, community engagement officer at Pecan, said soaring local rents are forcing some families to leave their established networks and move “as far as up north”.
Speaking on the BBC’s Politics London programme, Labour MP for Peckham Miatta Fahnbulleh described Pecan as an “amazing charity” and agreed that “the cost of living is biting”.
Fahnbulleh highlighted a £150 energy bill reduction and a £39bn investment in social and affordable housing to alleviate pressure.
Conservative MP Julia Lopez said energy bills had risen and the state of the public finances was in an “unsustainable position”.
She also criticised London’s housing record, claiming that housing starts have gone down 84% while Sir Sadiq Khan has been in charge as the London mayor.
“I’m not entirely sure what their policy is going forward, but I suspect it involves spending a lot of money,” she added.
Politics London
Sunday 12 July
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The government spokesperson pointed to a £1bn crisis and resilience fund, which included nearly £150m for London’s local authorities.
“Our recent statistics show that effort is beginning to make a difference – household incomes have risen 5% in real terms, food bank usage has fallen, and food insecurity is down,” they said.
The spokesperson also highlighted policies such as the removal of the two-child benefits limit – which affects approximately 240,000 children living in 65,000 households in London – and lifting the minimum wage.
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