Londoners face hidden poverty premium, study says

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.”