London’s cost of living crisis is nearly out of control

Jonathan Prynn
Daniel Hambury
WEST END FINAL

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That at least is the estimate today from respected forecasters, the National Institute of Economic and Social Research, of the number who will not have enough disposable income to cover their energy and food bills. It represents about one London family in 15, a higher proportion than anywhere else in the UK.

It has been clear for some time that London — the city that Rishi Sunak can barely bring himself to mention in his Budget and Spring Statement speeches — is being especially badly hit by the rapidly escalating cost of living crisis.

Rents are now galloping ahead at more than 10 per cent a year, while house prices are hitting new records, and mortgage interest rates are more than twice the level of last summer. Public transport fares could go up by 12 per cent in the New Year. 

Londoners may earn more, but the capital’s own extreme version of the cost of living squeeze means many have less left in the pot once they have handed over their tax and paid for the roof over their heads. 

One Londoner paid a particularly heavy price this week when he accidentally set his house ablaze burning wood to save on energy bills.

This crisis has been on a slow fuse for many months now, often overlooked amid the daily hubbub of the Covid pandemic, the partygate scandal and the war in Ukraine. It now feels close to out of control. Next week the Office for National Statistics will reveal that prices rose more than eight per cent in the year to April, a rate of inflation not seen since 1991. By the autumn, when energy bills go up another £600 or so, it will be in double figures, an unthinkable prospect for most of the last 40 years.

Even getting into debt is becoming far more expensive. The Bank of England revealed this week that average overdraft interest rates passed 34 per cent last month, the highest on record.

The Government has been behind the curve throughout. It must use the warm half of the year to get ahead. If it does not have a credible plan ready when the thermostats are turned up again in October, the headlines will be far grimmer than anything we have seen to date.

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