Being poor under capitalism doesn’t just mean having less money. It means being charged more for the basics of life.
New research by Fair by Design, funded by Trust for London, has found that low-income households in London pay hundreds of pounds more each year for the same essential goods and services as wealthier households. Families in Peckham pay an average of £493 more every year simply because they’re poor, while households in the worst affected parts of the capital face an annual “poverty premium” of more than £600.
This isn’t a mistake in the system. It’s one of the many ways capitalism extracts even more wealth from the working class.
The biggest driver of the poverty premium is food. Nearly four in ten low-income families have to rely on local convenience stores rather than large supermarkets, where prices are generally lower. Workers without cars, living in neighbourhoods abandoned by major retailers, end up paying more just to feed themselves and their families.
The same pattern appears across other essential services.
People forced onto prepayment energy meters pay an average of £129 more each year than customers able to access competitive fixed direct debit tariffs. Drivers living in poorer postcodes are charged around £153 more for motor insurance. Those who can’t afford to pay annually or set up direct debits are routinely penalised with higher monthly costs.
While capital exploits your labour power at work to create profits, different capitalists share in the spoils by profiting from life’s essentials, with the poor paying more.
Banks, insurers, utility companies and lenders all treat poverty as a business opportunity. If you have less financial security, less savings or a worse credit history, corporations simply charge you more. The less wealth you possess, the more expensive life becomes. Those already struggling financially subsidise higher profits for shareholders, through higher prices, higher interest rates and higher fees. Banks, insurers, utility companies and lenders all take advantage of the unequal conditions created by capitalism. The result is that a greater share of working-class incomes are funnelled into corporate profits.
Trust for London’s chief executive, Manny Hothi, called on regulators to “end the unfairness of people having to pay more because they pay monthly or don’t sign up to direct debit.”
While these measures could reduce some of the immediate burden, they don’t address the underlying cause. As long as essential services remain organised around private profit instead of human need, companies will continue looking for new ways to squeeze more money from those least able to pay.
The government defended its record, claiming it is “determined to turn the tide on poverty after years of rising hardship” and pointing to a £1 billion crisis and resilience fund, higher minimum wages, rising household incomes and the removal of the two-child benefit limit. According to ministers, real household incomes have risen by 5 percent, food bank use has fallen and food insecurity has declined.
Any improvements in workers’ living standards are welcome. The labour movement has fought for every wage increase, every benefit expansion and every protection won from the capitalist state. But reforms alone can’t eliminate poverty when the economic system itself rewards companies for exploiting it.
Conservative MP Julia Lopez responded by arguing that public finances are “unsustainable” and criticising London’s record on housebuilding. Yet this familiar call for austerity ignores the reality that Britain remains one of the richest countries on Earth. The issue isn’t a shortage of wealth but who controls it and whose interests the economy serves.
Marx described capitalism as a system driven by the relentless pursuit of profit. The poverty premium shows what that looks like in practice. Poverty itself becomes another market to exploit, with workers paying more for food, energy, insurance and credit simply because they lack wealth.
As long as the commanding heights of the economy remain in private hands, poverty won’t just exist, it will remain profitable.
