Cost of living in London soars to record high

The cost of living in London has risen by more than 5 per cent over the last year, outstripping the official national inflation rate of 1.8 per cent, the Mayor of London's office has revealed.

The living wage for Londoners has risen from £6.70 to £7.05 an hour, according to a unit of the Greater London Authority set up by Ken Livingstone two years ago to track rising prices in the capital. Without tax credits, housing benefits or council tax benefits, the figure would be as high as £9 an hour - 79 per cent above the National Minimum Wage of £5.05. The GLA said the increase was driven by rising costs of fuel, NHS charges, household services and council tax. It also included a 9 per cent annual increase in childcare costs because of a change in the way it was calculated.

Mr Livingstone said about one in seven of London employees received less than £6.15 per hour and was effectively living on poverty level wages.

"The living wage is not just a matter of welfare or social justice," the mayor said. "London's economy thrives because it is highly productive and creative. This means making the most of all the resources available, particularly its people."