Brits pay way more for housing, transport and alcohol than our European neighbours – here’s why

Looking to buy a house, catch a bus, or drink a beer anytime soon? Have you considered moving to Germany?

Britain has earned itself a reputation for being an expensive place to live. If you tally up everything that UK households pay for – from groceries to bills – living here is 8% more pricey than the average for Organisation for Economic Co-operation and Development (OECD) countries.

But the disparity is far, far greater in certain key categories. Brits pay 44% more for housing, 26% more for transport and 53% more for booze than other major countries assessed by the OECD. 

Overall, such eye-watering expenses leave low income British families up to £2,300 worse off per year than low income families in Germany, analysis by the Resolution Foundation think tank has found.

It’s an “urgent” crisis, said Simon Pittaway, the think tank’s senior economist.

“Britain’s recent toxic history of low growth and high inequality has left low-to-middle income families far poorer than their counterparts in Western Europe,” he said. “These damaging income gaps are even worse once we factor in the prices of goods and services that matter most to these families.”

So why is Britain so expensive for people who don’t have that much money?

Why is British housing so expensive?

British housing costs 44% more than the OECD average, the report finds. Housing, in this analysis, comprises rent, maintenance and utility bills.  

Demand for homes consistently outpaces housing supply in the UK, pushing rent on existing homes to record levels. According to analysis from the Joseph Rowntree Foundation (JRF), rent inflation has been above 8% for the last 17 consecutive months.

It’s largely an issue of supply, says Paul Swinney, director of policy and research at Centre for Cities. Britain simply doesn’t have enough houses.

“Since the end of the Second World War, Britain has built 4.3 homes fewer than it needs, pushing up prices,” he told Big Issue. In Europe, Swinney explains, the planning system allows governments to build more homes, faster.

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He added: “[The UK’s] discretionary, case-by-case approach to planning has prevented the country from adding new homes at the same rate as peer countries in Europe did on average – with the biggest shortfalls seen in our cities.”

Freddie Poser – director of advocacy group PricedOut – echoed this criticism.

“There are simply not enough homes – for years, it’s been a political question of ‘where do you put new homes?’” he said. “And for decades now, the answer to that question has been ‘anywhere but here’, writ large, across the country. So how does a government find solutions that allow them to say, ‘OK, well, we’re actually going to build here now,’ without that being politically unsurvivable?”

Labour has pledged to build 1.5 million new homes by 2029. Planning reforms – like loosening existing rules against greenbelt building – will be key to this.

But the plan has its sceptics. Activist and author George Monbiot, for example, has warned Labour’s plan will merely create a “bigger, more dysfunctional housing market”, because it doesn’t make provision for affordable rent homes. Housing secretary Angela Rayner has shied away from setting a target for social housing. 

Since the 1980s, the UK’s social housing stock has plummeted. Of the almost two million social homes which have been sold through Right to Buy, Shelter estimates that only 4% have been replaced.

“In terms of narrative, the key moments are the introduction of Right to Buy, the 1988 Housing Act that took away rent controls, and the creation of buy-to-let mortgages in the 1990s,” said Ben Leonard, a policy officer at ACORN union.

“None of these are kind of natural processes. They were all political decisions in the interests of landlords.”

As usual, it’s lower income people – who are more vulnerable to the ups and downs of the rental market – who suffer. According to the new Resolution Foundation data, low-to-middle income households allocate more than a fifth (22%) of their budget to housing, compared to 13% for higher-income households.

“Building is incredibly important, but you can’t just build your way to affordability,” added Leonard. “You need affordable housing and rent controls.

“Many European countries have rent controls. They’re not some radical system. And in Vienna, a quarter of people live in social housing.”

On average, Vienna’s renters pay roughly a third as much as their counterparts in London.

Why is British transport so expensive?

In news that will surprise no one who has tried to purchase an on-the-day rail ticket, UK transport costs are 26% higher than the OECD average.

According to the new Resolution Foundation data, poorer households – who are less likely to own cars – spend less of their budget on transport than richer households (11% vs 15%). 

But this is not to say lower-income people are doing fine. Poorer people are disproportionately impacted by high public transport prices, because they are more likely to rely on buses and trains. 

British rail fares are the highest in Europe, a study by the Transport & Environment (T&E) group found last year – up to two and a half times more expensive than those on the continent.  

Such high transport costs can limit access to essential services, says Tim Burns, head of policy at sustainable transport charity Sustrans. 

“Transport isn’t an end in itself,” he explained. “But it facilitates all the other things we experience. If transport is denied, then all those other opportunities are denied. So access to jobs and education, for example, is limited.”

So why is public transport so expensive in this country? Most of Britain’s public transport network is controlled by private companies. In Europe, by contrast, there is a far higher degree of public investment and subsidy.

“A lot of it is to do with deregulation. Private operators have the freedom to set their own fares, and there is less government oversight in this country,” said Michael Solomon Williams, head of campaigns at the Campaign for Better Transport.

“But there are solutions. And some places in the UK are really getting it right.”

Williams cites the London transport system – a combination of private franchises under tight public management – as a key example.

Elsewhere in the UK, wholly privatised systems mean there is no overarching owner, and several operators run competing services.

But other cities are copying the London model. For example, Manchester has rolled out the Bee Network of buses, which Burns said has the potential to dramatically increase public transport take-up and reduce the costs of travelling by car.

“The first six months of that trial showed a 5% increase in patronage,” he said. “It’s ultimately a money saver for the city and for commuters.”

Public investment delivers savings for passengers. Initiatives such as the German “Deutschlandticket” – a €49 monthly pass that allows unlimited travel on local public transport throughout the country – helped commuters amidst the cost of living crisis. The UK currently has no such alternative.

Why is alcohol so expensive in Britain?

British alcohol and tobacco are 53% more expensive than the OECD average. This is because the UK operates some of the highest excise duties in Europe, combined with a 20% VAT rate.

In better news, food is relatively cheap in the UK, at 12% less than the OECD average. But rising prices can still leave a bad taste in the mouth for poorer families who spend a greater share of their family budgets on food (14%, compared to 9% for the highest-income households).

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