Income and Poverty

London's Poverty Profile 2015

Commissioned by: Trust for London

  • Published 20th Oct 2015
  • Authors: Hannah Aldridge, , Theo Barry Born, , Adam Tinson, , Tom MacInnes,
  • Category: Income and Poverty

London’s Poverty Profile looks at the extent and depth of poverty in London. It is an independent report that presents evidence from official government data sources. The scope of this report is not limited to low income; it looks at the role of inequality, housing, work and education. Each of these are independently important but are also closely linked to poverty. The analysis looks at a range of indicators for London, how they have changed over time, how this compares with the rest of England and how it varies within the capital itself.

The fifth report in the series, London's Poverty Profile 2015 looks at how London has recovered from the recession in terms of unemployment, out-of-work benefit claims and the quality of work available; how poverty and inequality have changed at a time when average incomes have been flat; how London's housing boom is affecting affordability, tenure patterns and housing benefit claims; and how local authorities have been managing their homelessness duty with reduced funds and restrictions due to welfare reform.

Key findings

1. 27% of Londoners live in poverty after housing costs are taken into account, compared with 20% in the rest of England. The cost of housing is an important factor in London’s higher poverty rate.

2. The majority of people living in poverty are in a working family. As employment has increased so has the number of people in a working family in poverty – from 700,000 to 1.2 million in the last decade, an increase of 70%.

3. The total wealth of a household at the bottom (the 10th percentile) is £6,300; towards the top (the 90th percentile) it was £1.1 million. London’s 90:10 wealth ratio is 173, almost three times the ratio for the rest of Britain (at 60).

4. The number of unemployed adults is at its lowest level since 2008, at just over 300,000. The unemployment ratio in Inner London has halved over the past 20 years reaching 5.6%, slightly higher than Outer London (5.2%) and the rest of England (4.8%).

5. Almost 700,000 jobs in London (18%) pay below the London Living Wage. This number has increased for five consecutive years, particularly among men working full-time.

6. At 860,000 there are more people in poverty in private rented housing than there are in social rented or owner-occupied homes. A decade ago it was the least common tenure among those in poverty.

7. The vast majority of children in poverty are in rented housing (more than 530,000), half with a registered social landlord and half with a private landlord. The number of children in poverty in private rented housing has more than doubled in ten years.

8. In the three years to 2013/14 there was a net increase of 7,700 affordable homes a year compared with a target of 13,200, meaning the target was missed by 40%. 60% of these new homes were available for social rent.

9. In 2014/15 there were 27,000 landlord possession orders (permitting landlords to immediately evict tenants). This rate is more than double the rest of England. The highest rates were in Outer London.

10. 48,000 households live in temporary accommodation in London (three times higher than the rest of England put together), 15,600 of which live outside their home borough. Over the last two years an estimated 2,700 families have been placed in accommodation outside London.

11. In 2015, 10,500 families were affected by the overall benefit cap including 2,400 losing more than £100 per week. If the cap is lowered as planned, they will lose another £58 a week and a further 20,000 families will be affected.

12. Half of 0 to 19-year-olds in London (1.1. million) live in a family that receives tax credits. 640,000 children benefit from in-work tax credits and are likely to be worse off when these are cut in April 2016.

13. In every London borough pupils receiving free school meals performed better on average at GCSE than their peers in the rest of England.