Big changes in London poverty patterns
Today, Trust for London published our London Poverty Profile 2013; the fourth in series of reports looking at a range of indicators of poverty and disadvantage. These include low income, ill health, overcrowding, unemployment, and low pay to name a few.
The 2011 edition showed that London went into recession later and came out sooner than the rest of England. Now in 2013, we can see that London continues to lead the country out of the recession, but this is not lifting Londoners out of poverty. The experience of low income households in London is just as tough and the outlook just as bleak as those anywhere England.
At 2.1 million, the total number in poverty in London is 180,000 higher than ten years earlier. But although there has been little change in this headline figure, the graph below shows that the pattern of poverty in London has been transformed. The fall in workless poverty (of 150,000) has been more than offset by an increase in in-work poverty (of 440,000). As a result, the majority (57%) of working-age adults and children in poverty are in working families.
Likewise, poverty in the social rented sector has fallen by 340,000, but among private renters it has more than doubled (up 460,000). So there are now more private renters in poverty than social renters. There have also been big changes in geography with a shift in poverty from Inner London to Outer London.
Looking beyond the latest poverty statistics (which are almost two years old), the impact of welfare reform on low income households in London may even be deeper than elsewhere. This is not because Londoners are more likely to claim an out-of-work benefit; they aren’t. It is because London’s households are more likely to claim housing benefit and the amount of housing benefit claimed is much higher than the average across England. This in turn is the result of the much higher housing costs across the capital.
Housing costs, like poverty, are not just problems for those in the centre of London or those lacking work: 50% of housing benefit claimants live in Outer London and 40% are in work.
The report explores in detail how the various benefit caps introduced in the last few years make it difficult for any family on a low income to find accommodation that falls within these limits.
Across the country, housing benefit for private renters has been capped at the value of the 30th percentile of local rents (so 30% of properties charge rents below the cap and 70% charge rents above it). But in Inner London a national cap applies which means even fewer properties charge rents within the local housing benefit limits. In addition, in 13 of London’s 18 Outer boroughs more than 30% of private renters claim housing benefit, so clearly not everyone potentially affected by the cap can find accommodation within it.
But these reforms were introduced in 2011. The latest cap was introduced only last month, when the overall benefit cap was rolled out nationally. Of the 40,000 families expected to be affected, half are in London. It will be their housing benefit that pushes them over the cap and their housing benefit that will be cut as a result.
Given the high housing costs across London and the demand for lower cost properties it will not be easy, or even possible, for affected families to find cheaper housing within the capital. If the next edition of London’s Poverty Profile shows that poverty in London has fallen it may well be because low income families are being forced out of London altogether.