Income and Poverty

London's Poverty Profile

  • Published: Oct 20, 2011
  • Author: Anushree Parekh
  • Category: Income and Poverty

We launched our third London’s Poverty Profile report today. It looks at a range of indicators of poverty and disadvantage, from low income to ill health, covering housing, education and employment along the way. 

The report shows that, for some indicators, London mirrors national trends, even if the picture in London is worse than elsewhere. For others, though, the problems are unique to London. 

So for example, though the poverty rates for children, working-age adults and pensioners are much higher in London, they are but moving in line with national trends. 

Over the last ten years, child poverty declined in London as it did elsewhere. Pensioner poverty has also reduced, both in London and elsewhere. However, the proportion of working-age adults living in low income families has risen in London; as is the case throughout the country. 

Almost half of all children and adults in low income households in London and nationally are living in in-work poverty, which has increased in the capital as well as in rest of the country. 

More positively, the report shows that indicators on educational achievements among children are improving in London, at a faster rate than improvements elsewhere. The proportion of 16 year olds not attaining 5A*- C in London had dropped from 39% in 2007 to 22% in 2010; in rest of England it dropped from 40% to 24%. 

One of the reasons why London is making faster progress in improving children’s basic educational standards is because poor children (those receiving free school meals) are performing much better in London than elsewhere.

So while London’s overall levels of income poverty or educational attainment are different from the rest of the country, the patterns are comparable. 

What is unique about the nature of London’s poverty and exclusion is the key role of housing. Fundamentally, high housing costs are responsible for London’s high poverty rate. 

But in a range of housing related indicators London fares much worse than the English average. Rates of homelessness are higher. Three quarters of all families housed under in temporary accommodation under homeless provision are in London. The proportion of households living in overcrowded condition is also high and rising. The report also notes that number of rough sleepers in the capital increased in the last 7 years. 

The close link between housing and poverty in London makes it distinctively vulnerable to the worst effects of the changes to the Local Housing Allowance. 

Based on DWP calculations, the report estimates that over 100,000 households in London will have to supplement their LHA with other income in order to cover their rent. 

Landlords could reduce their rents in response to these changes, though the evidence suggests this is unlikely to happen in sufficient numbers to mitigate the worst effects. In the absence of a reduction in rent, families would be faced with four options. Firstly, the household could get by on a lower income. This will increase poverty. Secondly, households could move into smaller, cheaper properties - this will add to the already high levels of overcrowding. Thirdly, households could move out of the area and move elsewhere – this will put pressure on health, education and transport services in the “cheaper” areas into which such families move. Or in the worst case scenario, households may be forced to declare themselves homeless. 

Whatever happens, the impacts of this policy will be much greater in London than elsewhere. The character of the city will change substantially.

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