It’s London Challenge Poverty Week. Coordinated by a network of organisations working to improve the lives of the 4 in 10 children living in poverty across the capital, the week is shining a light on the persistent poverty and disadvantage in London.
Despite the rhetoric around levelling up the English regions, the reality is that levels of poverty and deprivation are higher in London than in the rest of the country. This is partly to do with extortionate housing costs and partly to do with higher living costs generally, stagnant wages and a decade of local government funding cuts.
Inequality is worse in London too. Low paid Londoners are more likely to be women, young people, migrants, and those from black ethnic groups. A survey of Peabody residents during the pandemic shows that black residents were 56% more likely to have lost their jobs than those of European descent. It’s a particular issue for the capital as one of the most diverse cities in the world.
Seventy-four per cent of Londoners in poverty are in work – for now. Londoners’ wage growth in the lowest salary bands has lagged behind the rest of the UK for more than a decade. Their pay has been outstripped by inflation, and private rents in the capital have risen more than twice as much as wages during the same period. Even before the pandemic, low income Londoners were becoming worse off relative to people in the rest of the country.
Now, with one in three low paid workers in sectors that were shut down by the pandemic, it is time for all of society to pay attention to London’s growing problems. I don’t deny the case for a regional rebalancing of the UK economy, but there is an urgent pressing need to challenge and alleviate the inequality and grinding poverty and disadvantage experienced by many in our capital city.
This will take a coordinated effort between government and business, the public and private sectors. We need firstly to raise awareness – which is the point of the London Challenge Poverty initiative. Then we need to work together as a coalition with proposals to, among other things, reform the social security system so it works for people when there are too few jobs, and invest in genuinely affordable rented homes in the capital. Only then can we create the conditions for prosperity and help people out of poverty.
In July, there were about five out-of-work benefit claimants for each available job in London, and the jobs crisis is deepening all the time across the city. Forty-two per cent of Peabody’s working residents have either lost their job, been furloughed or are working fewer hours as a result of the lockdown.
In this situation, with fewer job vacancies and falling incomes and living standards for more people, we need a functioning safety net – a system that protects people and provides them with enough money to live on if and when their incomes are reduced.
Universal Credit doesn’t do this effectively and is a particular problem in London because of its higher cost of living. I’m worried about what will happen to people if the government takes away the £20 a week uplift in the spring. Credit where it’s due, the decision to increase support in April was welcome. But for already struggling low-income Londoners it is a lifeline that should not be taken away.
Debt is a baked-in structural feature of the system through the five-week wait for money. The provision of loans has the effect of reducing the size of payments over a longer period as the DWP recoups money from the least well off. This is a failing safety net, even for people with the lowest housing costs in the capital, and it needs reform.
The lack of affordable housing in London is a key driver of poverty, and highlights another way in which people are worse off in the capital. Low-income families in London spend 56% of their income on housing costs compared to 37% in the rest of England.
Last year, London borough councils spent over £733 million on temporary accommodation for 57,000 homeless households, including 80,000 children. There are 250,000 people on council waiting lists inside the M25 and, increasingly, families are displaced to other parts of the country as there are no other options available. We need more public investment for affordable housing in London as a key part of an anti-poverty strategy.
These are tough, challenging times for the whole country. There are people in poverty everywhere, and the pandemic is only making things harder. However, the poverty challenge in London is particularly acute and needs urgent attention.
Brendan Sarsfield is Chief Executive of housing association Peabody.
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