The new London Living Wage wage rate has been set at £13.15 an hour, a rise of 10 per cent. The voluntary pay scale, which is higher than the government’s nationwide statutory minimum and, unlike it, applies to all over-18s, will benefit 130,000 adult workers in the capital. The Living Wage Foundation, which calculates the rate, says a full-time worker with one of the 3,500 London employers signed up to the scheme will be £2,145,000 a year better off – a welcome hike as cost of living concerns continue.
But this good news comes amid much bad. More than one in five adult Londoners have told YouGov in a newly-released poll for City Hall that they are struggling financially. Government figures show that as of September nearly 978,000 Londoners were receiving Universal Credit (UC), which is 30,000 more than in May. And nationally, according to analysis by the Trussell Trust and the Joseph Rowntree Foundation, 90 per cent of UC beneficiaries cannot afford what they define as “essentials”, covering the cost of food, utilities, clothing and basic communications, travel and household goods.
Many of the Londoners struggling to get by have jobs. A Social Market Foundation report published last year showed that in-work poverty is higher in the capital than anywhere else in the United Kingdom, and that conventional wisdoms about work being the route to solvency no longer necessarily apply. The report called in-work poverty “a structural challenge in London” due to the the nature and low pay rates of many of the jobs available. People interviewed for the report spoke of wishing they could work for more hours and the difficulty of combining this with caring for children and others.
Trust for London’s latest poverty profile puts the capital’s poverty rate – the percentage of all London households whose income, taking into account housing costs, is less than 60 per cent of the median – at 25 per cent overall, rising to 47 per cent for single parents. The overall poverty rate for London children is around 40 per cent. The Trust has done a borough breakdown which shows the rate reaches 48 per cent in Tower Hamlets, with Newham, Hackney, Barking & Dagenham and Camden all at 40 per cent or above.
This time last year, Professor Sir Michael Marmot and Financial Times data journalist John Burn-Murdoch separately characterised the UK as a poor country with a some very rich people in it. Burn-Murdoch reported that the lowest-earning Britons have a worse standard of living than counterparts in Slovenia. In London, despite the city being where so much of the nation’s wealth and taxes for public investment are generated, this pattern is particularly stark and damaging.
As well as meaning that around 2.4 million Londoners are struggling to make ends meet – skipping meals, turning heating down, cutting back on water consumption – it is inhibiting London’s economic efficiency and growth. The Social Market Foundation report says that poverty ultimately costs the UK £79 billion a year, a figure that includes spending on alleviating the worst of it.
What can be done to correct this situation, which is as counterproductive as it is unacceptable? Answers are available and not mysterious.
Roughly a year ago, Trust for London chief executive Manny Hothi, speaking at think tank Centre for London’s conference, pointed out some pretty basic ones: higher levels of benefits for those who need them, which also boosts the retail economy; higher wages, which governments can help enable and encourage; building more secure, low-cost housing, which can reduce both domestic and benefit bills as well as being a good thing in its own right as London homelessness soars. Far better provision of affordable childcare would pay dividends for London and many Londoners seeking employment too.
Sadiq Khan, with the limited powers and resources at any Mayor’s disposal, has made a contribution to alleviating hardship by providing meals for the poorest Londoners during school holidays and at weekends, and with his universal free school meals programme, which means parents who are insufficiently poor to qualify for national government provision no longer have to pay for their children’s school lunches. How much more could be achieved if others had the same political priorities and will?
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