A new report out this week shows that there are about 3.75 million people in the capital living in households that do not have an adequate income.
Single working-age adults living in inner London face the highest proportion of additional costs compared to the same households in urban areas of the UK outside of London.
The figure is based on ongoing research about a Minimum Standard Income (MIS), which outlines the goods and services that members of the public agree all should have access to in order reach a socially acceptable living standard.
It includes basics such as food, clothes and shelter, but also what the public agrees is needed to enable people to participate in the world around them, such as a one-week UK holiday each year, and an occasional meal out.
The MIS for London has been put together by Loughborough University's Centre for Research in Social Policy (CRSP) since 2014, and is used to calculate the Living Wage.
The latest report, published by Trust for London, shows that four in 10 Londoners (41%) have an income below what is needed for a decent socially acceptable living standard
It also reveals how around a third of all pensioners in London now have incomes below MIS, up from a quarter in 2011.
Author Matt Padley, Research Fellow at CRSP, wrote: “The Minimum Income Standard approach captures the nuance that is so easily lost in unsubstantiated claims that people ‘just need to do more in London’ or a feeling that life is fundamentally different in the capital.
“The smaller size of properties included as a minimum in London, for example, makes it more difficult to entertain people in your home, which means that single working-age people need a little more for eating out each month; part of the appeal of living in a capital is the range of opportunities it affords and at a minimum the public agree that you should be able to enjoy some of these.
“The overwhelming majority of additional costs, however, are a result of the higher cost of housing, childcare and transport in the city.
“Private rents continue to exert a greater burden on households in London than they do in urban areas outside of London.
“While for some households, there are small savings on the cost of transport because the cost of owning and running a car has been replaced by a monthly travelcard, others face substantially greater costs associated with moving around where they live than those outside the capital.
“Childcare costs continue to increase at a faster rate in London than in urban areas of the UK outside London.
“These additional costs combine to mean that even though the statutory minimum wage in the UK has increased at a rate far above inflation in recent years, households in London are not benefiting in the same ways as those outside London.”
“MIS continues to shine a light both on what is needed for a minimum living standard and where the pressures on living standards are. This insight will be as important as ever following COVID-19. As we emerge from the crisis it is important to work together to ensure all Londoners can afford a decent standard of living, and build a fairer London for all.”
- Four in 10 Londoners (41%) have an income below what is needed for a minimum standard of living
- A minimum budget in the capital costs between 15% and 58% more than in the rest of the UK depending on household composition
- A growing proportion of pensioners living in the capital do not have sufficient income to cover their minimum needs
- A key source of additional costs, the cost of renting in London, has increased substantially in the past five years
- The National Living Wage (NLW) has done less to improve workers’ ability to make ends meet in London than elsewhere
- Single working-age adults living in Inner London face the highest proportion of additional costs compared to the same households in urban areas of the UK outside of London and much of this is related to the higher cost of renting privately in London. Rent accounts for 44% of the total minimum household budget in Inner London, 40% in Outer London and 29% outside London
- Pensioner couples in inner London fall 29% short of meeting their minimum needs
- More than a million children in London are growing up in households with incomes below MIS
- More than three-quarters of all Londoners with incomes below MIS are living in rented accommodation
- A Minimum Income Standard (MIS) for London is the income that people need in order to reach a minimum socially acceptable standard of living in the capital today, based on what Londoners think. This builds on work done to calculate a Minimum Income Standard for the UK. The London MIS is based on research with groups of members of the public living in Inner and Outer London, from a range of socio-economic backgrounds, who are tasked with reaching consensus on which items already identified by similar groups outside London (for the UK MIS) need to be included in a household budget in order for its members to reach a minimum acceptable standard of living. The report this year is an update based on changes in prices.
- This research is by Matt Padley, Research Fellow at the Centre for Research in Social Policy, Loughborough University.
- Trust for London funded the research. The Trust is the largest independent charitable foundation funding work which tackles poverty and inequality in the capital. Each year we provide around £10 million in grants and at any one point are supporting some 400 voluntary and community organisations.