When a man is tired of London, he is tired of life.
Samuel Johnson
For centuries, London has been one of the most exciting and dynamic cities in the world.
In 2014, it was the most desirable place in the world to work because, “the UK capital’s career opportunities, cultural attractions and cosmopolitan mix beat New York and Paris.”
London is the wealthiest region of the UK and, as Investopedia reports, it is a magnet for wealthy people from elsewhere,
“London has become the hottest destination for ultra-high-net-worth individuals with more than 80 billionaires currently living in the city.
In fact, there are more billionaires in London than in any city in the world, and more than 80% of all billionaires in the United Kingdom live in London. The city’s billionaires have a combined wealth of $497.6 billion and account for 59% of the total value of the U.K.’s top 1,000 wealthiest people.”
The wealth, the glamour, the hustle, the pace of life in London are all palpable.
And at the same time, when you walk through the streets, even in the wealthiest areas, the doorways are full of homeless people, begging for food and money.
How can such poverty coexist with such wealth?
London is a city of extremes: it is true that London is richer than any other region of Britain, but income in London is so unequally divided that London also has more people on low incomes than other regions. And since costs – especially housing costs – are far higher, the problems of poverty are most severe in the richest city in the country. And they are felt surprisingly widely.
London is richer than any other region of Britain
The official statistics confirm that London is indeed far better-off than anywhere else in Britain, at least in terms of average income. On average, incomes in London are 23% higher than in the next most prosperous region, the South East, and 43% higher than the average for the whole of the UK.
Source: ONS
With such an advantage in income, it might seem impossible to have serious problems of poverty.
But this income is very unequally divided in London.
Compared with other regions, the chart above shows that Londoners are better-off in terms of income. But that is really only true for the richer Londoners: almost 50% have lower incomes than their equivalents in other regions.
Source: DWP
And for the lower centiles, the difference is dramatic.
London also has more poor people
As a result, poverty rates are significantly higher in London than anywhere else in the country.
Source: https://data.london.gov.uk/blog/poverty-in-london-2017-18/
This source also comments that,
“The poverty level in London has changed little over the two decades that these data have been collected, only varying between 27 and 30 per cent and now stands at 28 per cent, marginally higher than in the years immediately following the recession.
The rate in London has been consistently higher than in any other region or part of the UK. It is now six percentage points above the national figure, four percentage points higher than any other region, and ten percentage points above the lowest rate (Northern Ireland). Poverty levels in Inner London remain significantly higher, at 32 per cent, while the Outer London rate has generally been only a little higher than elsewhere and stands at 25 per cent.”
As the Resolution Foundation reports, poverty disproportionately affects children, and child poverty is set to rise to record levels:
“The backdrop to the 2019 manifestos is the £34 billion reduction in social security support since 2010, the vast majority of which has fallen on working-age families. The legacy of these cuts is set to continue into the next parliament. A quarter of the benefit cuts announced in 2015 by then Chancellor George Osborne are still to be rolled-out – notably the two-child limit on benefit support. It is this legacy that is driving our projection for relative child poverty rates to rise to 34 per cent. That would be the highest level of child poverty since records began in 1961.”
London children will be particularly badly hit.
This is bad enough, but the data above just reflect income. The other side of the coin is costs.
London costs are higher
For most households, the biggest single cost item is housing which is extremely expensive in London.
Source: https://www.gov.uk/government/news/uk-house-price-index-for-march-2019
It is well-known that buying a house in London is out of the reach of the vast majority of young people. They are condemned to rent or forced to move out and commute which is itself expensive in both time and money.
And of course, because the prices are high, rents are also high in London. If you are near the bottom of the income spectrum, this causes intense problems.
The problems of poverty are most severe in London
This combination of low incomes (for many people) with high costs has a predictable result: serious problems of poverty. London has not only more people in poverty, it has both the most severe problems and the greatest spread of non-poor people who are nevertheless squeezed. For example, London has:
- More homeless children than other regions
- More people dying of homelessness
- And more middle-class people who see a ‘middle-class life’ as increasingly out of reach.
More child homelessness
Child homelessness is not unknown in other regions, but it is rare.
Source: Shelter
But in London, more than 40 out of every 1,000 children are homeless, living in temporary accommodation which is often unsuitable and itself damages their life chances.
As one child told Shelter,
“Life in the B&B is horrible, it’s worse than being in a real-life horror film. There’s no room to do anything, even if I’m reading my book, as I’m still going to get annoyed by someone. I’ve been told off by someone for running in the small corridor, you can’t do much, you can’t play much. I don’t get to play that often.
“Sometimes me and my little brother Harry, we fight for the one chair, because we both want to sit at the table, and sometimes he wins and sometimes I win. I find it really hard to do my homework as I get distracted by my little brother and I don’t have another room to work in peace.
“We moved here in September, and they said we were going to stay for six weeks. Then they told us we were going to stay for two more, then they told us it will be another week, then another one.”
This is just one of the ways that poverty gets passed through the generations.
More deaths from homelessness
It is shocking that the UK, one of the richest countries in the world, should have people dying on the streets. But we do, in increasing numbers. As the Office for National Statistics says,
“In 2018, there were an estimated 726 deaths of homeless people in England and Wales, 129 (22%) more deaths than in 2017 when there were 597 estimated deaths. The increase is statistically significant and represents the largest year-to-year increase in estimated deaths since the time series began in 2013.”
What is even more shocking is how many of these people are dying in London, the richest city in this very rich country.
Source: ONS
More middle-class who find their aspirations out of reach
Less serious individually than these extreme cases, but affecting more people, is how the prospects for the middle classes have receded.
40 years ago, if you were a newly-qualified accountant with one of what was then the Big 8 firms, you had it made.
You might not have the most exciting job in the world, but you would certainly be comfortable financially: you would be assured of a good salary; of course you would not have any student debt; you could afford a nice, though not grand, house in Clapham; and you would be part of an attractive defined-benefit pension scheme that meant that you would now be retired on 2/3rds of your final salary.
Apart from the salary, none of this would be true today.
A friend recently told me of a newly-qualified accountant at one of the Big 4 firms who explained,
“I have decided to leave accountancy. If I stay and do reasonably well, in 4 years I will be a manager and I will be earning £80,000. But I still won’t be able to afford to buy anything in London. If I can’t have a house, I might as well have a life.”
According to Rightmove, he is correct,
“Last year most property sales in London involved flats which sold for on average £533,753. Terraced properties sold for an average price of £671,542, while semi-detached properties fetched £653,690.”
So to afford to buy an average flat would be out of reach, even if he could find a 10% deposit.
This is an extraordinary shift in the ‘deal’ offered to middle-class Londoners.
The Financial Times even reports on the problems of the ‘Squeezed One-percenters’ – that is people earning an annual household income of £179,800:
“A consequence of the UK property market, most notably in London and the south-east, and the above-inflation rise in school fees is that individuals who 15 years ago would have felt they could afford most things within reason now find themselves significantly stretched.”
And because of the change to the ‘deal’ that young people face, parents who a generation ago would have been happy with their children doing well, now feel that they must do exceptionally well. Where once they would have been delighted that their children attend Dulwich or Whitgift; now they feel that if they don’t get into St Paul’s or Westminster, they are set up for failure. The pressure on parents and children – even in well-off families – has become intense. Rates of mental illness among the young are rising fast and drug usage, which had been in decline is now on the rise again.
Increasingly, London is a city that only works for the truly wealthy.
All of this puts a tremendous pressure on charities – food banks, homelessness charities, drug rehabilitation charities etc – which are attempting to tackle the symptoms caused by government policy. This is grim, but it is not inevitable. The book 99% sets out how we can change the system so that the 99% (and even the squeezed 1%) can thrive. And it really just needs us to take five steps.
If you would like to help or just to hear more, please do sign up and join the 99% Organisation.