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London Poverty Levels Increase

Written by on 27 May, 2009

The great paradox of London is that despite contributing 36 per cent more per head to the economy than any other region of the UK, poverty in the capital continues to rise. A city of divided social fortunes, London is the richest part of Britain yet has the highest proportion of families in both the top and bottom tenth of income earners.

The City Parochial Foundation, one of the largest independent charitable foundations, recently commissioned an independent report to investigate the extent and effects of poverty in London. It is intended to provide government and local authorities with the rationale to introduce change.

After the cost of housing is accounted for, poverty rates rose considerably. Almost two-fifths of children, a quarter of adults of working age, and a fifth of senior citizens currently live in what is classified as a low income household.

Incomes are considered to be low if below 60 per cent of the median for that year. This measure is used by the government in terms of measuring child poverty targets. It is also the measure used throughout the European Union.

The number of children from low income families in London has risen since the 1990′s. Almost half of the children in low income families have parents with a job. Whilst child and working age poverty have reduced in inner-city London, it has increased in outer London. Ten years ago figures were evenly divided between inner and outer London.

Almost a quarter of all working age Londoners’ currently come from low income households. This is far higher than the national average of just 17 per cent. This means that as many as one in every five working age adults in poverty currently resides in London.

Whilst still high, the government has enjoyed some success in tackling low income amongst seniors. About 27 per cent of pensioners living in inner London and 19 per cent in outer London fall under the low income classification. However, these figures have come down considerably as they were once 42 per cent and 26 per cent, respectively. Pension credits are largely responsible for this large reduction.

According to the 2001 census, over-crowding was four times higher in London than other regions. Virtually all inner London areas had a higher percentage of over-crowding compared to outer London. Unaffordable property prices and a desire to be closer to work were largely behind these higher figures.

Housing costs are far higher in London than other regions, and during the economic downturn many in the capital have found themselves in debt and falling behind mortgage payments. Londoners’ have a higher before housing costs’ income than other regions and this paints a very false picture. It creates the illusion that someone is better-off when really they are worse off in real terms.

Levels of homelessness are roughly equivalent to other regions. The number of families living in temporary accommodation is many times higher than any other region of England. For example, it is five times higher than Manchester which had the second highest rate.

Despite a number of changes to the state benefits system, only the introduction of pension credits has enjoyed any real success. Global bank bail-outs have cost £4,473 billion in public funds so further help for low income families is likely to be limited for the foreseeable future.

Useful link: IVA

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