Almost a third of Londoners are living in poverty with the "majority" of those in working families, according to a new report which paints a bleak picture of city life hit by stagnant wages and soaring rents.
Of those living in poverty in London, according to the fifth edition of London's Poverty Profile, 1.2 million are in a working family, a figure which has increased 70% in the last decade.
In England 20% of people are living in poverty, compared to 27% in London.
The number of children in poverty in the capital's private rented sector has doubled in the last 10 years, to 260,000, and the number of rough sleepers is at the highest level since data has been collected at 7,580 people, the report revealed on Wednesday.
While the introduction of the national living wage was welcome, the report found, George Osborne's planned cuts to in-work tax credits in April 2016 are likely to affect 640,000 London children.
The capital contains almost half of the families currently affected by the overall benefit cap at 10,500 families, including 2,400 losing more than £100 per week. Our analysis shows that if the cap is lowered as planned, they will lose another £58 a week and a further 20,000 families will be affected.
While poverty is getting worse, paradoxically adult unemployment has improved and is now at its lowest level since 2008, with just over 300,000 without jobs. The number of workless households, according to the report, which measures around 80 poverty and inequality indicators, is at a 20-year low - now below 10% of working-age households.
As a consequence out-of-work benefit claims have fallen sharply – from a post-recession peak of 690,000 to 525,000 – faster than the rest of England average, the report said.
"Improving employment prospects alone", the report found, had not been enough to lift people out of poverty because wages aren't high enough.
Mubin Haq, Director of Policy and Grants at Trust for London, said: “A record number of Londoners are in work, yet this has had little impact on the numbers living in poverty in the capital. Over two million are on a low income in London, with an increasing number in working families. On too many occasions work doesn’t pay enough, leaving people living in precarious situations."
The number of low paid jobs, the report found, was up for the fifth consecutive year in London with almost one in five jobs paying below the London Living Wage. It also comes as the number of temporary and involuntary temporary contracts reached a ten year high.
Housing was a key driver of poverty and homelessness, which has been a consistent trend across the five editions. It states: "Worryingly, the problem is not getting any better".
The private rented sector is an emerging problem which the report said required "urgent attention", with 860,000 private renters in poverty in London. Compounding the issue is that rents have increased by 19% in the capital during the last five years, compared to 11% in England. The average private rent in London is now £1,600 per month (more than double the £770 average in England).
A decade ago, the report said, "it was the least common tenure among those in poverty".
Report author, Hannah Aldridge from New Policy Institute, said: “When people talk about ‘generation rent’ they normally think of young working adults unable to save a deposit. But the 260,000 children growing up in private rented poverty are at the sharp end of London’s housing crisis – living in expensive, often low quality homes, without long-term security.
“‘Affordable’ starter homes at £450,000 won’t solve this problem – London needs investment in more housing suitable for a range of families and incomes, and it needs greater powers to ensure private accommodation is of a good standard.”
Building more affordable housing could help fix the problem, the report found, but noted that the Government keeps missing housing targets. The latest affordable housing target was missed by 40% - a net increase of 7,700 affordable homes a year compared with a target of 13,200.
The report said: "With a shortage of affordable housing, the only option for low-income households is private renting. For the very poorest, it can be a gateway to homelessness: almost all the rise in homelessness acceptances in the last five years have been due to the end of a private tenancy."
The report noted that the number of rough sleepers is now at its highest since data has been collected – 7,580 people.
While London is in crisis, the report found that poverty was spreading to new "hotspots" in the outer regions.
For the first time, western boroughs such as Brent and Ealing are "facing much greater pressures", whilst Inner London boroughs in the east are improving. Tower Hamlets and Newham were among the boroughs with the highest levels of benefit claimants in the first report, and now sit mid-table, the report said.
Haq said the problems identified in the report were not insurmountable: "There is no shortage of solutions to these problems. We can tackle them if there is the political will and drive to ensure London is a city for all and not just the wealthiest. With the Mayoral Election next year, there is a great opportunity to make London fairer.”