THE BLOG

How Fair Is London?

05/04/2016 13:10 | Updated 05 April 2016

London is a city rich in diversity with deep inequality. The metropolis is Europe's largest city and the sixth richest place in the world. Yet the total wealth of a household at the bottom (the 10th percentile) is £6,300; towards the top (the 90th percentile) it is £1.1million. London's 90:10 wealth ratio is 173, almost three times the ratio for the rest of Britain (at 60).

As employment has increased so has the number of people in a working family in poverty - from 700,000 to 1.2million in the last decade, an increase of 70%. Almost 700,000 jobs in London (18%) pay below the London Living Wage. This has increased for five consecutive years, particularly among men working full-time. Last week's Minimum Wage increase for those aged 25+ at £7.20 falls far short of the £9.40 London Living Wage. Despite the spin, the Government is being complacent in addressing low pay. More could be done to incentivise fairness, not least in preferential rewarding of public contracts to firms that pay the London Living Wage.

Amongst the 8.6million Londoners, nearly half of Inner and two fifths in outer London's population belong to an ethnic group other than White British, compared to about one in ten of the population outside the capital. From the 28 English authorities classified as most diverse, 24 are in London. This diversity is set to increase - just think about 80% of children in inner London primary schools coming from ethnic minorities and more than half not speaking English as a first language. Giving those children improved life chances means narrowing the wealth gap so families can better thrive, by for instance, providing better vocational education and more apprenticeships. It also means an economic policy centered on investment not austerity, with greater devolution of powers - including the retention of property and land taxes.

The housing crisis is the single biggest barrier to prosperity, growth and fairness facing Londoners today. The capital's shortage of decent and affordable homes is causing misery for too many families. For example, 48,000 households live in temporary accommodation in London (three times higher than the rest of England put together), 15,600 of which live outside their home borough. Over the last two years an estimated 2,700 families have been placed in accommodation outside London. Families and communities are being broken up as a result.

The cost of housing is growing beyond the reach of many Londoners. Today 27% of Londoners live in poverty after housing costs are taken into account, compared with 20% in the rest of England. Rents are taking up more and more of people's income. Home ownership is slipping increasingly out of reach for more and more Londoners, and homelessness is rising for the first time in a generation. Many Londoners now face far longer and more expensive commutes, with businesses struggling to recruit and retain the people they need to grow and prosper. At 860,000 there are more people in poverty in private rented housing than there are in social rented or owner-occupied homes. A decade ago it was the least common tenure among those in poverty.

London needs a housing revolution. In the three years to 2013/14 there was a net increase of 7,700 affordable homes a year compared with a target of 13,200, meaning the target was missed by 40%, with the new definition of £450,000 deemed to be affordable. 60% of these new homes were available for social rent. That's why more affordable homes need building, linked to new infrastructure, including Crossrail and Bakerloo extension.

More people are moving from inner to outer London and increasing numbers are going much further. Families are able to get more spacious and affordable homes, but suffer from spiraling transport costs. The divide is illustrated by 9% of all rail journeys being taken by the wealthiest, compared to 2% of the most low-paid. Conversely, shorter trips and working class families are more likely to take local bus journeys. London commuters pay an average of £320 each month or £3,830 per year for their journey, which includes just over £3,000 on rail fare and nearly £1,000 on parking.

All in all, the evidence clearly indicates that fairness is increasingly alluding most Londoners. The more diverse the city gets, the bigger the wealth and poverty divide becomes. That's particularly true as more women are pushed into part-time work, more ethnic minorities are pushed into low paid jobs and disabled people are consigned to benefits. Consequently, life gets economically tougher and less inclusive.

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