It will be ten years in 2024 since we began research on what's needed to live with dignity in London. During this time our research with members of the public in London has identified what different individuals and households need to cover the essentials, like food, clothes and shelter – but also what they need to be able to participate in the world around them, to feel part of the city they live in.
We came back to London towards the end of 2022 to do some new research with the public, building on our work across the UK on Minimum Income Standards (MIS). Regularly updating this work is critical. It means we can look at how the broader economic, social, cultural and political environment has impacted the ways people think about and describe what’s needed for a minimum socially acceptable standard of living. And, importantly, it means that we can track what’s happened to the cost of reaching this minimum over time.
Much has happened in the UK over the past decade to potentially impact on shared views of what’s needed - we've had five different prime ministers, a referendum on membership of the EU resulting in Brexit and its fallout, and Covid-19, with its accompanying restrictions and legacy.
And yet against this backdrop, the core of what’s included in a minimum basket of goods and services hasn’t changed much. Many of things that the public agree are needed have remained the same over time, and most of what‘s needed in London is the same as in towns and cities outside London – access to the internet, birthday presents for children, or an annual holiday in the UK.
What’s changed substantially over time is the cost of reaching this minimum. As a result, so has the minimum income needed to provide a dignified standard of living.
For those in work, the National Living Wage has had a generally positive impact on disposable incomes since its introduction, but hasn’t kept pace with what’s been happening to the cost of living in the capital. More employers paying the London Living Wage, and developing thinking and practice on the role of London weighting could help to address this side of the equation.
How much do you need to earn for a dignified standard of living?
In 2018, a single working-age adult living in Inner London needed £488 each week (including rent) to reach this publicly determined minimum living standard. By 2022, this had increased to £649 each week. This means that a single working-age adult in the capital needs two-thirds more than they would if they were living in an urban UK area outside of London.
Much of this difference is a result of significantly higher rents in the capital. In 2022, a privately rented one bedroom flat in Inner London, towards the cheaper end of the market, is nearly three times as much as a similar flat in the East Midlands. Working full-time on the National Living Wage, a working-age single person would only be able to cover 64% of what they need to live with dignity in the capital. They would need to earn just over £45,000 to cover all of their minimum needs and to be able to participate in the city in which they live.
The extra costs of living in London are just as stark for families. A couple with two living in Outer London needed £906 each week (including social rent and childcare) in 2018. By 2022, this had increased to £1109 each week. A growing number of households with children are in private rented housing in the capital, with social housing difficult to access. This has a significant impact on what’s needed to meet those minimum needs. If they were living in private rented accommodation, the same couple with two children in Outer London would need nearly £200 more a week in 2022 (£1299 per week). This would mean each parent would need to earn £28,000 in Outer London – substantially more than in urban areas outside of London, where they would need to earn £22,400.
What does this all mean for living standards in the capital?
One way of looking at this is to look at the number of people living in London who don’t have the income they need to live with dignity, after they’ve paid for housing and childcare. Our latest analysis shows that:
- 4 in 10 Londoners (39%) have an income below what they need for a minimum standard of living
- nearly half of all children are in the capital (48%) are growing up in households with incomes below this level. This means that nearly a million children are living in households that are having to make really difficult decisions about what to prioritise
- 35% of pensioners are living on inadequate incomes, up from 25% in 2011.
A disheartening conclusion of our research in London – and this analysis – is that the challenges to living standards in the capital that were apparent in 2014 are still the most significant policy challenges. And the dual importance of boosting incomes and addressing costs remains.
When it comes to addressing costs, in terms of housing, key questions about quality, affordability, accessibility and suitability persist. How can we ensure that a broad range of individuals and families are able to live and work in the capital? While the recent announcement about an increase in the level of support with the cost of childcare is welcome, the burden of childcare costs remains a substantial one for many households.
When thinking about boosting incomes, support through the social security system has failed to keep pace with increases in costs and has become less and less adequate, leaving households who depend on this support further and further from meeting their minimum needs. We desperately need a system that supports the most vulnerable, that enables people to feel part of the society they live in and that supports people to live with dignity.
For those in work, the National Living Wage has had a generally positive impact on disposable incomes since its introduction, but this hasn’t kept pace with what’s been happening to the cost of living in the capital. More employers paying the London Living Wage, and developing thinking and practice on the role of London weighting could help to address this side of the equation.
It's difficult not to sound like a stuck record when talking about living standards in London. As we approach a decade of research in the capital, our hope is that the next decade will be one in which those living in London are able to thrive not just survive.