Poverty 2026: London has highest poverty rate in the country for second year in a row

27% of Londoners are living in poverty. That’s almost 2.5 million people, equivalent to twice the population of Birmingham.

In this analysis, we unpack the latest data, explore which groups are most affected and what factors are driving London’s poverty rate.

Poverty still highest in London

At 27%, London has the highest poverty rate in England. The way poverty rates are calculated has changed, and we can't make direct comparisons to last year yet (more on that later).

But we do know that the gap between London and the rest of England is even larger than it was last year. The West Midlands has the second highest rate, at 21%.

Poverty rates by region (2024/25)

Why London is an outlier

This year, the Department of Work in Pensions (DWP) changed how it calculates poverty rates. We explore the changes and what they mean in more detail further down the page.

But essentially, poverty rates historically have undercounted the number of households receiving benefits and how much is being claimed.

The new measure corrects this, meaning we have a more accurate picture of how much people receive in benefits. Because those benefits count towards household totals incomes, more people rise above the poverty line. So across most of the country, poverty rates were expected to fall slightly under the new measure.

And that's exactly what happened in almost every region of England. But in London, poverty rose anyway.

At the moment, only the top-level data has been published. We'll share more analysis when it's available.

What we do know – the cost of housing

The number one reason for London’s high poverty rate is the cost of housing. The city goes from having one of the lowest poverty rates in the country before we take housing costs into account (15%), to the highest when we do (27%).

Potentially, this could be a reason why London is an outlier in this year’s poverty statistics: the worsening housing crisis outweighed any expected increase from the new methodology.

But London’s poverty rate before housing costs also didn’t reduce in the latest data, whereas it did in all but one of the other English regions. So there seems to be more to the picture.

We'll be updating London's Poverty Profile with the latest data and analysis when it is available.

Since the mid 1990s, poverty statistics have been calculated using a survey called the Family Resources Survey (FRS).

Carried out each year by the by the Department of Work and Pensions (DWP), the survey collects information about how much money people earn, their income sources and their housing costs. It gives us a good picture of household income.

But historically, the survey hasn’t been able to provide a full picture of how much people receive in benefits, due to reliance on self-reporting. The benefits system is complicated, and people aren’t always able to accurately give their exact income to the level of detail needed for the survey. People are also sometimes reluctant to tell interviewers about their benefits, because of stigma.

Under the new method, the DWP can now link its own benefit data records directly to the people who took part in the survey (with consent). And so it no longer needs to rely on self-reporting that they receive a benefit or how much they receive.

Because benefits were previously undercounted, some people’s income was recorded as lower than it actually was. This meant more people were counted as being below the poverty line.

The DWP has used linked administrative data for the main statistics for the first time with the 2024/25 data – meaning we’ll have a more accurate poverty rate. As a result, the proportion of people counted as in poverty will (in most cases) be lower than in previous years by around 1-2 percentage points.

This isn’t necessarily because people are earning more, but because we have better data.

The downside of this we can’t now make longer-term comparisons – as the poverty rates from 1994/95-2020/21 have been calculated using the old methodology.

The good news is the DWP but has also looked back and retrospectively linked people’s benefit records from 2021/22. From 2021/22 to 2024/25 we have values for self-reporting and the new linked data, with the administrative data now being used in the official statistics for all these years.

London's Poverty Profile

Explore all of our data on London's Poverty Profile