London's Poverty Profile: borough-level poverty 2022

This report provides an analysis of borough-level poverty in London with new figures covering five years of survey data pooled together up to 2019/20. This period pre-dates both the COVID-19 pandemic and the cost of living crisis, and should be viewed as a baseline analysis of poverty before these issues have impacted. It explores how poverty is distributed across the London boroughs, calls attention to the effect that housing costs have on poverty rates and highlights components that are characteristic of poverty in London.

London is often discussed and thought of as a city of great affluence and although there is truth in this, it is also a city with high levels of poverty - London has almost the same proportion of its population in the highest and lowest income deciles and both are the highest when compared to the rest of England's regions. London is different to the rest of England in many other respects. Income inequality in London has been rising over the last 20 years, while remaining stable across the rest of England and Londoners pay a much higher percentage of their income on rent, compared to the rest of England. However, there are quite big differences within London as well. Poverty is not equally distributed, with inner London generally having a higher proportion of people in poverty than areas in outer London and there are stark differences in area deprivation.

In this report we examine the levels of poverty in different London boroughs and how housing costs affect these. We then explore how different characteristics, such as gender and working status are distributed within households that find themselves in poverty.

In 2019/20, just over a quarter (27%) of Londoners were living in households that were in poverty after housing costs (AHC) were taken into consideration. Such levels of poverty in London have remained stubbornly persistent for twenty years, with the number of Londoners living in poverty dropping by only 2 percentage points since 1999/2000. Moreover, AHC poverty rates in London have been consistently higher than the rest of England across the last two decades. In 2019/20 the AHC rate of poverty in London was 6 percentage points higher than the rest of England.

Within London, the significance of the impact housing costs have on poverty rates cannot be understated. When measured before housing costs, poverty rates in London and the rest of England over the same twenty year period have been much more closely aligned, with the rest of England actually having a marginally higher number of people in poverty than London (17% compared to 16%) in the most recent year of 2019/20. In fact, when compared with other regions of England, London only becomes the region with the highest rates of poverty after housing costs. When accounting for housing costs, London sees the largest increase in the poverty rate – an 11 point difference compared with before house cost levels in 2019/20 – leading to London moving from the region with the fourth lowest level of poverty to the highest rate of poverty.

The impact of housing costs to poverty rates is acutely apparent within London at borough level. Before factoring in housing costs, the disparity between the boroughs with the lowest rate of poverty (Merton and Sutton) and the boroughs with the highest rate of poverty (Wandsworth and Lewisham) stands at 12 percentage points in 2019/20. With housing costs factored in, the disparity between the borough with the highest (Tower Hamlets) and lowest rates (Merton) of poverty soars to 23 points. Before housing costs, only Lewisham and Wandsworth – the boroughs with the highest BHC poverty rates – have a poverty rate above 20%. Once housing costs are factored in, only 5 of the 31 boroughs have a poverty rate below 20%. Indeed 10 boroughs have an AHC poverty rate of 30% or higher, with 39% of people in Tower Hamlets living in poverty.

Westminster is the borough that sees the most dramatic impact of housing costs on its poverty rate, with a 22 percentage point increase after housing costs are factored in, while Richmond-upon-Thames sees the smallest change in poverty rate at 4 percentage points. Four other boroughs – Haringey, Newham, Tower Hamlets, and Camden – also see a change in the BHC/AHC poverty rate of greater than 20 points. All these boroughs are located within the ONS’s classification of Inner London, although large rates of change are also apparent in Outer London boroughs: Brent, Ealing and Enfield all see a change in the poverty rate after housing costs of 17 percentage points. Amongst those boroughs with the highest rate of change, Westminster, Haringey and Camden are particularly noteworthy for their extreme differences within the boroughs, containing pockets of both high prosperity and high deprivation.

The significance of housing costs is also seen in the changing poverty rates across the ten year period 2009/10 – 2019/20. Before housing costs are accounted for, 22 boroughs saw the rate of poverty fall and only 7 saw an increase in poverty rates. 5 of these boroughs – Wandsworth, Bexley, Lewisham, Hounslow and Richmond-upon-Thames – also saw an increase in poverty rates across the ten year period both before and after housing costs were factored in. The other two boroughs with a BHC increase in poverty rates – Croydon and Greenwich – moved to a position of no change in poverty rates once housing has been factored in.

When housing costs are factored in, the number of boroughs with an increase in the poverty rate over the ten year period increases to 12. This includes 7 boroughs which had, before housing costs, witnessed a decrease in poverty rates. The biggest impact of this was seen in Enfield where AHC poverty rates increased by 10 percentage points compared with a modest 1 point reduction before housing costs. However, even after factoring in housing costs, a majority of boroughs (17) have still seen their poverty rate fall across the 2009/10 – 2019/20 period. The biggest reduction in the rate of poverty (12 percentage points) was seen in Hammersmith and Fulham, while Wandsworth saw the highest increase at 15 points – which is only one point higher than its BHC poverty rate.

One of the most striking indicators on the composition of poverty in London is that across all boroughs at least 50% of people in poverty are from working families. In fact, with the exception of Southwark and Hammersmith and Fulham – which both have a 50:50 split on poverty amongst working and non-working families – all other boroughs have a majority of people in poverty who are in working families. Wandsworth has the highest proportion of in-work poverty, at a staggering 87%. This is also the borough that has seen the largest increase in poverty rates, both before and after housing costs, across the last ten years. In total, more than half of boroughs (55%) have a proportion of in-work poverty greater than 70%.

Poverty rates between men and women are fairly similar across the London boroughs, with only relatively minor differences between the number of men and women in poverty. That said, in most boroughs (20 out of 31) there are more women than men in poverty, with only eight boroughs having a higher percent of men in poverty than women. The difference in Wandsworth – where 61% of men are in poverty compared to 39% of women – is, however, the largest poverty gender divide of any London borough.

The disparity in child poverty rates is stark. Research by Loughborough University using a different methodology to us has produced statistics for 2020/21 and finds, after accounting for housing costs, over half of children (51%) are in poverty in Tower Hamlets – the highest of the boroughs. This is five times higher than the 10% rate in the City of London, which is the lowest borough. Only the City of London and Richmond have an AHC child poverty rate of less than 20%. Housing costs again have a significant impact on the rate of poverty amongst children, with child poverty rates at least doubling in all but 3 of the 33 boroughs. In the City of London – despite having the lowest overall child poverty rate – housing costs increase the rate of child poverty by more than three times as much (3% to 10%).