A Minimum Income Standard for London 2019

A Minimum Income Standard (MIS) is the income that people need in order to reach a minimum socially acceptable standard of living in the UK today, based on what members of the public think.

Previous research in the capital building on an established programme of research in the UK has explored in detail what people living in London agree is needed for a minimum standard of living. Groups of members of the public in London discuss the needs and costs which are different and/or additional to those described by people living in urban areas of the UK outside London. This provides the basis for calculating the income needed by a range of different household types in order for them to be able to afford an acceptable living standard.

This year's report from the Centre for Research in Social Policy at Loughborough University and funded by Trust for London builds on this research and updates the MIS for London based on price increases in the year to April 2019, as estimated by the Consumer Prices Index (CPI). For housing, transport and childcare costs the updated budgets reflect ‘real’ changes in London costs. This update provides an opportunity to assess what has changed in the cost of minimum between 2018 to 2019, and to examine the implications of this for the adequacy of state support and wages, and for the income needed to provide a minimum standard of living.

• 4 in every 10 Londoners (41%) have an income below what is needed for a minimum standard of living, a significantly greater proportion than in the UK as a whole. This means that 3.57 million Londoners are living in households with inadequate income.
• Although many of the costs of meeting a minimum standard of living in London are similar to other towns and cities in the UK, a minimum budget in the capital costs between 15% and 58% more than in the rest of the UK depending on household composition. Much of this difference continues to be accounted for by the higher costs of housing, childcare and transport in the capital.

Three key recent trends

• A growing proportion of pensioners living in the capital do not have sufficient income to cover their minimum needs. Around a third of all pensioners in London now have incomes below MIS, up from a quarter in 2011.
• A key source of additional costs, the cost of renting in London, has increased substantially in the past five years. While rents at the cheaper end of the rental market in the UK increased by around 10% between 2014 and 2019, in Inner London private rents increased by around 15% and in Outer London by around 20%.
• The National Living Wage (NLW) has done less to improve workers’ ability to make ends meet in London than elsewhere. The NLW enables a single person working full time in urban areas of the UK outside London to cover just over 80% of their costs, and this figure has risen as the NLW has increased. For a single person in London, however, the proportion of costs covered has fallen to below 50%, partly because costs have risen but also because the level of support provided by Housing Benefit to help workers with high rents has fallen.