This report presents an assessment of the nature and extent of poverty in London, prior to and during the coronavirus pandemic. This original analysis uses the Social Metrics Commission’s approach to poverty measurement.
The most recent survey data only allows Government to calculate poverty rates up to the 2019-20 financial year. Assessing the impact of the pandemic requires updating this data to reflect the labour market impact of the pandemic, and to reflect changes to the tax and benefit system instituted since 2019-20. This modelling shows that:
- The poverty rate in London rose to a peak of 29% in the second quarter of 2020, as the impacts of furlough and job losses hit the capital harder than any other part of the UK;
- Poverty is expected to fall back to 28% in the second quarter of 2022, as the labour market improves.
This modelling suggests that the pandemic did little to change the pattern of persistently high poverty in London. In every period modelled, London exhibits a significantly higher poverty rate than the UK average. This consistent picture obscures the differential impact of labour market changes and the response of government, including support offered to households through the benefit system.
- The labour-market impact of the pandemic increased the number of people living in poverty in London by 230,000 in the second quarter of 2020.
- The £20 per week uplift to Universal Credit shielded 130,000 Londoners from poverty in the second quarter of 2020.
Analysis of pre-pandemic data reveals how the experience of poverty in London differs from that in the rest of the UK. Londoners living in poverty are more likely to be in deep poverty, and are more likely to experience poverty over a long period of time:
- Around 1 million Londoners in poverty are in deep poverty (more than 50% below the poverty line)
- Some 17% of Londoners live in persistent poverty, compared to 12% of people outside the capital.
There is considerable uncertainty as to the likely path of poverty from the second quarter of 2022 onwards, with families facing the most significant rising costs seen in recent times. What is clear is that the long-term challenges that face London will not be alleviated without concerted action from policymakers, both in London and nationally.
Encouragingly, this report shows that targeted support from government can have a material impact in protecting families from poverty during difficult times. In particular, our modelling shows that support offered to households through the benefit system largely alleviated the poverty impact of the pandemic in London.