London is often viewed as a wealthy and prosperous city, with a plethora of well paid jobs, and some of the country’s most important institutions and businesses. While this is true, it is also not the whole picture.
New research from WPI Economics, commissioned by Central London Forward (CLF), shows that London is also the most unequal region in the UK with stark and persistent inequality, poverty and deprivation going into the pandemic.
The majority – seven out of twelve – of central London boroughs are in the most deprived 20% of local authorities nationally.
Despite higher wages than in other parts of the country, high levels of wage inequality and extremely high housing costs means central London has the highest poverty rates in the UK. 30% of residents in inner London were living in poverty, eight percentage points higher than the UK overall (22%). While many assume that poverty is synonymous with unemployment, three in five (58%) people in poverty in inner London are in a working household.
Higher levels of poverty in London mean that children in the capital are more likely to be growing up in poverty. Immediately prior to the outset of COVID-19 four in ten (38%) children were growing up in poverty in London, compared to three in ten (31%) nationwide.
Figure 1: Child poverty rates in central London after housing costs (2019/20)
Our report finds that the pandemic has deepened these inequalities. The capital has been hardest hit by the Coronavirus jobs crisis. Employments fell by more than 6 percentage points between March 2020 and February 2021, meaning there were approximately 110,000 fewer payrolled employees in February 2021 than in February 2020. As a result, the capital saw the largest increase in unemployment of any region, and the largest increase in Universal Credit claims of anywhere in the UK.
While London as a whole has been hit hard, some Londoners have been more vulnerable to the impact of the pandemic. Young people in central London and those from ethnic minority backgrounds, are much more likely to have lost their job and fallen into unemployment during the pandemic. The proportion of people claiming unemployment related benefits in the most ethnically diverse neighbourhoods increased to 11.7%, compared to only 4.4% in neighbourhoods with a predominantly White population.
The unequal impact of the pandemic is also visible when it comes to wealth. The distribution of wealth within the capital is much more unequal than in other parts of the country. The least wealthy 30% of households in London own just 1% of the capital’s wealth; the top 10% own nearly half (43%). There is some evidence that these wealth inequalities have widened during the course of the pandemic. Many more affluent Londoners have been able to carry on working from home, and have seen their outgoings decrease, meaning they have built up significant savings. By contrast, Londoners who were struggling to get by before the pandemic have been more likely to lose their jobs, or to lose hours or earnings, forcing many to eat into savings, or slip into rising debt. Many of these Londoners – both those in work, and those out of work – will be facing a growing financial challenge this winter due to the end of the £20 uplift to Universal Credit, and the rapidly rising cost of living.
COVID-19 has also exposed significant health inequalities within the capital. Our research finds that death rates from the pandemic were significantly higher among Londoners from black and ethnic minority backgrounds, and that central London residents in the most deprived neighbourhoods were 30% more likely to die than those living in more deprived neighbourhoods. These inequalities help contribute to a relatively higher death rate in the capital. The age-standardised mortality rates – which adjust for our younger age profile – was 36% higher in central London than across England and Wales overall.
Figure 2: Age-standardised mortality per 100,000 (March 2020 – April 2021)
Although the impacts of the pandemic have been felt heavily by all Londoners, the report finds that the most significant impacts have been on areas and people that were already disadvantaged. Whether it be the health impact, the labour market impact, or the impact on households finances, the pandemic appears to have both exposed and deepened pre-existing inequalities.
This report demonstrates the significant inequalities present in central London which affects not just those experiencing it but also public services and the wider economy too. Addressing and tackling these inequalities is vital to progress not only a stronger and more resilient economy post-pandemic, but a fairer and inclusive economy so that all central London residents are able to access the opportunities available locally.
The government is carrying out its spending review later this month which will set out public spending plans for the next three years. This comes alongside the much anticipated levelling up white paper expected this autumn. This research clearly shows that despite the wealth in parts of the city, London needs levelling up too. If levelling up is about tackling stark inequalities and improving livelihoods, then this must happen in London too.
Efa Gough is a Policy Officer at Central London Forward – 21.10.21