The richest 10 per cent of Londoners were a quarter richer in 2010/12 than before the recession, bucking the trend for the rest of the capital's workers
New analysis by LSE academics has shown that the capital’s economic success following the recession has come at the price of increased income inequality for Londoners.
Taking housing costs into consideration, the richest 10 per cent of Londoners were a quarter wealthier in 2010/12 in terms of income than they were before the recession, whereas the poorest 10 per cent lost nearly a fifth of their net income over a similar period.
Between 2007/8 and 2012/13, incomes fell for most Londoners. Median income fell by three per cent before housing costs, and 11 per cent including housing costs. Londoners near the top of the wealth distribution were not only richer in terms of income than their counterparts elsewhere, but 26 per cent richer than in 2006/8.
The poorest 10 per cent of Londoners were worse off than their counterparts around the country, with a weekly household income of £112 after housing costs compared to £161 nationally.
Incomes of the poorest 10 per cent of Londoners living in privately rented accommodation in 2012/13 were up to 53 per cent lower in real terms after housing costs than their equivalents in 2007/8.
The situation has also got worse for disabled people. LSE’s estimates suggest that in 2007/8, the poorest 10 per cent of Londoners with a longstanding illness or disability had a weekly income of less than £141 after housing costs. By 2012/13, best estimates suggest that this figure was at £100, representing a fall of 29 per cent, or £41 a week. This fall is much more pronounced than anywhere else in the UK.
Low pay emerged from the analysis as an increasing problem – the proportion of London workers who earned less than the London Living Wage (LLW) increased from 17 per cent in 2007/8 to 23 per cent in 2012/13. There are also troubling ethnic inequalities where low pay is concerned – 47 per cent of Bangladeshi workers 44 per cent of Pakistani workers and 31 per cent of African, Caribbean or Black British workers were paid less than the LLW in 2012/13,
Dr Polly Vizard, the author of the report, said:
“Our examination of detailed data on the position of different population groups up to 2012/13 suggests that economic outcomes for some of the poorest, lowest paid and most at risk Londoners deteriorated in the wake of the economic crisis and subsequent downturn, whilst wealth at the top of the distribution grew, and inequality against some indicators increased.
“As the 2015 General Election and 2016 Mayoral Elections approach, the findings show that disadvantage and inequality in the capital are major challenges for whoever gains power”.
Bharat Mehta OBE, chief executive of the charity Trust for London which funded the research, said:
“To start closing the gap and to tackle poverty, we need to address the issue of housing, which for many in London is their single biggest cost of living. Quite simply, we need more homes in London – to rent and to buy.
“These homes need to be affordable, with affordability linked to something sensible such as people’s incomes. We must challenge the view that has grown up in this country of property primarily being an asset rather than a home and a basic human need.”
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.