1 in 3 Londoners Lack Minimum Income

New research from the Centre for Research in Social Policy at Loughborough University, funded by Trust for London, suggests that although many of the costs associated with living in London are similar to the rest of the UK, a minimum socially acceptable standard of living is substantially more expensive in the capital.

Background to the Minimum Income Standard (MIS)

Since 2008, the Centre for Research in Social Policy has published annual reports on what the public say is needed to achieve a minimum socially acceptable standard of living in the UK. The MIS is based on detailed discussions with members of the public about goods and services different households need to cover essential needs and to participate fully in society.

Our latest study, funded by Trust for London, is the first to compare systematically the minimum costs in London with those elsewhere in the UK. Groups of Londoners from diverse backgrounds assessed what households in Inner and Outer London require for this living standard.

Key Findings: London Versus the Rest of the UK

Although many goods and services cost the same as elsewhere in the UK, key differences dramatically increase London’s minimum budget:

• Housing: The biggest additional cost in London, particularly private rent for working-age singles.
• Childcare: A three-hour nursery session in London costs significantly more than in other regions.
• Transport: London’s unique public transport network brings higher ticket prices.
• Lack of space: Less room for entertaining at home can mean eating out more frequently.

Example differences for three household types:

• A couple with two children (aged 3 and 7) needs around £164 (22%) more per week in Inner London and £157 (21%) more in Outer London.
• Lone parents with a child under two require £134 (25%) more per week in Inner London and £125 (23%) more in Outer London.
• Single working-age adults face a 47% higher cost (£131 per week) in Inner London and 35% higher (£97) in Outer London when private rent is included.

Who Is Most Affected?

These higher costs mean a minimum standard of living is unaffordable for a large proportion of Londoners:

• About 1 in 3 Londoners do not have sufficient income to reach this standard.
• This rises to 4 in 10 for families with children.
• Approximately 1 in 5 pensioners fall below this threshold.

Those earning or relying on the National Minimum Wage are particularly stretched. In some cases, a single parent on benefits is closer to the MIS than a parent on the NMW.

Addressing the Gap: Wages and Costs

Wage Solutions: Increasing the number of employers paying the London Living Wage would help more Londoners afford a minimum standard of living. For example, Brent Council offers firms discounts on business rates when they become Living Wage employers.

Cost Solutions:

• Housing: Build genuinely affordable homes and invest in social housing to reduce rent pressures.
• Transport: Expand discounted and concessionary fares for jobseekers and apprentices through Transport for London.
• Childcare: Increase the free entitlement from 15 to 30 hours per week to lower costs for working parents.

Conclusion

Samuel Johnson claimed that “there is in London all that life can afford.” To ensure as many people as possible can access that life, policymakers and employers must tackle both the income and the cost sides of the equation.

About the Author

Matt Padley is a Research Associate at the Centre for Research in Social Policy, Loughborough University, and a Lecturer at the Open University.

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