Poverty in London 2021/22
- The data collection used to create these poverty statistics was heavily affected by the coronavirus (COVID-19) pandemic, as in the previous year, but to a lesser extent. As a result, only a single recorded change in the Department for Work and Pensions’ (DWP) published headline low-income measures was statistically significant. The DWP advises caution when making comparisons with previous years and when interpreting larger changes.
- Estimates of overall poverty levels in London fell to 25 per cent of the population, or 2.2 million people.
- Poverty levels fell for all age groups in London.
- London’s child poverty rate fell to its lowest level and below the level for the West Midlands. Even so, it is estimated that one in three children in London are living in poverty or around 700,000 children.
- Although persistent poverty is now lower among London’s children than in previous estimates, one in four children are growing up in persistent poverty.
- Estimates for small areas highlight some of the areas in London where the issue of child poverty is most acute, most notably some of the wards in Tower Hamlets, Hackney and Camden, but also in widespread pockets in other boroughs too.
- Poverty levels among working age Londoners have fallen to around 22 per cent but persistent poverty has increased to 15 per cent of this age group.
- Estimates of pensioner poverty have decreased for London but remains marginally higher than working age poverty in London, at 23 per cent.
- Around one in nine pensioners in London are living in material deprivation, unable to access the necessities for today’s society.
- Around 95 per cent of Londoners were described as food secure, meaning that one in twenty lived in a household that was in food insecurity.
The data used in this analysis relates to the financial year ending 31st March 2022. The regional data are presented as a three-year average. However, the data for 2020/21 were so badly impacted by the pandemic that the Department for Work and Pensions (DWP) who publish these statistics1 did not publish the usual detail in the release last year, including regional statistics, and have decided to exclude that year’s data from all regional estimates. The “three-year average” data used in tables and figures showing regional data and for some other characteristics, such as ethnicity, therefore incorporate just two years’ data in the time points that would include 2020/21.
This note concentrates on the measure of relative poverty after housing costs (AHC), which is people living in households with equivalised2 income to spend below 60 per cent of contemporary median (midpoint) income after taking account of essential housing costs of rent, mortgage interest, council tax, water bills etc, but not including fuel bills. The poverty level for 2021/22 equates, for a couple with no children, to around £300 per week. However, there are different ways to measure poverty, and this brief analysis also outlines some of the key findings on those different measures for London.
The data in this report pre-date the bulk of the cost of living crisis3, which started in late 2021, so although some costs had started to increase during the financial year 2021/22, many people would have been on fixed contracts for rent or mortgage interest payments etc, so the full effects of the crisis on disposable income, including wage increases, would not be included.
The estimated number of Londoners living in poverty for 2019/20–2021/22 was 2.2 million, or 25 per cent of the population. The previously published estimate of poverty levels in London was 27 per cent, or 2.4 million, for the three-year period 2017/18-2019/20.
The overall level of poverty in London, at 25 per cent, is the lowest estimate in over a quarter of a century that these data have been collected, having previously varied between 30 and 27 per cent. The London poverty rate does, however, remain above the UK-wide rate, which has ranged between 25 and 21 per cent, standing at 22 per cent for the latest estimate. The London poverty rate has been the highest of any region but was, for the first time, lower than the percentage for the West Midlands (27 per cent, representing 1.6 million people), and the same as for the North East region (25 per cent or 0.7 million people). The poverty rate for Outer London matched the rate for the next highest regions – North West, Yorkshire and the Humber and East Midlands, at 23 per cent, but Inner London stood out as still having the highest poverty rate, at 29 per cent. The differing sizes mean that more people living in Outer London were in poverty than in Inner London – 1.4 million in Outer London, compared with 0.8 million in Inner London.
In contrast, the poverty rate in London, counting all income and deducting taxes but before taking housing costs into account (BHC), which had tracked the national rate more closely, is now among the lowest of any region, alongside neighbours East and South East, at 14 per cent. Median income in London, at £662 per week (BHC), is higher than in any other region – £12 more than for the next highest region, the South East and at least £150 higher than in the North East, Yorkshire and the Humber and the West Midlands. Overall the London median equivalised net income was nearly £100 higher than the median weekly net income across the UK as a whole of £5694. The higher income in London is the result not only of higher wages on average, but also higher benefit levels relating to housing. A much higher proportion of London households live in private rented housing and their costs are higher, so the amount paid in Housing Benefit and Universal Credit contributes to overall higher levels of income in London before the costs of housing are taken into account. The costs of housing in London are significantly higher than elsewhere, so that the median figure for income AHC is much closer to the figure for the whole of the UK at £532 per week in London and £499 for the UK (a difference of £33).
The mean average weekly household income AHC in London, at £723, is more than £100 above the national average, due to the much higher incomes in a significant portion of London’s households. At the same time, nearly one in five Londoners live in a household with less than half the national median income, that is in households with equivalised weekly income after housing costs of less than £250 per week. This proportion of 18 per cent (compared with 15 per cent nationally) live in what is sometimes termed “severe income poverty”. Together, these illustrate the much greater levels of income inequality in London than found elsewhere in the UK.
Poverty by age group
Levels of poverty vary across the population for different attributes. One of the key differentials is age. Poverty rates for London have fallen for every age group in the latest estimates, continuing the long term trend among children and working age Londoners but reversing the recent trend for Londoners above pensionable age.
Children are more likely to be living in poverty than adults overall, with the latest estimate of 33 per cent of London’s children (700,000) in poverty for 2019/20-2021/22. This is a substantial decrease from the previous estimate of 38 per cent of London’s children living in poverty, but still well above the 25 per cent for the population as a whole. This is by far the lowest estimate of the child poverty rate London has seen, with the previous lowest proportion of children in poverty after taking housing costs into account of 36 per cent seen during 2013/14-2015/16, towards the end of the financial crisis.
The child poverty rate in London is still above the national level, which has remained unchanged at 30 per cent, but below the rates given for several other regions. Both the Inner and Outer London child poverty rates were substantially lower than the previous estimates, though the percentage of Inner London children living in poverty was still as high as the highest rate elsewhere in the country, matching the West Midlands, at 38 per cent. The Outer London child poverty rate was closer to the national average, at 31 per cent. However, caution is advised in using these figures, in comparing areas and particularly when looking at change over time, due to the increased uncertainty in the estimates. Some of these estimates show greater volatility in recent years.
Alternative measures of poverty are published, some derived from the same source and using different definitions, others derived from other sources. Child poverty in London as measured before taking housing costs into account also fell in the latest estimates, to 17 per cent. Even this lowest estimate of children in poverty in London represents one in every six children living in poverty, but whereas the London rate measured on this basis had been close to the national rate in all previous years, the UK estimate remained at 21 per cent for 2019/20-2021/22.
Another alternative measure is children living in severe poverty. This means children living in households with less than half (50 per cent) of median income, equivalent to £250 per week after housing costs for a couple with no children. Almost one in four children in London were living in severe poverty during 2019/20-2021/22 (24 per cent). Again, this was somewhat lower than the estimates for previous years (down from 29 per cent prior to the pandemic), but remained among the highest for any region, while the percentage of children in Inner London living in severe poverty was 30 per cent, still well above all other parts of the country.
For some children, their experience of poverty may be relatively short term, but most children in poverty stay in poverty. The percentage of all children in London counted as being in persistent poverty5 over the four-year period ending 2020/21 is 24 per cent AHC but just seven per cent BHC. Both figures are somewhat lower than for the previous year, although the national estimates for persistent poverty increased by one percentage point on both measures, compared with the previous year. The estimate for persistent poverty among children in London using the BHC measure halved compared to the previous estimate and was among the lowest of any region. However, while the rate of persistent poverty using the AHC measure fell among children in London by four percentage points compared to the previous year, persistent child poverty remained higher in London than in any other region.
Most children in poverty across the UK live in a working household. Seven in ten of all children in poverty lived in a family with at least one adult in work in 2021/22. However, living in a household with no one in work does substantially increase the risk of poverty, so that while one in four children in a family with at least one person in work lived in poverty, this rises to three out of five children living in a workless family6. Half of all children living in rented housing were living in poverty.
Material deprivation – when people cannot afford what are commonly regarded as essentials for life in Britain – affects many London children. Nationally, the percentage of children living in low income (below 60% median income BHC) and material deprivation is seven per cent. This is the same as the percentage for London, and indeed for both Inner and Outer London, although the percentages living in households with low income (BHC) are very different (20 per cent for UK, 17 per cent for London overall, 24 per cent for Inner London and 15 per cent for Outer London). This means that, for example, a much higher proportion of children living in households with income below 60 per cent of median (BHC) in Outer London are in material deprivation than in Inner London. As shown above, the percentages living in poverty after housing costs are also very different between these areas.
This highlights how using a single measure to portray levels of poverty can be misleading, while all these different measures help to build up a more nuanced picture of poverty affecting children. The chart below shows how the different measures compare across the regions and countries of the UK and help to illustrate how the measures vary independently. For example, in Inner London the proportion of children in material deprivation and low income is below that for the North East, while the proportion of children in poverty using the Before Housing Costs measure is close to Inner London, but, using the After Housing Costs measure, is much higher in Inner London than the North East.
The DWP also publish a set of estimates of the numbers of children in poverty for small areas across Great Britain. This uses administrative records of benefit data, combined with income levels consistent with the HBAI Before Housing Costs measure to give estimates of the number of dependent children in poverty (BHC) for small areas. DWP also publish rates for the percentage of children aged under 16 living in low income families. These are produced using the ONS Small Area Population Estimate data for wards for 2020 and are shown in the map below. Using these estimates as denominators means that there is additional uncertainty in the data, due at least in part to known population changes during the pandemic.
The rates given are not comparable with those used elsewhere in this note, since the data are for a single year and the definition does not take into account housing costs, which are a clear driver of poverty levels in London. The use of the ONS estimates for 2020, prior to the pandemic, when there are known changes in the population will also add to the uncertainty. Nevertheless, these estimates may give some indication of where child poverty is particularly acute within London. The map shows that while there are many areas with relatively low levels of child poverty, below one in twelve children, the areas with at least one in four children in poverty are spread across London, from Barking and Dagenham in the east to Hillingdon in the west and Haringey in the north to Croydon in the south. However, there are still clusters of areas with significant levels of child poverty (BHC) in Tower Hamlets, Hackney, Camden and also in Newham.
Poverty among working age people in the UK has shown relatively little change over twenty years, varying between 19 and 21 per cent. In London, the poverty rates for this age group had been decreasing very slowly, and prior to the pandemic stood just below one in four, which is still well above the national figure. The latest estimates show a further decrease to 22 per cent of this group living in poverty, the lowest rate since the series began in 1994. This represents 1.3 million working age Londoners living in relative poverty after taking their housing costs into account. While the rate is below that for the West Midlands (25 per cent), there are one and a half times as many working age people in London living in poverty as in the West Midlands. The poverty rate for Inner London remains unchanged from the estimate prior to the pandemic at 26 per cent – higher than for any region of the UK.
Working age poverty rates in London and UK: 2019/20-2021/22
Percentage of people of working age in households with income below 60 per cent of national median
|Before Housing Costs
|After Housing Costs
Source: HBAI 2019/20 – 2021/22, data are three-year averages, but 2020/21 is missing.
The proportion of working age Londoners in poverty that are classified as in persistent poverty has been increasing over recent years, with 15 per cent of working age Londoners in persistent poverty over the four year period from 2017/18 to 2020/21, representing almost two thirds of those in poverty.
The proportion of pensioners7 in London that are in poverty fell sharply in the latest estimates, having been rising over recent years. Even so, pension poverty was higher in London than in any other region of the UK, at 23 per cent, compared to 18 per cent across the UK as a whole. Because London has a younger age structure than other parts of the country, the number of pensioners in poverty is lower than in some regions, but was nevertheless around 200,000 people.
High housing costs make London pensioners more likely to be in poverty using the after housing costs measure, while in most of the rest of the UK, pensioners are more likely to be counted as in poverty using the before housing costs measure, though the difference has narrowed in recent years. Despite
many pensioners in London and elsewhere owning their homes outright, and thus having reduced housing costs, renting remains more common in London than in many other areas for this age group.
Around one in eight London pensioners are classified as in persistent poverty (AHC), having been counted as living in poverty in at least three years out of the last four8. This is around half of all those in poverty.
Material deprivation is also much more prevalent among older people in London than in other parts of the UK, with 11 per cent of all pensioners in London unable to afford or being prevented by health or disability issues or social isolation from having such necessities as a damp-free home, access to a telephone or having their hair cut regularly. This proportion is, however, continuing to follow a slowly decreasing trend. Pensioners living in Inner London are around twice as likely (17 per cent) as those in Outer London (8 per cent) to be in material deprivation, but even the proportion of pensioners in Outer London in material deprivation is higher than for any other part of the UK.
Now included as part of the Family Resources Survey (FRS) are questions around food security9. It found that 88 per cent of UK households had high food security in the previous 30 days, with a further 6 per cent having only marginal food security. Seven per cent were food insecure with either low or very low food security in 2021/22. These figures were very similar to those for the previous year. With 95 per cent of households classed as food secure, London showed slightly higher food security overall in 2021/22 than for the previous year, when it was very close to the national picture.
Assuming that all of the individuals in these households were food insecure (though knowing that the status can vary between individuals), the FRS recorded there being 4.7 million individuals living in food insecure households in the UK. Just 2.4 million of these were living in households that were in relative poverty AHC, out of a total of 14.2 million people living in households in relative poverty AHC, so that one in six of all people across the UK living in poverty were in a household that was classed as food insecure. However, more than 1.5 million of people living in food insecure households had incomes above 70 per cent of median income AHC, which indicates that the measure of low income does not capture the full extent of people in financial hardship in the UK.
A new set of questions also capture information about food bank ` usage, showing that 0.6 million people in the UK lived in a household that had used a food bank during the previous 30 days and 2.1 million were in households that had used a food bank some time in the previous 12 months. While most people living in households below the poverty line had not used a food bank, 1.3 million in relative poverty AHC used a food bank at some point during the year. This compares to 0.9 million classified as in poverty using the BHC measure, again showing that housing costs are an important factor in understanding income, poverty and financial hardship.
Technical notes relating to data quality
All data in this briefing note are derived from published DWP Households Below Average Income series, based on the FRS, DWP Income Dynamics, which uses underlying data from Understanding Society and DWP estimates of Children in relative low income, which are derived mainly from data collected to administer benefits and tax credits.
The Family Resources Survey sample from 2020/21 was seriously affected by the coronavirus (COVID-19) pandemic. The survey had to move to telephone interviewing rather than face to face. This meant that the sample size was not only reduced, but was also less representative of the overall population, with particularly reduced response levels from renters compared with much higher response among owner occupiers. Similarly, the achieved sample had more older and more highly educated respondents and people from White ethnic groups, and fewer from younger groups, those with lower levels of qualifications and some Asian groups particularly than the overall population, and also noticeably fewer responses from residents in more deprived areas. DWP therefore took the decision to publish the headline statistics supported by a small number of supplementary tables rather than the full range of statistics in 2022 that would have included the data from 2020/21, so no regional data were published. Rolling three-year average data published by DWP and as presented here in trend tables and figures use just two data points for the entries that would normally include 2020/21 data.
The FRS continued to be affected by the pandemic in 2021/22, including the continuation of telephone interviewing rather than face to face and lower response rates. The sample size was increased from October 2021 and the grossing regime was adapted to adjust for the continued response differentials. Nevertheless, the overall achieved sample size for 2021/22 was 16,000, with an overall response rate of 26%. The number of responses was up from 10,000 in 2020/21, but still well below the sample size pre-pandemic (20,000 – 50% response). This means there is still increased uncertainty in all of the estimates for 2021/22. Because the regional data use two years’ data rather than three, the uncertainty in these estimates is again increased compared to pre-pandemic estimates. The response rate for London in 2021/22 was 18%, which stands out as lower than the 21% in Scotland, at least 25% in all other regions of England and 41% in Northern Ireland. This means that the figures for London have greater uncertainty than the figures for other regions.
Income from the Coronavirus Job Retention Scheme (CJRS, also known as furlough) and the Self-Employment Income Support Scheme (SEISS) were treated as income at the point at which they were received. (Both schemes closed September 2021).
Further information on data quality issues can be found here.
1 The main poverty estimates are published in the Households Below Average Income series, which in turn is based on the Family Resources Survey
2 Equivalised means adjusted for number and age of household members to allow for comparisons between different types of households.
4 All monetary values are three-year averages calculated at 2021/22 prices, but excluding 2020/21.
5 Persistent poverty is defined as being in poverty in the latest year and in at least two of the previous three years. Analysis is compiled by DWP based on data drawn from Understanding Society, a longitudinal study of people in the UK.
6 Comparable figures are not available for London specifically due to sample sizes.
7 Pensioners are all residents aged over state pensionable age at the time of interview in this analysis.
8 Note that this is of people who were counted in poverty in the latest data and were already over state pensionable age in the first of the four years.
9 Households with high or marginal food security are “food secure”. Food secure households are considered to have sufficient, varied food to facilitate an active and healthy lifestyle. Households with low or very low food security are “food insecure”. Food insecure households have a risk of, or lack of access to, sufficient, varied food. For more details, see https://www.gov.uk/government/statistics/family-resources-survey-financial-year-2019-to-2020/family-resources-survey-financial-year-2019-to-2020#household-food-security-1