Wellbeing, benefits & life expectancy in London
London's Poverty Profile is divided into five themes:
- Living standards;
- Work, worklessness and benefits; and
- Shared opportunities.
Each one provides insights into a range of different indicators of poverty and inequality across London, drawing comparisons over time, between different boroughs and with the rest of the country.
The Living Standards theme focuses most heavily on poverty, demonstrating how hard it is for Londoners to translate their earnings, benefits and assets into wellbeing. It also looks at wider indicators of living standards, including life expectancy and health.
Living Standards: Indicators
Households affected by the benefit cap
Number of London households affected by benefit cap (2016 and 2019)
The benefit cap limits the amount of benefit that most working-age people can receive. In London, the limit is £23,000 per year or £15,410 for single adults with no children; this was reduced in 2015. The benefit cap is applied by either reducing Universal Credit or Housing Benefit (for those not claiming Universal Credit).
The benefit cap reduced the benefits of nearly 20,000 families in London in November 2019 (11,062 had Universal Credit reduced and another 8,899 had Housing Benefit reduced). The number of families with their benefits capped in London has risen by 76% over the last five years and 87,665 London families have been affected by the cap since its introduction in 2013.
The majority of London households affected by the benefit cap in 2019 had their benefits reduced by up to £50 per month.
Poverty definitions and thresholds
How much weekly income is needed to not be in poverty?
|Household types||Minimum Income Standard - Inner London (AHC), 2018||Minimum Income Standard - Outer London (AHC), 2018||UK poverty line - After Housing Costs, 2018||Destitution, 2018|
|Lone parent, one child (aged one)||£291||£308||£205||£90|
|Couple with two children (aged three and seven)||£503||£520||£373||£140|
Note: MIS figures are updated to reflect the report produced by Loughborough University for TfL in 2019. For family types where updates are not available we have carried forward the 2016/17 data and adjusted for inflation by CPIH. Destitution is defined by the JRF as people who went without 2 or more essentials in the past month because they couldn't afford them, or their income is extremely low
Data source: Poverty thresholds are from Households Below Average Income 2017/18, Department for Work and Pensions. Minimum Income Standard thresholds are based on the Minimum Income Standard (MIS) for London, Trust for London 2018. Destitution in the UK 2018, JRF
There are a number of different definitions of poverty including the UK poverty line, the Minimum Income Standard (MIS), and the UK destitution line. This table shows how poverty thr…
Poverty over time
Proportion of people in poverty over time after housing costs (1996/97 - 2017/18)
More than a quarter (28%) of Londoners live in households that are in poverty (after housing costs - AHC), meaning that 2.4 million Londoners live in poverty. The poverty rate (AHC) in London is 7 percentage points higher than in the rest of England
The proportion of households in poverty after housing costs (AHC) was relatively stable between 1996/97 and 2017/18:
- In London poverty rates varied between 26% and 30%; and
- in the rest of England poverty rates varied between 20% and 24%.
Poverty rates (AHC) in London have been higher than in the rest of England for at least the last two decades.
In contrast, poverty rates before housing costs (BHC) over the last 20 years have been more similar between London and the rest of England. Current rates of BHC poverty are higher in the rest of England (17%) than in London (15%). Again, this shows the la…
Poverty and disability
Proportion of Londoners in poverty in families with and without disabled persons (2007/08, 2012/13, and 2017/18)
Disability is strongly associated with poverty, both because disability brings with it extra costs which reduce the resources available relative to non-disabled people, and because it often reduces the capacity to work.
Londoners who live in families that include a disabled person are 54% more likely to be in poverty than those living in families that do not include a disabled person.
For example, in the 3 years to 2017/18, 37% of families that included a disabled person were in poverty but only 24% of those who did not were. The gap was narrower in the three years to 2012/13.
When considering the overall composition of the population in poverty in 2017/18, we see that 30% of people in poverty live in families that contain at least one disabled person.
Poverty and life stages
Poverty for children, pensioners and working-age adults (2007/08 and 2017/18)
Children, working age adults and pensioners all have higher rates of poverty in London than in the rest of England. Of the three age groups, children have the highest poverty rates with 37% of children in London in poverty, compared to 25% of working-age adults and 24% of pensioners.
In both London and the rest of England, poverty rates fell between 2007/08 and 2017/18 for children but rose or remained flat for working-age adults. The poverty rate for pensioners rose in London but fell in the rest of England.
Material deprivation of children
Material deprivation of children in London (2017/18)
More children are materially deprived in London than the rest of England whether or not they are in poverty. Material deprivation is based on a weighted score of responses to questions about what material things - such as a warm winter coat or a safe outdoors space to play - children go without.
Nearly half (45%) of children living in households in poverty in London are classed as materially deprived, compared with 38% in the rest of England. For children who do not live in households in poverty, the proportion of materially deprived children is 15% in London and 11% in the rest of England.
More than half (56%) of children in London in poverty went without a holiday away from home for at least one week a year with their family, the highest rate for any item or activity.
Poverty across London
Poverty rates in London (by small area) (2014)
This map shows poverty rate estimates after housing costs for areas known as middle-layer super output areas (MSOAs). These are relatively small areas with an average population of 7,200. These statistics are experimental and so should be considered as indicative rather than definitive, but reveal interesting trends.
Overall the map shows the large disparity of poverty outcomes both across and within London boroughs. The most concentrated areas of high poverty are in areas such as Tower Hamlets, Hackney, Newham, and the north east of London. There are also noticeable pockets of high poverty rates in areas in west London, such as in Brent and the north ends of Kensington & Chelsea and Westminster.
Only six MSOAs have a poverty rate below 10% in London, all in Outer London boroughs, whilst nine MSOAs have a poverty rate above 45%. Refle…
Top and bottom earners
Proportion of population within the bottom and top 10% of the income distribution after housing costs by region (2017/18)
This indicator shows the proportion of the population in each region in England who are in the bottom and top deciles of the overall income distribution after housing costs.
It shows that, in comparison to all other regions in England, London has the largest proportion of its population that are in the bottom decile (14.2%).The South West has the lowest proportion, with just 7.9% of its population in the bottom income decile.
Some 14.3% of Londoners are in the top decile of England’s income distribution. The only region with a higher proportion is the South East, where 14.7% of the population are in the top 10% of the income distribution.
Net income inequality before housing costs (1996/97 - 2017/18)
This indicator shows one way of measuring income inequality; the 90:10 net income ratio. This compares the net income of those at the 90th net income percentile with those at the 10th net income percentile. A higher figure means that inequality is higher.
In 2017/18 those in the 90th net income percentile in London took home 10.2 times more than those in the 10th net income percentile (a 90:10 net income ratio of 10.2). In the rest of England the 90:10 net income ratio is 5.2.
Net income inequality has risen gradually in London over the last 20 years. In contrast, it has been relatively stable in England overall.
This means that the gap between the rich and poor in London and the rest of England is much larger today than it was two decades ago. In 1996/97, the gap between London’s 90:10 net income ratio and that of the rest of England was …
Proportion of total net and gross income before housing costs held in each decile (2017/18)
Those in the bottom half of the net income distribution in London take home less than a quarter (23.9%) of London’s total net income (before housing costs). On its own, the top decile of London households takes home 31.7% of total net income.
The impact of redistribution through the tax and benefit system can also be seen in this chart; the top decile holds a lower proportion of total net income (31.7), than it does of gross income (36.3%). In contrast, the bottom decile of London households hold 1.3% of total gross income but 1.8% of total net income.
Compared to London, the top decile in the rest of England holds a lower proportion of total net income (26.9%). However, a higher proportion of total gross income is held in this decile in the rest of England (40%).
Those in the bottom decile in the rest of England, in both total net and gros…
Gross weekly earnings
Indexed gross weekly pay in London and England (2002-2018)
In 2011, jobs at the 10th percentile of gross weekly pay in London had weekly pay 16.5% lower (in real terms) than in 2008. This compares to an 8% fall for those at the 10th percentile in England overall. Pay for these jobs in London has also failed to recover, still being nearly 8% lower in real terms than their 2008 level a decade later in 2018.
While gross weekly pay for jobs towards the top of the distribution (at the 90th percentile) were not so heavily impacted by the financial crisis (with an 11.5% fall to the low point in 2015), they remain 6.5% below their 2008 levels (in real terms) in 2018.
Even so, jobs at both the top and the bottom of the income distribution pay more in London than in any other region of the country, with jobs and the 90th percentile paying over £1,300 a week in London compared to just under £900 in the North…
The distribution of wealth
Proportion of total wealth held in each decile (2016/18)
Wealth is very unequally distributed. In London, those in the top wealth decile (i.e. the 10% of people with the highest wealth) hold 42.5% of London’s total net wealth. Those in the bottom decile (the bottom 10%) hold 0% of London’s total net wealth, due to negative net wealth held by households in the bottom decile.
In the rest of England a similar divide is found, where the top decile holds 42.6% of total net wealth and the bottom holds 0.1% of total net wealth.
Total net wealth is an estimate of the value of wealth held by all private households, including net property, net financial, private pension and physical wealth.
Change in gross earnings by income decile
Change in hourly gross earnings by income decile (2017-2019)
In both London and the rest of England, growth in hourly earnings between 2017 and 2019 was fastest for the bottom 10% of jobs; increasing by 4.6% in the capital and 5% in the rest of England. This rise was likely driven by the increase in the minimum and living wages. The National Living Wage (paid to workers over 25) increased from £7.50 an hour in 2017/18 to £8.21 an hour in 2019.
In London, weekly and annual earnings rose fastest for the highest 10% of jobs. This is particularly true for annual pay (which includes bonuses) which rose by 4% in the two years to 2019 for the top 10%, compared to 1.1% for the bottom 10% and only 0.1% for the 4th decile.
The figures presented here are adjusted for inflation, meaning that for all deciles in both London and the rest of England, earnings increased at least as fast as the cost of living. This …
Poverty rates by London borough
Modeled poverty rates by London borough (2013/2014)
The most recent estimates of overall poverty rates for London boroughs are from modelled small-area estimates using 2013/14 data. According to these, the boroughs with the highest proportion of people living in poverty are Tower Hamlets (39%), Newham (37%) and Hackney (36%). In contrast, these estimates suggest that Bromley (15%), Richmond upon Thames (15%) and Bexley (16%) have the lowest rates of poverty.
These borough-level poverty rates are based on aggregations of lower-level figures (Middle Layer Super Output Area) that were derived using a combination of responses to the Family Resources Survey and information from the 2011 Census and administrative data.
Children in poverty before and after housing costs
Proportion of children in poverty before and after housing costs by London borough (2017/18)
This indicator shows the large disparity in poverty rates for children in different London boroughs. Tower Hamlets is the borough with the highest rate of child poverty after housing costs, with a rate (57%) which is nearly three times as high as that of the boroughs (Sutton and Richmond upon Thames) with the lowest rate (21%).
It also demonstrates the large impact that the cost of housing has on poverty in the capital. In the borough with the highest poverty levels (Tower Hamlets), 35% of children are classified as being in poverty before housing costs are considered. Taking account of housing costs increases this figure to 57%.
In almost half of boroughs, the child poverty rate at least doubles when housing costs are accounted for.
Income deprivation within London boroughs
London boroughs' median income deprivation ranking relative to London and rest of England (2019)
The typical neighbourhood in 24 (of 32) London boroughs is more income-deprived than the typical neighbourhood in England.
This indicator assesses this by comparing the average (median) income deprivation in each borough to the average income deprivation of London overall and the rest of England through a relative deprivation ratio. Boroughs close to the red line have similar average income deprivation levels to the comparison. If they are to the left of the line, they are less income-deprived and if they are to the right of the line they are more income-deprived.
Tower Hamlets is on average the most income-deprived in comparison to the other London boroughs. The average neighbourhood in the borough is 2.03 times more income-deprived than the average in London, and 2.67 times more income-deprived than the average in the rest of England. O…
Pay inequality by London borough
80:20 hourly wage ratio by London borough (2019 and 2009)
There are many ways of measuring pay inequality. This indicator considers the 80:20 hourly wage ratio, which shows how much greater hourly pay is for those at the 80th percentile of the hourly pay distribution than for those at the 20th percentile. The larger the ratio, the more unequal the hourly pay.
Based on this measure, pay inequality is higher in London than in England. Whilst this was also true a decade ago, the difference between the two was smaller in 2009. In London, the 80:20 pay ratio is 2.74, meaning that hourly wages at the 80th percentile are 2.74 larger than at the 20th percentile. In England, the 80:20 ratio is 2.08.
Pay inequality fell in both London and England between 2009 and 2019, however, it fell by more in England than in London. In 2009, pay inequality was slightly higher in London, with hourly pay at the 80th per…
Poverty before and after housing costs
Proportions of people in poverty before and after housing costs (2017/18)
The difference between poverty rates before and after housing costs shows how much of an impact housing costs have on poverty.
In London, poverty rates almost double when housing costs are accounted for (increasing the poverty rate from 15% to 28%). In the rest of England, the difference is much smaller (increasing poverty rates from 17% to 21%). This shows that, compared to the rest of England, high housing costs are a much more significant driver of poverty in London.
Put another way, this means that accounting for the high housing costs in the capital leads to over one million more people being judged to be in poverty.
Poverty before and after housing costs by age
Proportion of Londoners in poverty after housing costs by age band (2017/18)
In both London and the rest of England, poverty rates (after housing costs) are highest amongst children and young people.
- More than a quarter of a million (250,000) children aged four and under live in households in poverty - more than any other age group;
- More than a third of children aged up to 14 are in households in poverty (38% of those aged 0-4, 32% of those aged 5-9 and 37% of those aged 10-14); and
- Nearly half (44%) of those aged 15-19 live in households that are in poverty.
In contrast, one in five Londoners aged 35-39 (21%) live in households that are in poverty - the lowest rate for any age group.
Poverty rates in London are higher than those in the rest of England for people of all ages.
The impacts of housing costs on poverty in the capital can again be seen by comparing these findings to those from measures of poverty …
The impact of housing costs on poverty
London poverty rates before and after housing costs (1996/97 - 2017/18)
The proportion of people living in poverty in London almost doubles when housing costs are taken into account (rising from 15% to 28%).
This gap between before and after housing costs measures of poverty is much larger in the capital than in the rest of the country. For example, in 2017/18 the gap was 12 percentage points in London, compared to 5 percentage points in the rest of England. This demonstrates the fact that the cost of housing is a much larger driver of poverty in London than in the rest of the country.
The impact housing costs have on poverty in London has also increased since the early 2000s. For example, in 2003/04 the gap between before and after housing costs measures of poverty in capital was 8 percentage points, whilst between 2010/11 and 2017/18 the gap has been between 12 and 14 percentage points.
Relative housing costs
Housing costs as proportion of net income for households in poverty (2017/18)
Households living in poverty are spending a significantly larger proportion of their net income on housing costs than households not living in poverty. This is true both in London and in the rest of England.
London households in poverty are estimated, on average, to spend 56% of their total net income on housing costs. In comparison, those living in households which are not in poverty spend just 14% on average. In the rest of England, a larger proportion of net income goes to housing costs for households living in poverty (37%) in comparison to households not living in poverty (9%).
Compared to the rest of England, both types of households in London are spending proportionally more of their net income on housing costs.
Poverty rates by demographics
Poverty rates by demographic characteristics in London (2017/18)
Poverty rates vary significantly across different demographic groups in London and the rest of England.
Overall, poverty rates amongst men and women are similar. However, in the rest of England both men and women have a lower poverty rate (with 20% and 22% respectively) compared to those in London (27% and 28% respectively).
Within London, poverty rates are almost twice as high for BME groups (38%) as for white groups (21%). Amongst the different family types, single parents with children are most likely to experience poverty. In London, 54% of this group were in poverty in 2017/18. Between 2013/14 and 2017/18, London pensioners experienced the largest increase in poverty rates. The poverty rate for couple pensioners rose by 5 percentage points (from 15% to 20%) and for single pensioners by 5 percentage points (from 22% to 27%).
English Index of Multiple Deprivation, rebased for London
English Index of Multiple Deprivation (rebased for London) (2019)
Deprivation varies significantly across London, and, to truly understand the diversity of deprivation across the city, it is useful to adapt national indices to compare within just London itself, excluding variations outside the capital. Mapped here are the deciles of neighbourhoods in London as defined by the Index of Multiple Deprivation, which integrates deprivation domains relating to income, employment, crime, living environment, education, health and barriers to housing and services, in various proportions, to produce an overall index.
Every neighbourhood in England has been given a deprivation score based on various measures which form each domain above, integrated together in various proportions to produce a single value. They are then ranked for England. We have taken these rankings and rebased, by excluding all non-London areas …