Cost-of-living and lasting effects of COVID-19 are deteriorating Londoners’ living standards, new report shows

The London Poverty Profile 2022 report, COVID-19 and poverty in London, brings together data sources to provide insight into the nature of poverty in London.

It paints a bleak picture of life in the capital during the pandemic, showing an increase in anxiety and a decrease in life satisfaction throughout 2020 and 2021, while this year real wages are dropping amid rising inflation.

The report comes during the ongoing cost-of-living crisis, which is putting further strain upon households across the country, and demonstrates the precarious way of life for many Londoners.

With costs rising, it shows that 1 in 4 of Londoners experiencing a cost-of-living increase have been using savings to cover increased spending – and 15% are going further into debt.

Poverty rates were high in London before the pandemic, where it was already the region with the highest poverty rate in the country and 35% of people were living below the Minimum Income Standard.

Estimates show that figure has now risen to 38%. This means that 3.6 million Londoners are living below the minimum needed for a basic standard of living.

Commissioned by the Trust, the report also outlines the disproportionate impact that the pandemic has had on the capital.

As well as having the highest age-adjusted mortality rate in England, employment has been starkly affected: when furlough ended in September 2021, Londoners were 50% more likely to be on the scheme than those in the rest of England.

The London Poverty Profile brings together key data and evidence to paint a picture of and provide insight on the picture of poverty in London.

This year’s report focuses on living standards, work and health, and how they have been impacted by the COVID-19 pandemic.

Manny Hothi, Chief Executive at the Trust for London, said:

London’s Poverty Profile shows just how ill-equipped many Londoners are for the worsening Cost of Living Crisis. The last two years have seen the scale and complexity of London's challenges worsen. Our city is a resilient one, but there is no doubt the situation will become impossible for so many households.
When the winter comes, we will need to work together and use every tool available to us to support those who are simply unable to cope.

Key findings

  • The increase in in- and out-of-work benefits claimants has been around two times higher among the 20% most income-deprived communities compared to the least deprived
  • More than 2 in 3 Londoners report increases in their cost of living during the first months of 2022, mostly as a result of rising food prices , gas and electricity bills.
  • 1 in 4 of those experiencing a rise in their cost-of-living report using their savings to face the increased spending, while 15% are going further into debt.
  • When the furlough scheme ended in September 2021, the proportion of eligible employees that were furloughed was more than 50% higher in London (6%) than in the rest of England (3.7%).
  • The employment gap between current and pre-pandemic levels in London is linked to an increase in the unemployment rate, whereas in England it has been caused by a large increase in economic inactivity rates.
  • The rise in unemployment has impacted women, the young, and people living in the most deprived communities more intensely.

July 27