Why a minimum London Weighting is needed to improve living standards

New research by the Centre for Research in Social Policy (CRSP) has shown that a minimum London Weighting of £6,549 is needed to cover a basic standard of living in the capital. The report, funded by Trust for London, will be presented by Matt Padley, Associate Director of CRSP at a webinar on 20 June. Below, he outlines why a minimum London Weighting is so vital to improve living standards.

In recent months, the cost of living crisis has been a dominant and recurring motif in public and political discussion. There has been much debate about what can be done to alleviate the significant pressures facing many households, in terms of both increasing incomes and reducing costs.

Minimum London weighting webpage

Large rises in the cost of home energy, combined with increases in the price of essentials such as food and transport, mean that the cost of reaching a minimum standard of living has increased at a faster rate over the past year than the overall inflation rate as measured through the Consumer Prices Index (CPI).

Amidst this climate, the package of support for low income households announced last month provides significant financial assistance for those who are most affected by the costs of living crisis.

It is absolutely right in the current circumstances to focus support on those who need it most. But the pressures on incomes extend across society – the challenge posed by increasing energy costs is not limited to low income households, something recognised in the recent announcement of a £400 ‘grant’ for all households.

Through our ongoing research on living standards in London, we know that what the public agree is needed for a minimum standard of living is higher in the capital than in other parts of the UK. This raises really important questions about how best to ensure all households are able to reach this living standard. Part of the answer here is about ensuring that those on the lowest incomes are well-supported.

But it is also important to acknowledge that many of those on low-middle incomes in London are struggling to meet their minimum needs in the capital. This goes beyond just having the essentials and recognises the importance of being able to participate in the world around you - of taking part in the life of the city you live in.

Many public and private employers in the capital recognise that costs in London are higher and as a consequence pay a wage supplement, often referred to as the London Weighting. However, there is no agreed coherent approach to calculating this. The levels paid across different sectors vary considerably, and often these are not regularly updated to reflect the changing context.

The work that we have done this year sets out what a minimum London Weighting could be, rooted in our research about what the public agree is needed to meet minimum needs in London, and the additional and different costs that result from living here. The analysis we’ve undertaken to produce this minimum London Weighting has calculated how these additional and different costs could be reflected in a wage supplement.

This minimum London Weighting has been calculated to be £9,600 in Inner London, and £6,539 in Outer London. We are recommending that the minimum London Weighting be set at the Outer London level – £6,549 – as this is the minimum that would enable people to live in London and access employment anywhere in the capital.

Everybody deserves to be able to meet their needs wherever they choose to live. Paying this minimum London Weighting to those earning £40,000 or less would help families across our capital to meet the additional costs that come from living here. It would also allow them to do the sorts of things that are so often taken for granted, but are critically important to feel part of the city you live in.

Matt Padley will be presenting his analysis at a webinar on 20 June. Register for your place now.

14 June 2022