Low income Londoners and Welfare Reform
Policy in Practice’s latest analysis shows that 1 in 7 low-income Londoners can’t make ends meet. Their analysis of 550,000 low-income London households finds a 21% rise in low-income Londoners facing a cash shortfall since 2016. The number of families who are struggling is expected to triple by 2020.
The analysis found that:
- One in every three low-income families faced a cash shortfall for at least one month during the two years covered by the analysis.
- Struggling families typically accrued a shortfall of over £2,000, with the shortfall lasting an average of nine months.
- The boroughs with the greatest proportion of low-income families facing a cash shortfall were Enfield, Brent and Camden.
- Overall, two thirds of low-income households face a drop in disposable income of more than £30 per week by 2020.
Tracking households over twenty-four months gives new insights into the drivers of financial resilience.
- Employment and higher earnings are the main paths toward improved financial resilience, closely followed by changes in benefit income (e.g. taking up benefits).
- The most common driver of experiencing a cash shortfall was a drop in benefit income, highlighting the importance of social security in supporting those on the lowest incomes.
- One in four households falling into deficit had a member who had lost their job or saw a fall in their earnings.
- Employment income was crucial for people’s financial wellbeing: 45% of working-age households on low-incomes studied were in employment.
- More than one in four of the nearly 230,000 households in work lost their job at least once. This highlights the need for job stability and higher pay as well as increasing employment rates.
This research was supported by a Trust for London grant. It has been extended for a further eighteen months and will track the impact of Universal Credit as it rolls out across the capital. Future analysis will include a public facing dashboard on the impacts of welfare reform, and analysis as requested by participating authorities.
The analysis is based on data used to pay out over £24bn in Housing Benefit payments each year. Ten of the participating local authorities are using the household-level data to target tailored support to households most in need, and to track the impact of their interventions.
This research shows how wider use of administrative data can help ensure resources are targeted to those that need help the most. Councils can use their data to help with practical problems, making sure struggling families get the help they need as they move onto Universal Credit. We would like to see this type of systematic analysis adopted by government.”
With welfare reform, rising living costs, job insecurity and the roll-out of Universal Credit, it is a time of real change for low income Londoners. The response from policymakers needs to be right if we are to prevent many thousands of people from being pushed into real financial hardship because of the changes.
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From our Twitter
This week is London Challenge Poverty week, a chance for people to speak out about poverty across the capital. We will be tweeting about the reality of poverty in London throughout the week, and what we we must do as a society to solve it. #LDNChallengePoverty @4in1015 Oct 2018
58% of Londoners in poverty are from a working family. The changing face of poverty must be met by a new approach from government. We need housing costs to be controlled, and more employers to pay the real living wage. https://www.mirror.co.uk/news/politics/poverty-moved-dole-queue-workplace-13441046 …19 Oct 2018
"It's incredibly disempowering to not understand how your benefits work, or how much money you are entitled to from each payment." Good discussion from the floor at our event about #UniversalCredit with @LCPAlliance @policy_practice @MindCharity @CPAGUK #LDNChallengePoverty19 Oct 2018
#UniversalCredit can be very difficult to manage for people with mental health problems. @MindCharity are pushing for people's other benefits not to be taken away until they receive their first payment under Universal Credit. #LDNChallengePoverty19 Oct 2018
People affected by the benefit cap are more likely to move into work than before the cap began. But for every 1 child in a family which gains work, there are 5 who get less welfare because of the cap. Devan & @policy_practice say this is a poor trade-off. #LDNChallengePoverty pic.twitter.com/cyxwITuZzW19 Oct 2018