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With a gross weekly household income of £834 per week, London has by far the highest income of any region on the UK. Furthermore, a quarter of London households have a gross weekly income of £1000 or more. However, these figures mask considerable inequality between areas within the capital. For instance, after housing costs, Inner London has a significantly higher incidence of income poverty for children, working-age adults and pensioners than any region or country in Great Britain.
This chapter begins with an analysis of income, including, gross household income, as well its source and distribution. The focus then switches to a discussion of expenditure including data relating to spending on durable goods, commodities and services and expenditure on food. Finally, the chapter looks at expenditure on luxury and leisure items such as new cars and cinema admissions, along with the nature of tourist expenditure.
In 2006/07, 25 per cent of London households had a gross weekly income in excess of £1,000, eight percentage points higher than the UK average (Figure 7.1). London also had the second lowest proportion of households with weekly incomes of less than £500 with 46 per cent, behind the South East, compared with the highest figure of 59 per cent in both the North West and North East regions. London does however exhibit the greatest polarisation of any region in terms of the income scale. In total, 52 per cent of households had gross weekly incomes of either less than £300 per week or greater than £1,000. This is 6 per cent higher than the UK figure (Table 7.18). The interconnected issues of polarisation and poverty will be discussed in greater detail later in this chapter.
London’s average gross weekly household income in 2006/07 was £834. This represented an increase of £68 on the previous year. The London figure was also £187 higher than the UK average and £88 higher than the South East figure – the next highest region with £746. The North East had the lowest weekly household income with £543. Table 7.19 shows that in 2006/07 the largest contribution to household income in London is from wages and salaries with 74 per cent of the total being derived from this source, the highest of any region and compared to the lowest figure of just 61 per cent in the South West. London households derived eight per cent of their household income from Social Security Benefits, the lowest of any region in the UK. Annuities and pensions constitute just four per cent of London households’ income, again the lowest of any UK region.
There were almost 32 million individuals in the UK who earned an income greater than £5,035 per annum in 2006-07 and were therefore liable to pay tax. In London 3.9 million people had an annual income greater than this threshold, over 50 per cent of the population. In terms of the UK tax paying population, 19.7 per cent had an income between £5,035 and £10,000, compared with 17.2 per cent in London. For higher incomes, the gap between London and the UK was accentuated. Nationally, 22.5 per cent of taxpayers earned an income greater than £30,000 (per year), compared with 31 per cent in London. Furthermore, almost 12 per cent of taxpayers in London earned over £50,000, whereas the UK figure was seven per cent (Table 7.2).
Savings and Banking
During 2005/06-2006/07 around nine in ten London households had access to a current account, about the same as the UK average. This breaks down as 88 per cent in Inner London and 90 per cent in Outer London. Scotland, Northern Ireland and the East Midlands all had a smaller percentage (84 per cent) of households with current accounts than Inner London. Nearly a third of households in London had an ISA account, though the figure was slightly lower in Inner London – lower than any English region, though Northern Ireland had a smaller proportion (14 per cent). In terms of National savings/bonds and stocks and shares, London was consistent with the national average with figures of 26 per cent and 21 per cent respectively. In both cases, the South East had the highest proportions of households with 39 and 27 per cent respectively. (Table 7.3)
In 2006/07, a quarter of households in London were claiming an income-related benefit such as Income Support, or Housing Benefit (Table 7.4). The figure rose to 28 per cent in Inner London, which along with the North East was the joint highest in the country. Only 51 per cent of Inner London households were claiming non-income related benefit, considerably less than the UK average (67 per cent). Households in Outer London were more likely to claim this type of benefit with 64 per cent in 2006/07. London also had the lowest percentage of households claiming tax credits of any region in the country at 12 per cent, compared with 17 per cent in the UK as a whole. Despite having the highest percentage claiming an income related benefit, Inner London also has the highest percentage of unsupported households (43 per cent) not in receipt of state support in the country, which indicates the extreme polarity experienced in this area. In Outer London, the proportion drops significantly to 33 per cent. However this is still considerably higher than the UK figure of 30 per cent.
Total weekly household expenditure in London in 2006-07 was £529.30 compared with £454.10 in the UK. The London total was 17 per cent more than the UK figure, and was the highest amount of any UK region. (Table 7.20). London households spent more than any other region on housing and fuel (not including mortgage interest payments and council tax). The capital also spent 31 per cent more on health than the UK as a whole and more than double the UK figure for education (Figure 7.5). London households spent slightly more than Northern Ireland on restaurants and hotels at £45.60 per week. Again, this was the highest in the country and £8.20 per week (22 per cent) higher than the UK average. In terms of expenditure on alcoholic drinks, tobacco and narcotics, London households ranked the lowest out of any region at £9.80 per week. Similarly, London spent the least on recreation and culture at £48.00 compared to the East of England, where the average household spent £63.60 per week, the most of any region.
People in London spent £5.10 per week on fresh/processed fruit and vegetables, second only to the South East. In contrast, Londoners spent the least on meat, fish and eggs at £5.60 compared with the South East who spent the highest at £6.30. With the exception of Northern Ireland, Londoners spent the least on alcoholic drinks (£2.40). The average London resident spent £2.20 on milk and milk related products, which was the joint lowest figure in the country and 20 pence lower than the national average. Furthermore, the average spend of £4.30 on bread, cakes, biscuits and other cereal products and confectionery was 40 pence lower than the national average, the lowest nationally. (Figure 7.6 and Table 7.21).
Expenditure on food and drink for consumption outside of the home was the highest nationally. The average London resident spent £13.37 per week on food and drink outside of the household, 15 per cent more than the national average and £1.34 more than the next highest region – South East. If food and non-alcoholic drinks are combined, London again comes out on top with a total spend per week of £9.66 compared to just £6.63 in the North East, the lowest region. Expenditure on alcohol outside of the home in London (£3.71) was relatively close to the national figure (£3.65) (Table 7.7).
In 2005/06-2006/07, London households were the least likely to have a satellite receiver of any UK region, six percentage points lower than the UK average. The North West region had the highest percentage with 81 per cent of all households owning a satellite receiver. Furthermore, London had the lowest percentage of households with either a tumble dryer (45 per cent) or microwave (87 per cent). Of the key durable goods shown in Table 7.8 London households were less likely than the UK as a whole, to have any of them other other than a dishwasher, a computer and Internet access.
In 2005/06-2006/07, 71 per cent of London’s households had a home computer, second only to the South East where 74 per cent owned a computer. This pattern was mirrored in terms of Internet access, with 63 per cent of London homes able to access the web and 66 per cent in the South East (Figure 7.9).
Figure 7.10 shows a steady increase in the percentage of households with Internet access over the period 2000-2007 in London. Since 2000, Internet access has increased by 41 percentage points, second only to the South East where there was an increase of 43 percentage points. The UK and London have increased by an identical amount over this period, though London has consistently maintained a slightly higher percentage of households with access to the Internet.
In 1997 London (40) had a higher rate than Great Britain (37) of new cars registered per 1,000 population. The following year, the capital dropped below Great Britain and has remained below the average since (Figure 7.11). The 2007 rate was 26 new cars per 1,000 in London and 40 in GB as a whole. In 2005, Londoners registered 16 fewer new cars per 1,000 population than the British average, the widest margin in the ten year period, though the latest margin stands at 14. London is the only region to have recorded a drop in registrations over the period.
In 2007 there were 162.4 million cinema admissions in the UK. Almost 40 million of these were in London - a share of a quarter – by far the highest of all regions. However, there was a one per cent drop on the previous year which equates to 397 thousand fewer admissions. The largest gain was made in the Southern television area, where an increase of 0.3 per cent represented 45 thousand more admissions in 2007 than 2006 (Table 7.12).
London households spend the least of any British region on both overseas and domestic package holidays at £9.70 and £0.50 per week respectively. Both figures are significantly lower than the UK figures of £12.70 and £0.90 (Figure 7.13). The South West spent the most on overseas holidays at £15.80 per week, while the highest spend on domestic holidays occurred in the East region at £1.40 per week.
In terms of domestic tourism (UK residents), London accounts for a tenth of all domestic tourism spend in the UK (Figure 7.14). There were 11.5 million visits to London in 2007 from UK residents, 6.6 million visitors fewer than the South East, which was the highest of any region. The South East also saw the largest spend by UK tourists with just over £3 billion spent in 2007. London received £2.1 billion, which ranks fifth out of all regions in the UK. The total amount spent by all tourists (both overseas and domestic tourism) in London was £10.3 billion in 2007.
In 2007 over half of all expenditure by overseas tourists to the UK was spent in London (Table 7.17). As a region London’s figure of £8.2 billion is more than five times as much as the the next highest region - the South East (£1.6 billion). The number of visits to London from overseas was 15.3 million, which dwarfs the next most popular region, the South East (4.5 million).
In 2003 the number of overseas tourists that visited London was 11.7 million, and by 2007 visits had increased by just under a third (31 per cent) to 15.3 million. Over the same period, the number of visits to the rest of England increased by 22 per cent. While the number of visits to London was slightly less than the rest of England as a whole, in terms of expenditure, London experiences far greater total spend (Figure 7.15 and Figure 7.16). In 2007, London earned over £2.5 billion more than all the other English regions together. This means that expenditure in London accounts for around 60 per cent of national spend. This proportion has not altered significantly since 2003.
Spend per night in London was £86 in 2007, compared with £46 in the rest of England. However, tourists tend to stay a shorter time in London than outside the capital. In London tourists stayed 6.2 nights per visit, whereas nationally the figure was 7.8.
» In London, more than one in five people live below the poverty line.
» A child in London is a third more likely to live in poverty than in the rest of the UK.
» Since 1996 the rate of child poverty in London has dropped below 40 per cent on just two occasions and in 2007 stands at 41 per cent after housing costs are considered.
» The average value of a county court judgement in London in 2004-05 was £3,137, £520 higher than the next closest region.
» In August 2008, 7.3 per cent of working-age people were claiming Income Support. This rises to 8.6 per cent, in Inner London, higher than any UK region. Seven London boroughs featured in the top twenty local authorities in England.
» Tower Hamlets had the highest rate of Pension Credit claimants in England with 46.4 per cent of its pensionable age population claiming the benefit. A further three London boroughs feature in the top five nationally.
» In August 2008, 27.5 per cent of children aged 0-18 lived in families claiming at least one key benefit - the highest rate of any region. Ten Inner London and two Outer London boroughs had rates above 30 per cent.
» More than one in five households in London claimed Housing Benefit. This is the highest rate of any region or country.
» Hackney, Tower Hamlets, Newham and Islington had the four highest rates of Housing Benefit claims in the country.
» Over a fifth (22 per cent) of households in London were in receipt of Council Tax Benefit. Hackney, Tower Hamlets and Newham all feature in the top five local authorities nationally.
Despite remaining the wealthiest region in the UK London retains the highest level of child poverty. Child poverty is crucially important in analysing more widespread poverty and primarily manifests itself in two ways. Firstly, the immediate deprivation it causes and secondly the restrictions it places on parents’ ability to make the best decisions for their children.
This chapter begins by looking at the risk of living in poverty by a range of key age groups and continues by looking at the issue of worklessness and also indicators of personal debt. The analysis concludes by examining London’s benefit claimant rates and a comparison with previous years and other regions within the UK.
Risk of being in income poverty by age
In London more than one in five people lived below the poverty line (has an income less than sixty per cent of the median income). In all instances except adults of pensionable age, there is a higher chance of living in income poverty in London than in the rest of the UK (Table 8.1). A child in London is a third more likely to live in poverty than the UK average. This is the most pronounced gap across any of the age groups. Working-age adults are nine percentage points more likely to live in poverty in London. A pensioner on the other hand has a 19 per cent chance of living below 60 per cent of the median income level, compared with 23 per cent in the UK.
Child poverty is one of the key indicators to overall poverty because low income in childhood increases the likelihood of other types of negative outcome such as poor educational attainment, poor health care and low wages. This results in the risk of poverty in adulthood for those who were poor in childhood being twice as high as for those who were not.
Table 8.2 compares levels of child poverty across UK regions, before and after housing costs are deducted from income. The data for all areas except the UK are based on a three-year average. The UK figure represents just 2006/07.
The table shows the North East as having the highest regional rate of children living in poverty before housing costs (28 per cent). However, the rate in Inner London is slightly higher at 31 per cent. The South West
(17 per cent), South East (15 per cent) and the East (15 per cent) have the lowest rates in the UK. Once housing costs are taken into account London has by far the highest rate of child poverty at 41 per cent, climbing to 48 per cent in Inner London. This was an exceptionally high rate of child poverty and since 1996 the London figure has dropped below 40 per cent on just two occasions in 2002 and 2003. The next closest region to London is the North East with 32 per cent, nine percentage points lower than the capital. Outer London rates were above the UK figure and all other regions, with 37 per cent compared with 30 per cent in the UK. It is in this relationship that the importance of taking into account housing costs is emphasised. Before housing costs are deducted, Outer London rates are in line with the UK figure and are below five other regions. Figure 8.3 further highlights the difference between before and after housing cost measures.
Working-age poverty rates before housing costs in London mirrored the UK figure at 15 per cent, compared with the highest rate in the North East and West Midlands at 18 per cent (Table 8.4). As with child poverty, after housing costs are taken into account, London had the highest rate of working-age adults living in income poverty of any region or country in the UK at 24 per cent. This means that nearly one in four working-age Londoners, equivalent to 1.2 million people, lived in households with incomes below 60 per cent of the median, compared with one in five nationally.
In both Inner and Outer London figures are higher than any other region at 26 and 23 per cent respectively. These figures differ slightly from those of the previous year in that the Inner London rate has dropped three percentage points and the Outer London figure has increased by one percentage point, demonstrating a narrowing of the gap between the two years.
Pensioners had a slightly higher chance of being in income poverty than working-age adults but still significantly less than children. Before housing costs are considered, pensioners in London had a one in five chance of being in poverty with little variation between Inner and Outer London. This was slightly lower than the UK average of 23 per cent and the joint second lowest of any region in the UK (Table 8.5).
After housing costs are taken into account the picture changes significantly. The London figure of 22 per cent was the highest of any region. However, whilst the Outer London figure matches that of the UK figure at 19 per cent, the proportion in income poverty increased to 28 per cent in Inner London, some nine percentage points higher than the UK rate.
A work-rich household is classified as a working-age household where all members aged 16 or over are in employment. A workless household is a working-age household where no-one aged 16 or over is in employment. Of the English regions, London has the joint lowest percentage of work-rich households with 54 per cent (Table 8.12). The capital also has the highest percentage of children living in workless households at 23 per cent, seven percentage points higher than the UK figure. Furthermore, London had the second highest proportion of working-age people living in workless households (Figure 8.6).
County Court Judgements
County Court Judgements (CCJs) are issued by the courts in response to a county court claim being registered by a creditor. If the debt is not paid within one month, the judgement will be recorded on the register of county court judgements for six years. Organisations such as banks and building societies can use the register to decide whether to loan money to an individual. According to figures published by the Registry Trust for 2004-05, London had the second highest number of CCJs issued with 75 thousand compared with 77 thousand in the West Midlands and just 28 thousand in the Wales - the lowest in the UK (Table 8.7). However, when looking at the value of CCJs, London has both the highest total value of all CCJs (£235 million) issued and the highest average value of each (£3,137). When expressed as a percentage, London contributes 22 per cent to the total value of all CCJs in England. The capital also has the highest value of CCJs per person at £38, compared with just £19 in the South West and £25 in England as a whole (Figure 8.8).
Benefits data provide a useful source of information about the spatial distribution of poverty and low incomes. The data can also be used to offer proxy measures of unemployment, disability and ill health. Table 8.9 shows claimant rates as percentages of appropriate base populations for all the main benefits.
Income Support (IS) is intended to help people on low incomes who are not required to be available for employment. The mains groups of people who receive IS are:
• Lone parents,
• The long and short-term sick,
• People with disabilities, and
• Other special groups.
In August 2008, there were 365,210 London residents in receipt of Income Support, a decrease of 11,800 on the November 2006 figure. Expressed as a percentage of those aged 16-59, London had a claimant rate of 7.3 per cent, 0.2 per cent lower than the previous year, but fairly consistent with the overall trend in Britain (Table 8.10). The Inner London rate of 8.6 per cent is by far the highest rate of any region or country in the UK. In contrast, the Outer London rate is much closer to the GB average at 6.4 per cent compared with 6.0 per cent in Great Britain.
Hackney had the highest rate in London (11.8 per cent) and the third highest in Great Britain. Barking and Dagenham had replaced Islington as the second highest in London with 10.8 per cent. As in 2007, seven London boroughs feature in the twenty highest rates for all Local Authorities, and four in the top ten. All except Greenwich and Barking and Dagenham were in Inner London (Table 8.13).
Job Seekers Allowance
Job Seekers Allowance (JSA) replaced Unemployment Benefit and Income Support for unemployed people on 7 October 1996. It is payable to people under state pension age who are available for work of at least 40 hours a week and actively seeking work.
In August 2008 there were 134,160 people in London claiming JSA, amounting to 2.6 per cent of the working-age population. This compares with the rate for Great Britain of 2.3 per cent. There was significant disparity within London illustrated by a 0.8 percentage point gap between Inner London (3.1 per cent) and Outer London (2.3 per cent). The Inner London rate is the third highest of any region whilst Outer London falls in line with the Great Britain average.
At borough level, Tower Hamlets, Hackney and Newham have rates above 4 per cent and rank 6th, 12th and 14th respectively out of all Local Authorities in England. Haringey (3.9 per cent), Waltham Forest (3.9 per cent) and Barking and Dagenham (3.6 per cent) also appear in the top twenty authorities.
Disability related Benefits
Incapacity Benefit (IB) replaced Sickness Benefit and Invalidity Benefit from 13 April 1995. It is paid to people who are assessed as being incapable of work and who meet certain contribution conditions.
Owing to the capital’s younger age structure, the overall claimant rate for IB tends to be relatively low compared with the rest of the country. In August 2008 there were 307,830 claimants of Incapacity Benefit, which expressed as a percentage of the population aged 16-64 gives a claimant rate of 5.8 per cent. The rate for Great Britain is 6.7 per cent. As in previous years, the Inner London rate (6.6 per cent) is much closer to the national figure (Table 8.9).
None of the London boroughs had a claimant rate which featured in the 20 highest rates nationwide. As in 2006, Hackney had the highest London rate at 8.4 per cent, followed by Islington with 8.3 per cent, which rank 60th and 65th respectively.
Disability Living Allowance (DLA) provides a non-contributory, non-means-tested and tax-free payment for severely disabled people who claim help with associated costs before the age of 65. It replaced and extended Attendance Allowance and Mobility Allowance for people in this age group from April 1992.
In terms of child (under 16) DLA claimants, London ranks relatively low. The London wide figure of 2.3 per cent is significantly less than the Great Britain rate of 2.8 per cent. This pattern continues with the population aged 16-59. London’s rate of 3.4 per cent is almost a full percentage point lower than for Great Britain as a whole and almost 3 percentage points lower than Wales, where the rate is 6.3 per cent.
Of those aged 60 and over, 7.7 per cent of the population claimed DLA, amounting to almost 91 thousand people. Again, there is a clear polarity between Inner and Outer London, with Inner London (9.8 per cent) above the Great Britain figure of 8.8 per cent and Outer London 2.1 percentage points below. Both were significantly lower than Wales with a rate of 15.0 per cent, the highest in the UK.
Attendance allowance is a benefit for people over the age of 65 who are so severely disabled, physically or mentally that they need a great deal of help with personal care or supervision. People who have a terminal illness and are unlikely to live longer than six months can claim attendance allowance under ‘special rules’ provisions. There were 132,200 people claiming Attendance Allowance in August 2008 equating to a claimant rate of 15.3 per cent compared with the Great Britain rate of 15.8 per cent. In contrast to most other forms of benefit, rates differed little between Inner London (15.3 per cent) and Outer London (14.8 per cent).
Pension Credit was introduced in October 2003. It is an entitlement for people aged 60 and over living in Great Britain, designed to assist the poorest pensioners and also to reward savers with low or modest incomes who missed out under the previous system. It is not necessary to have paid national insurance contributions to be eligible.
Almost one-quarter of all Londoners aged 60 and over claimed Pension Credit in August 2008. This was the second highest rate nationally behind the North East at 26.4 per cent (Table 8.9). As with many forms of benefit there was a marked contrast between claimant rates in Inner and Outer London. One in three people aged 60 or over claimed Pension Credit in Inner London, compared with just one in five in Outer London.
Tower Hamlets had the highest claimant rate in London with 46.4 per cent of its pensionable age population claiming Pension Credit. This was also the highest rate in Great Britain and a further three London Boroughs (Newham, Hackney and Islington) featured in the five highest rates for local authorities in Great Britain. Bromley had the lowest rate in London at just 14.1 per cent, followed by Richmond with 14.3 per cent. This further highlights the disparity across the capital, particularly between Inner and Outer London.
Children in families dependent on benefit
This statistics relate to children living in families where an adult of working-age claims a key benefit. In August 2007 there were 365 thousand such children, which represents 27.5 per cent of all children in London aged 0-18. This was by far the highest rate of any region in Great Britain, 4.1 percentage points higher than the next closest region – the North East. Once again, significant polarity exists between Inner (35.7 per cent) and Outer London (22.8 per cent). Both figures are considerably higher than the Great Britain average of 19.1 per cent.
Tower Hamlets has the highest rate in England at 45.7 per cent, followed by Islington at 43.1 per cent. Hackney (38.2 per cent) and Newham (37.6 per cent) also feature in the highest five local authorities in England. Ten of the 13 Inner London boroughs have a claimant rate of at least 30 per cent. Only two Outer London boroughs have a rate higher than 30 per cent - Barking and Dagenham (32.8 per cent) and Waltham Forest (31.0 per cent) (Table 8.14).
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