28/11/2011 – Two cities in one
It's really struck me this week that London is, to paraphrase the Charles Dickens novel, really made up of two cities in one. The capital's financial services sector alone accounts for over 10% of the total tax take of the United Kingdom. The average property price in Greater London stands at £440,230, more than £200,000 higher than the UK average. And advertised salary levels in London are estimated to be at least £10,000 higher than the rest of the UK.
Yet, despite this apparent wealth, there is also a flip-side of the highest poverty rates of all of England's regions, at 28% compared to 22% in the rest of England. The number of people out of work is over 400,000, the highest levels seen since 1996, with young peoples' unemployment also at a twenty-year high. London accounts for 75% of all households forced to live in temporary accommodation in England, with most in private housing stock.
I'm not usually one to be looking at the negatives if I can help it, but an event at City Hall this week, looking at the impact of welfare reform in London, suggests that these stark differences may well be set to become even more pronounced if urgent action is not taken by government. Whether you look at housing provision, income levels, employment and skills or childcare provision, current reforms look like having a disproportionate and significant impact on many of those people already struggling to survive.
Speaking about the geography of welfare reforms, Professor Chris Hamnett of Kings College London, expounded a view that the current economic crisis has gifted the current government an excuse to make wide-ranging and radical reforms to welfare are probably the biggest since Atlee and the post-war settlement. He said that he had no doubt that private rental tenants in inner and west London will certainly be squeezed out of their homes due to Local Housing Allowance (LHA) changes and capping of payments. With over £5b of the total housing benefit spend going to London alone (about 25% of the total), his view was that the London situation was actually a large driver for current reforms.
The numbers affected vary, depending on which research report you read, with estimates of between 9,000 and 82,000 households thought to be at risk of losing their homes. This has all kinds of implications for the ability of low-paid workers to remain living in proximity to their work, thus potentially increasing the chance that they will need to give up work due to inability to afford extra travel costs, or make childcare arrangements. It will disrupt schooling and education at a time when the problem of children not in education, employment or training has never been bigger. It will disrupt health and social care services, as people move between London boroughs, which could place extra strains on the "cheaper" outer London boroughs.
Additionally, the impact of the proposed overall cap on benefits payments under the Universal Credit will exacerbate this situation. Philip Clifford of London Councils presented research that suggested that the scale of this will be even more wide-ranging than the LHA changes above. This research also challenged the notion that outer London will be unaffected by reforms with many boroughs other than those in the east seeing major problems emerging. In a very paradoxical outcome, he stated that even someone moving into work under the universal credit could see them becoming worse off, not better. I ask how that acts as any sort of employment incentive?
It's crystal clear to me that the government really does need to do some urgent thinking about better understanding the nature and complexities of the capital city, if its reforms are not to have an unwanted and unneeded adverse impact on many of its poorest residents. I want us to work together at this uniquely challenging time to try and reduce the inequalities that exist in London, to make sure that we can all share in some of the riches and opportunities that continue to evolve.
Posted by Terry Stokes