Social Policy in a Cold Climate:Focus on London

Ruth Lupton9 July 2013

Social Policy in A Cold Climate

The impact of economic and political changes, on poverty and inequality in the UK, between 2007 and 2014

Phase 1 (now!) • Labour’s social policy (from 1997 and through the crash)• Changes in economic inequalities 2007-2010Phase 2 (January 2015)• The Coalition’s social policy• Further changes in economic inequalities In both phases:• Pulling out everything we can at a London level• A particular focus on spatial patternsAlso:• Three local authority case studies on the local government cuts in London

Prosperity, Poverty and Inequality in London 2000/01 to 2010/11

• A first report on the London work (more to come!)• Includes:

– Changing distribution of qualifications, employment,hourly wages, weekly earnings, incomes and wealth, from pre-crash (2007/8) to post-crash (2010)

– Changing spatial distribution of poverty over same period.• Important because:

– First crash/post crash comparison for London– Tracks what already happening in London before Coalition reforms – And documents the situation Boris inherited in 2008

• Contextualised by:– Wider data on London’s economic performance, housing markets etc over

decade– Analysis of spatial patterns of poverty pre-crash as well as post-crash

The Team

• John Hills leading on economic outcomes, with Polly Vizard, Jack Cunliffe, Polina Obolenskaya, Ludovica Gambaro

• Ruth Lupton leading on spatial aspects, with Alex Fenton, Amanda Fitzgerald

Economic Outcomes: Aims and Sources

• Aim of analysis:– Overall shape of distribution (focus on 90:10)– Who wins and loses as wider economic circumstances change– Compare London with rest of England, and compare Inner and Outer

• Sources:– National Pupil Database (age 16 qualifications)– Labour Force Survey (adult quals, employment, wages, earnings)– HBAI dataset (DWP) (incomes)– Wealth and Assets Survey (ONS) (wealth)

• Dates:– 2006/08 (National Equality Panel) and 2010 (i.e. nothing before 2006-8)

• Caveats:– Designed for national comparison– More can be done with Annual Population Survey– More can be done with sub-London splits when data available

Spatial Distribution of Poverty Aims and Approach

• Aim of analysis:– Where do people in poverty live?– What levels of poverty exist in different neighbourhoods?– How does this change over time?

• Approach:– Develop a consistent proxy measure for poverty at LSOA level (a rate of the

number of claimants of means-tested benefits divided by the number of households)

– Look at 2001, 2008 and 2011 – Look separately at numerator and denominator to explore source of change in rate

• Caveats:– Although more can be done to explore data at a local level, small year on year

changes in single neighbourhoods should not be regarded as significant – looking for overall patterns

London during growth (2001-2008)

• London’s economy does better than any other region• The population of the city grows rapidly• House prices grow rapidly, faster than earnings• The number of social rented homes in Inner London falls,

while subsidised private renting increases (esp in Outer London)

• Many new high value homes are built in inner areas• Poverty falls only slightly (after housing costs)• London is more unequal on all the indicators we look at in

2006-2008 than other regions

Poverty rates decline in Inner London, as population increases

Londonsub-region

LSOA UMBRH

band 2001

Change 2001-08(per cent)

Households Claimants Rate

Inner London -

East

< 25% 10 -3 -1225-35% 6 -2 -835-45% 6 -3 -945-55% 8 -4 -11

55% or more 10 -4 -13

Inner London -

West

< 25% 8 -1 -825-35% 10 0 -935-45% 13 2 -945-55% 19 1 -16

55% or more 27 -5 -25

Outer London -

East & North East

< 25% 6 18 1225-35% 3 12 935-45% 3 6 345-55% 6 1 -5

55% or more -7 -8 -2

London’s relative resilience to recession

• London the only region to see no dip in output in 2009

• Smaller falls in full-time employment than other urban regions

• And smaller rises in unemployment

• Part time employment increases: an under-employment rather than unemployment story

East Midlands

Eastern

London

North East

North West

South East

South West

West Midlands

Yorkshire and Humberside

Northern Ireland

Scotland

Wales

-4 -3 -2 -1 0 1 2 3 4

-1.63

-3.91

-3.28

Unemployed Employed, PT

Employed, FT

Losers: Men and Outer London

• The increase in part-time employment is only for men

Some disadvantaged groups less hard hit in London than elsewhere

• For youth 16-24:– unemployment up 1.5 percentage points in London– 2.9 percentage points elsewhere.

• For Black/Black British people:– no significant changes in London– elsewhere in country a fall in FT employment of 5.7

percentage points whilst unemployment increased.• Similar pattern for social tenants• So differentials between London and other regions

close (convergence towards worse outcomes)

Lowest Earning Men Hardest Hit and Earnings Inequality Rises for Men and Women

• Overall 90:10 ratio in London went up more - from 7.4 to 9.4 - than in the rest of England (7.8 to 8).

• Low-earning men in London had greater decline in earnings than low-earning men elsewhere, driving an increase in wage inequality.

• For women, earnings inequality also increased, and by more than in the rest of the country, but less than for men. Top earning women did not experience the same gains as top-earning men.

People with Lowest Incomes see them fall more in London (after housing costs)

• Income inequality after housing costs remained virtually unchanged in the period to 2010/11 in England as a whole

• In London the 90:10 ratio rose considerably from 8.4 to 10.7

Changes in Net Equivalised Household Income After Housing Costs 2007/8 to 2010

Poverty continued to spread outwards

Londonsub-region

LSOA UMBRH band 2001

Change 2008-2011(per cent)

Households Claimants Rate

Inner London - East

< 25% 2 14 1125-35% 2 10 835-45% 2 9 745-55% 1 7 6

55% or more 3 7 4

Inner London - West

< 25% 2 12 1025-35% 2 9 735-45% 2 5 345-55% 2 4 1

55% or more 4 4 0

Outer London - East & North East

< 25% 2 20 1725-35% 1 13 1235-45% 1 9 845-55% -1 5 7

55% or more -2 5 7

Outer London - South

< 25% 2 20 1725-35% 2 15 1335-45% 2 12 945-55% 0 5 5

55% or more -1 5 6

Change in Neighbourhood Poverty Rates 2001 to 2011

• A slight majority of “the poor” (53 per cent) by this measure live in Outer London in 2011

• Proportion of highest poverty neighbourhoods in Inner London falls from 77 per cent to 55 per cent

At the same time, the wealthy of the wealthy pull away, so wealth inequality rises

Changes in the 90:10 Ratio (Financial, Physical and Property Wealth 2006/08 to 2008/10

• wealth at the 10th percentile in London stayed flat while in England generally it rose 14.3 per cent

• But median wealth increased 7.6 per cent in London, compared with a 1.3 per cent fall in England generally.

• At 90th percentile, wealth increased 8 per cent in London, but only 0.4 per cent elsewhere.

• Different story if pension rights included

But some good signs: Strong and improving qualifications of Londoners

Inner London driving the improvements in qualifications

And London’s schools continue to slightly outperform others, with greater socio-economic equality

Particularly strong performance of FSM pupils in Inner London

2008 2010 2008 2010 2008 2010ALL FSM non FSM

200

220

240

260

280

300

320

340

360

380

London

Best performing region excluding London

Worst performing regionGC

SE

poi

nts

scor

e

Implications/Discussion

• High incomes, high wealth, high poverty are global city characteristics. Can London do it differently?

• The changing poverty map could be a good thing, but:– Is it?– What are the implications for services in outer areas?– Are we on our way to a ‘donut city’ (with welfare

reform accelerating the trend)?