A Divided City: Gap Between Rich And Poor In London Widens

Rachel Holdsworth
By Rachel Holdsworth Last edited 17 months ago

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A Divided City: Gap Between Rich And Poor In London Widens
Decline in households in the 'middle', proportionally by borough. By Londonmapper.
Decline in households in the 'middle', proportionally by borough. By Londonmapper.
Increase in 'poor' households, proportionally by borough. By Londonmapper.
Increase in 'poor' households, proportionally by borough. By Londonmapper.
Increase in 'wealthy' households, proportionally by borough. By Londonmapper.
Increase in 'wealthy' households, proportionally by borough. By Londonmapper.
For reference, the number of households actually in each borough, without any representative distortion. By Londonmapper.
For reference, the number of households actually in each borough, without any representative distortion. By Londonmapper.

New research provides dramatic evidence for London becoming an increasingly unequal city. Between 1980 and 2010, middle income households in London declined from 65% of the total to 37%, while poor households increased from 20% to 36% and wealthy households increased from 15% to 27%. That's right: London's 'middle' has gone from two-thirds to one-third of the city in three decades, and there are now almost as many poor people as those who are comfortably off.

This research, done by Professor Danny Dorling and Dr Benjamin Hennig for Trust for London, used data from the census and the most recent Rowntree Foundation poverty survey to reach these conclusions. They define 'poor' as not being able to afford necessities and 'wealthy' as qualifying for inheritance tax (read more about the methodology). It seems to confirm what many of us have thought for a while — that we live in a divided city, where the rich are getting richer and the rest of us are increasingly being squeezed out. Worse, as the data is several years old and doesn't take into account the most recent effects of austerity and property price rises, the situation is likely to only have got worse.

Despite what we all think about Kensington and Chelsea, outer London actually has the highest proportion of wealthy residents. That's mainly because it's where people are more likely to own property and have wealth fall into their laps from rising house prices. Richmond, for example, has seen its wealthy households grow by a third, the largest rise in London. A third of households in outer London are 'rich', compared with 19% in inner London. Inner London has more poor households (43% compared with 31% in outer London).

Why are these changes happening? Well, the one already mentioned is a biggie — the concentration of wealth into the hands of those who were lucky enough (read: being born at the right time) to take advantage of the property market before it went completely batshit. Those same property prices have also affected the other end of the scale, with people who might well have been in the middle a generation ago now paying out more than they can afford in rent, as the minimum wage proves woefully inadequate to cover the costs of living in London. (In 2013, nine out of 10 new applicants for housing benefit in London were working; around a quarter of all London households receive housing benefit.) It's two ends of the spectrum being pulled apart, creating two separate cities in one. Which isn't what London's supposed to be about.

Last Updated 13 September 2016

Gd Old Reliable Nick

Any chance of explaining what the graphics are representing? "relative share" of what?

TD

But are they cash rich? I doubt it. I would be classified as wealthy under this methodology but I am asset rich and cash poor as are a lot of people I'm sure.

Paul

Any chance of having each borough identified, if only when the cursur hits them

Jim

Have you actually read their methodology? It doesn't tell us anything about actual poverty or inequality. Instead, they estimate 'poverty' in individual boroughs in 2011 based on things like the number of private renters or carless households because a national survey told them that private tenants and those without a car were more likely to be poor in 1999 across the country as a whole. But in London these days being a private tenant or not having a car doesn't make you poor. This is an elementary mistake that completely biases the results at local level.

Furthermore, their estimates of wealth are based entirely on house prices, which are only one ingredient of wealth and arguably a misleading one, since most people selling a house would still have to buy another one. Is anyone who owns a home in London 'wealthy', even if they're struggling to pay off their mortgage? I'm not sure most people would agree that they are.

It's sad to see someone as respected as Danny Dorling pass off such sloppy analysis without properly explaining to people the many serious caveats that should be attached to it, and to see so many people embracing it simply because, as you say, "It seems to confirm what many of us have thought for a while".

Gordon

Boroughs represented in the graphics are difficult to individually identify

Greg Tingey

I too, am confused by the wording referring to "share".
And I live in Waltham Forest, which appears to have one of the widest differentials.!
Incidentally, there's another way to own a "nice" property, even a small suburban house - inherit it.