People living in social housing in London getting poorer even though more of them have jobs, new research for the Peabody housing charity shows today.
The first Peabody Index, compiled by the Social Market Foundation, shows that despite falling rents, tenants in social housing in the capital saw their annual income fall by almost £400 at the same time as more of them were in work.
The Index, which will be published on a regular basis, uses official statistics and data from surveys of the Peabody Trust’s 111,000 residents in London to show the impact of low wages and the rising cost of living.
The Index reveals that more residents are in work. The unemployment rate among social housing tenants in London was 10.9% in the first quarter of 2018. A year earlier, the rate was 14%.
The gain in employment continues a longer trend towards work. The proportion of economically active social housing tenants in paid employment in London increased from 78% to 88% between Q1 2008 and Q1 2018.
Peabody’s resident survey shows that social housing tenants include significant numbers of teachers and teaching assistants, childminders, hospital workers, bus drivers, construction workers and carers. Around 8% of tenants in work were on zero-hours contracts and another 3% are “self-employed” as Uber drivers and Deliveroo riders.
But even as more people in social housing work, average incomes are falling.
The average household disposable income for social housing tenants in London stood at £406 per week in April 2018. That was 1.1% lower than a year ago, and down from £413 in July 2017.
On an annualised basis, this amounts to a decline in real household disposable incomes of about £389 between July 2017 and April 2018.
Peabody’s resident surveys reveal the steps tenants have had to take to cope with the squeeze on their incomes. 41% have cut back on food shopping. 35% have cut back on heating. 13% skip meals to save money.
Over 70% said they do not have any savings or investments to fall back on, showing the precarious situation many tenants find themselves in.
Hundreds of residents surveyed also used food banks, high-cost weekly payment stores, quick-cash or payday loans, or resorted to unlicensed lenders to make ends meet in the last year.
The index findings provide some insight into the sluggish consumer spending figures released by the Office of National Statistics which say that household spending is the weakest for three years, dragging the economy down in the first quarter of the year.
Peabody Chief Executive Brendan Sarsfield said:
“Low-income Londoners are working hard, doing jobs that literally keep the city running. They are the engine of growth, contributing £15bn a year to the capital’s economy, yet more than half those surveyed are worse off than a year ago because of low-wages, rising transport costs and the spiralling cost of living in the capital.
“This trend represents a real risk to London’s continuing growth and underlines the need for more low-rent housing. This would boost household income and the economy, putting more money back in the pocket of hard-working Londoners.”
Scott Corfe, SMF Chief Economist, said:
“Social housing tenants are working more but getting poorer. That is a clear challenge to politicians at all levels to do more to ease the squeeze on the incomes of people doing the jobs that London’s services and economy depend on.
“The Peabody Index uses hard economic data to give policymakers clear evidence on which to base decisions about social housing. The reality of the London housing market is that social housing is the only viable way for many people in vital jobs to live and work in the capital.”
For more information or to arrange an interview, contact Scott Corfe, SMF Chief Economist, on firstname.lastname@example.org. The full Index is published at https://www.smf.co.uk/publications/the-peabody-index
About the SMF:
The Social Market Foundation (SMF) is a non-partisan think tank. We believe that fair markets, complemented by open public services, increase prosperity and help people to live well. We conduct research and run events looking at a wide range of economic and social policy areas, focusing on economic prosperity, public services and consumer markets. The SMF is resolutely independent, and the range of backgrounds and opinions among our staff, trustees and advisory board reflects this.
Peabody has been creating opportunities for Londoners since 1862, when it was established by the American banker and philanthropist, George Peabody.
In July 2017, Peabody and Family Mosaic merged to create a new Peabody, more than doubling its capacity to provide new homes and services in London and the South-East. The new organisation owns and manages more than 55,000 homes, providing affordable housing for around 111,000 people.
As well as bricks and mortar, Peabody provides a wide range of community programmes in their neighbourhoods, including help with employment and training, health and wellbeing projects, family support programmes and a dedicated care and support service.
The Peabody Community Foundation will invest more than ￡90 million supporting communities over the next 10 years. This year, it invested more than￡7.3 million in programmes, helping 1,123 people into work and delivering over 58,000 hours of free-to-access community activities.
Peabody also runs a comprehensive programme of socio-economic investment in supporting residents into enterprise, employment, education and skills.