[A-List] UK state: London mayoral election & poverty report

["Michael Keaney" <michael.keaney@xxxxxx>]

Declan Gaffney is a sometime colleague of Allyson Pollock, the plucky
professor who has been the subject of a disgusting smear campaign by New
Labour toadies like David Lock and Alan Milburn (posts passim) over the
financial gymnastics used to "justify" PPPs in the National Health Service.
Livingstone's selection of him as an adviser is quite astute.


Capital of child poverty

Unemployment and high living costs mean that more children now live in
deprivation in inner London than anywhere else in Britain

Declan Gaffney
Tuesday November 19, 2002
The Guardian

City bankers may be feeling the pinch this year, with tumbling markets
meaning likely cuts in Christmas bonuses, but inner London still has the
highest income per head in Europe. London has the most millionaires, the
most expensive properties, the most designer boutiques, the most expensive
restaurants. But this enormous wealth masks a staggering divide between rich
and poor, because inner London also holds another record - one in two of its
children lives in poverty.

Child poverty - defined in terms of households with disposable incomes below
60% of the national average - has emerged as a major focus of government
action in recent years. Poverty is not evenly distributed across Britain,
but until recently little attention has been paid to variations in poverty
levels between areas, perhaps because data on household incomes at regional
level has only been published since 2000. New data on poverty in inner
London in a report commissioned by the mayor of London raises important
questions about the factors contributing to poverty.

Income poverty in Britain is measured in two different ways. The first is
based on disposable household income after tax and national insurance
contributions, yielding a child poverty rate of 21% for the UK in 2000-01.
The second uses the same data but also deducts housing costs from disposable
income. On this basis, the child poverty rate is 31%.

The measure which takes account of housing costs is the one which appears
most commonly in government statements on poverty. It is also the measure
needed to make realistic comparisons of poverty between areas. Unless
housing costs are deducted in measuring disposable incomes, higher housing
benefit payments in areas with higher housing costs will lead to a distorted
picture of poverty levels.

Before housing costs are taken into account, the regional distribution of
child poverty in Britain is more or less as might be expected from widely
recognised patterns of employment and deprivation. The north-east and
south-east represent opposite extremes, with poverty rates of 32% and 11%
respectively. London emerges as significantly disadvantaged compared with
other southern regions, but not in comparison to elsewhere in Britain.
However, inner London - which with nearly three million inhabitants is
comparable in size to the north-east or Wales - has a higher child poverty
rate than any region, at 36%.

A more realistic comparison, taking account of housing costs, shows much
greater relative disadvantage in London. Forty-one per cent of children in
Greater London are in poverty, compared with 31% nationally and 37% in the
north-east. This is largely due to unparalleled levels of poverty in inner
London: 53% of children in inner London are living in income poverty.

Poverty rates for pensioners and working-age adults in inner London are also
far higher than in other regions. Thirty-six per cent of pensioners are in
poverty, compared with 28% in the north-east, and 30% of working age adults,
compared with 23% in the north-east.

The hitherto unrecognised scale of income poverty in inner London raises
important questions about the factors contributing to poverty in different
parts of Britain. The most important single factor behind the unprecedented
rate of child poverty in inner London appears to be the proportion of
children living in households where nobody works. While employment is not a
guarantee that households will not be in poverty - 40% of poor children live
in households where at least one person is working - the difference between
the child poverty rate in London and the national average reflects the high
percentage of children in the capital living in workless households.

This shifts the burden of explanation to London's labour market. While in
the 1970s and 1980s unemployment in London was well below the national
average, over the past 10 years the capital has had one of the worst
unemployment rates in the country. Inner London has the highest unemployment
rate of any sub-region in Britain. Economic activity - the proportion of the
population which is either in employment or seeking employment - is also
among the lowest in the country.

What is of particular concern is the mounting evidence that households with
children in London are especially at risk of exclusion from the labour
market. Analysis of economic activity by age and gender reveals a striking
pattern of low rates of employment in London for women between the ages of
30 and 45, when they are most likely to be looking after young children.
Receipt of the working families tax credit - the main benefit available to
parents in employment - is by far the lowest in Britain.

Any explanation of the pattern of disadvantage in London needs to take into
account the cost of housing and childcare in the capital. While the working
families tax credit provides a boost to households with low earnings and
meets up to 70% of childcare costs, the financial benefit is reduced in
areas with high housing and childcare costs. Using the Department for Work
and Pensions tax-benefit model, the mayor's report shows that even with the
working families tax credit, a lone parent moving from benefits to a job
paying £250 will, after meeting average childcare costs, be only £20 a week
better off - the price of a weekly travel card.

· Declan Gaffney is senior research fellow at the School of Public Policy,
University College London, and policy adviser to the mayor of London.