However you crunch the numbers and whatever definition you use, London contains a lot of children whose families don’t have much money to spare. A city both revered and reviled for its vast wealth contains some the nation’s poorest kids. At 37%, the poverty rate among Greater London’s children is the highest of any region in the land.
Around 300,000 children living in the capital’s inner boroughs are members of households with incomes below the poverty line, defined as less than 60% of the national median income. That’s an astounding 45% of them. In Outer London, the number is 400,000. There are 8.6 million people living in the great metropolis. Some 700,000 of those below the age of 18 are not exactly living the high life. A new report for the Child Poverty Action Group backed by the Trust for London finds that, for many, things are getting worse.
The stats above include London’s housing costs and the report, by Donald Hirsch, a social policy academic at Loughborough University, shows how these and the similarly high price of childcare in the capital mean that London parents face bigger financial costs as a result of having children than counterparts elsewhere in the UK. It’s not the first analysis to single out these as large and distinctive “cost of children” factors in London, but it builds in the effects of recent benefit reforms to show how these are making those costs still harder for many to meet and that the upside of the new, universal credit system offers limited compensation for this.
Hirsch uses a different benchmark for acceptable family finances from the usual “poverty line” figure, which is related to range of UK incomes overall. The Minimum Income Standard is defined by the views of members of the public based on their opinion of the goods, services and choices households with kids should be able to afford if they are to participate fully in society. This includes a panel from London.
He points out that in some ways, the costs of having children are no different in the capital than in other places and can be lower: an extra pint of milk or a shirt from Primark cost the same everywhere, while all public transport is free for under-12s and parents eat out less, which “saves” more in London than elsewhere.
Consider food costs in general. Outside London a couple with no children typically spends £77.91 a week on it according to the report, while a couple with a four year-old and a ten year-old spend £103.25 a week - a “cost of children” difference of £25.34 a week. In Inner London, childless couples spend £87.44 a week while those with a four year-old and a ten year-old spend £109.52 - a smaller increase of £22.08. For Outer London, Hirsch’s model shows a hike of just £17.95.
He lists several other measures which find the London cost of children can be slightly lower than elsewhere, such as clothing, household goods, social and cultural participation. But the price of London childcare devours all that: up by £83.10 a week in Inner London and by £69.35 in the suburbs for those four and ten year olds to make overall total increases of £380.69 and £360.24. Outside of London the figure including childcare is a significantly lower £326.39.
And all of this is before housing costs are factored in. The ways these change when Londoners have children is, Hirsch explains, harder to pin down because households may move to different types of homes in different housing sectors: for example, a family that moves into social housing from private renting will have lower housing costs as a result. Also, the cost of housing varies considerably from one part of London to another.
But when such factors are held constant, Hirsch’s formula shows large increases in housing costs in London, especially Inner London, which dwarf those experienced outside the capital when children swell a household’s size. He recognises, of course, that those costs can trigger more state support for those affected, meaning families don’t have to bear the full burden themselves. However, he also shows that the impact of the under-occupancy penalty (“bedroom tax”) and benefit caps are having a growing effect.
Hirsch demonstrates “the consequence of renting a three-bedroom property so that each of two children can have their own bedroom, when the system will pay for only one.” He calculates that in the private rented sector “a family may have to find an additional £105 a week in Inner London and £58 in Outer London in order to finance an extra bedroom for a second child - which is another way of saying that, in practice, the children will have to share.”
Next year, the government will lower the overall benefit cap from £26,000 a year to £23,000 a year. This, Hirsch concludes:
Will make it virtually impossible for most London families without work to afford any form of privately rented housing, or for larger ones to afford social housing. For those in work, universal credit potentially extends housing assistance to families on a wider range of incomes. But, at the same time, many families receiving this assistance are facing cuts in entitlement relative to their rents.
Hirsch illuminates how childcare costs in London can make it financially pointless to for parents to work longer hours:
The better rate of support for childcare being introduced under universal credit does not allow London families to gain from working more than part time, because once they require about 30 hours of childcare they are above the current limit for such support.
London is often lauded as a city of opportunity. In many ways it is. But unless that support limit is increased, argues Hirsch, London families on low incomes will find it hard to take advantage of the employment opportunities they may have. Some could even end up worse off if they work more.
The upshot of these renewed financial pressures is easy to guess: the dispersal of lower income households from more prosperous parts of London or harder lives for them in worse housing conditions. Neither outcome makes sense in terms of social or economic costs and both strengthen the case for higher wages, cheaper childcare and greater public investment in low cost housing. None of these things, however, hold much appeal for the present government. This does not bode well for the capital.
Donald Hirsch’s report, entitled Children In London: the Extra Cost, is available via the Child Poverty Action Group website.
