A Minimum Income Standard for London

Lydia Marshall, Matt Padley and Donald Hirsch

Centre for Research in Social Policy

21 May 2015

A Minimum Income Standard (MIS) for London

• What is different about living in London?

• What is the impact of these differences on the cost of a minimum socially acceptable standard of living in the capital?

What is MIS?

• What people need in order to have a minimum acceptable

standard of living

– A minimum standard of living in the UK today includes, but is more than

just, food, clothes and shelter. It is about having what you need in

order to have the opportunities and choices necessary to participate in

society.

• Based on detailed discussion with members of the

public

• A benchmark - a standard below which society thinks

that no one should fall

A MIS for London

• Building on the UK MIS

• Focus on additionality and difference – explaining ‘what’ and ‘why’

• Groups of working age adults without children, parents and pensioners, in Inner and Outer London

Key findings

• Similarity – e.g.– Household goods and services

– Clothing and footwear

– Groceries

• Difference– Housing arrangements and costs

– Transport and getting around

– Leisure activities and eating out

– Childcare costs

Housing arrangements

• Similar perceptions of minimum housing needs prevailed

• Some moderate adjustments reflecting the nature of available housing in the capital

Housing arrangementsHousehold Type Accommodation in UK MIS Accommodation in MIS London

Single working age person living alone

Living alone in a one bedroom flat (PRS) Living alone in a studio flat (PRS)

Pension age couple Two bedroom flat (SH) Two bedroom flat (SH)

Lone/couple parent(s) plus one child

Two bedroom house (SH) Two bedroom flat (SH)

Lone/couple parent(s) plus two children

Three bedroom house (SH) Three bedroom flat (SH)

Lone/couple parent(s) plus three children

Four bedroom house (SH) Three bedroom flat (SH)

Couple parent(s) plus four children

Four bedroom house (SH) Three bedroom flat (SH)

(PRS) Private Rented Sector(SH) Social Housing

Transport

• No cars

• Better public transport links. But…– Insufficiency of buses

– Challenges for families with children in Inner London

– Higher costs

• Greater need to get away from home in Inner London

TransportHousehold Type Transport in UK MIS Transport in MIS London –

Inner LondonTransport in MIS London – Outer London

Working age without children (living alone, or as part of a couple)

Bus pass

Taxis

Trips by coach/rail

Monthly zone 1-4 Oyster card

Trips by coach/rail

Monthly zone 1-6 Oyster card

Taxis

Trips by coach/rail

Pension age (living alone or as part of a couple)

Free bus pass

Taxis

Freedom pass

Taxis

Trips by coach/rail

Freedom pass

Taxis

Lone parent plus one child (aged 1)

Car

 

Monthly zone 1-4 Oyster card

Trips by coach/rail

Monthly zone 1-6 Oyster card

Trips by coach/rail

Taxis

Couple parents plus two children (aged 3 & 7)

Car

Bus pass for one parent

Monthly zone 1-4 Oyster card for each parent

Trips by coach/rail

Monthly zone 1-6 Oyster card for each parent

Trips by coach/rail

Taxis

Social Participation

• Some similarities …

• Some differences in patterns of socialising– Different ways of living

– Different pressures

– Different expectations

Eating outHousehold Type Frequency of eating out

agreed in UK MISFrequency of eating out agreed in MIS London – Inner London

Frequency of eating out agreed in MIS London – Outer London

Working age without children (living alone, in shared accommodation or as part of a couple)

Once a month Once a fortnight Once a fortnight

Pension age without children (living alone or as part of a couple)

Once a fortnight Once a fortnight Once a fortnight

Family with children (lone or couple parent(s))

Three times a year Once a month Three times a year

The additional costs of living in London

• Many goods and services cost similar amounts in and outside of London

• Differences in costs arise because of:– difference in prices

– difference in infrastructure

– differences in ways of living

The additional costs of living in London

• Key elements of additional costs:– Housing

– Transport

– Childcare

• What do these differences mean for weekly budgets?

Outer London

Inner London

UK outside London

£172

£173

£169

£61

£46

£26

£143

£191

£84

Single person (living alone)

Other items

Transport

Rent

47%

35%

Minimum costs in/outside London

Outer London

Inner London

UK outside London

£245

£246

£243

£53

£44

£48

£131

£131

£85

£235

£254

£164

Single parent plus child aged 1

Outer London

Inner London

UK outside London

£415

£420

£408

£107

£87

£74

£144

£144

£91

£226

£249

£162

Couple plus children aged 3 and 7

Other items

Transport

Rent

Childcare

22%

21%

23%

25%

Outer London

Inner London

UK outside London

£274

£315

£252

£6

£9

£11

£131

£131

£85

Pensioner couple Other items

Transport

Rent

31%

18%

MIS London: income comparisonsDisposable income on safety-net benefits, as % of MIS

Single adult Pensioner couple Lone parent, one child

Couple, two children0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40%

95%

57% 57%

35%

77%

57%54%

33%

89%

56%52%

UK Outside London

Inner London

Outer London

Disposable income on Minimum Wage as % of MIS

Single adult Lone parent, one child Couple, two children0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

69%

85%82%

61%

55%

74%

57%60%

72%

UK Outside London

Inner London

Outer London

Household type Below MIS in London Below 50% of MIS

Working-age adults 26% 11%

Families with children 43% 12%

Pensioners 18% 3%

LONDON TOTAL 34% 11%

Households below MIS in London

Conclusions and implications

• Key finding 1:

London costs differ partly but not only because of prices– Price of housing, childcare

– ‘Infrastructure’ of life. e.g. what kind of housing, transport available.

– Lifestyles: more outside the home; responding to stresses of London life

Conclusions and implications

• Key finding 2:

For different groups, different costs crucial, e.g.– Transport costs for singles: 2.5 times in Outer

London than outside London

– Childcare costs adds nearly £100 a week for child under 3 in Inner London

– Social participation requires an additional £3 a day for pensioners in Inner London

Conclusions and implications

• Implications 1:

Tackling income and costs must go together– Confirms a living wage higher in London

– But wages can’t do it on their own: two-pronged approach essential

Conclusions and implications

• Implications 2:

Public subsidies could help in particular areas– Social housing – availability and rent levels

– Transport – price and bus access

– Childcare – extra help will be welcome, but cap on eligible rates problematic in London

Conclusions and implications

• Implications 3, 4, 5

– ………………………………………..

– ………………………………………..

– ………………………………………..

Please fill in

Conclusions and implications

• Implications 3, 4, 5: – Affordable housing for families in Camden

means rents below £XX…

– Making jobs available locally in Barking would reduce a single worker’s costs by Y%…

– Free wraparound childcare in Southwark would reduce lone parents’ overall costs by Z%...

Conclusions and implications

• MIS produces tools to see how specific policy and practice measures impact overall living standards

Centre for Research in Social Policy

Loughborough University

Leicestershire

UK

www.crsp.ac.uk

www.minimumincome.org.uk/london