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 arrangements Household TypeAccommodation in UK MISAccommodation 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 coupleTwo 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

Transport Household TypeTransport in UK MIS Transport in MIS London – Inner London Transport 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 out Household Type Frequency of eating out agreed in UK MIS Frequency 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 monthOnce a fortnight Pension age without children (living alone or as part of a couple) Once a fortnight Family with children (lone or couple parent(s)) Three times a yearOnce a monthThree 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?

47% 35% Minimum costs in/outside London

22% 21% 23% 25%

31% 18%

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

Disposable income on Minimum Wage as % of MIS

Household typeBelow MIS in LondonBelow 50% of MIS Working-age adults26%11% Families with children43%12% Pensioners18%3% LONDON TOTAL34%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