Poverty in London

by: Andrea Hoffmann

5. Semester, March 2006

Table of Contents

0 Introduction

1 Definition and General Causes of Poverty

2 Poverty in London

2.1 Employment

2.1.1 Unemployment Among Women
2.1.2 Unemployment Among Ethnic Minority Groups

2.2 Earnings

2.2.1 Demand for Higher-Skilled Employment
2.2.2 Gender Pay Gap
2.2.3 Earnings for Ethnic Minority Groups

2.3 Education

2.3.1 Educational Achievement Among Ethnic Minorities
2.3.2 Truancy and Exclusions

2.4 Housing Costs

2.4.1 The Real Estate Market
2.4.2 The Impact of Housing Costs on Poverty

2.5 Child Poverty

2.5.1 Child Poverty Among Workless Families
2.5.2 Child Poverty Among Ethnic Minorities

2.6 Crime

2.6.1 Home Contents Insurance

3 Plans and Measures to Defeat Poverty

4 Conclusion
 

0 Introduction

Poverty is a problem as old as mankind and has always haunted parts of society in various forms. The fact that we have entered the 21st century is a clear reason to assume that poverty has been successfully defeated to the greatest possible extent and is only to be found in individual cases. However, the opposite is true and contrary to what one might expect poverty is not only an issue in developing countries. Industrial nations also struggle with increasing poverty and a continuously widening gap between rich and poor1. The problem is particularly evident in large cities.

This paper examines the extent of poverty in London today. The first section outlines the essentials of poverty in general and its causes. Focussing on main reasons and consequences, the second section provides details about the different faces of poverty in London. This section is mainly based on comprehensive information about poverty provided in a report published by the Mayor of London in 2002. Unless otherwise noted, all figures provided in the second section refer to values after housing costs are taken into account. The third section of this paper describes the government’s future plans to tackle poverty and gives information about countermeasures that have already been implemented. The concluding section considers current achievements and the possible future development of poverty in the capital.

1 Definition and General Causes of Poverty

Poverty is a very ambiguous term. Due to its complexity and because of the entirely different conditions prevailing in the world’s societies, there is no universally valid definition of poverty.

Generally, poverty is considered as the state of not being able to satisfy all basic needs of daily living and describes living standards that do not meet certain minimum requirements. These requirements may concern essential material goods or services and may refer to deprivation over short or long periods suffered by individuals or groups. In its worst form, poverty may be connected with famine, misery and death. One attempt to measure poverty is the differentiation between relative and absolute poverty. Relative poverty describes deficiencies compared to the average living conditions prevailing in the relevant society. Absolute poverty refers to the inability to reach a standard of living above the bread line by oneself.¹ In the long term, living in absolute poverty poses a high risk of severe health problems.

In the European Union, households are considered as poor if their net income is less than 60 per cent of the country’s average net household income. This limiting value is also called the poverty line.² Poverty may be the consequence of individual behaviour or familial causes. However, the most essential factors leading to poverty are wars, political structures, economic disadvantages due to geographic preconditions, a lack of globalisation, high population growth and lack of education and skills. Additional significant conditions that may cause poverty are unemployment, age, gender or racial discrimination, an unequal income distribution and the lack of educational opportunity.³ Generally, those most severely affected by poverty are disabled people, older people, single parents, children and socially disadvantaged groups.⁴

2 Poverty in London

London is usually associated with a bustling and vibrant city life, cultural diversity and an impressive mixture of history and modernity that justifiably attracts millions of visitors from all over the world. Although this picture of the unique metropolis London still prevails, the difficulties of the capital have become increasingly apparent in recent years. Hence, it is not surprising that the issue of deprivation and its consequences have already become part of a London travel guide:

“The number of homeless people in the streets is not just a stain but an adulteration on the rich robes of this, Europe′s richest city.”⁵ Today, London is a city divided between the extremes of prosperity and deprivation. Tackling poverty is one of the main items on the local government’s agenda. Reports published by the Department for Work and Pensions in the years 2000 and 2002 drew attention to the severe extent of poverty in London. Providing statistics on households below average income, the reports found that with 43 per cent, “London had the highest rate of income poverty for children of any region of Great Britain” and that London’s “rates of income poverty for working age adults and pensioners were also high by comparison with national averages.”⁶

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1 http://www.aktionsprogramm2015.de/www/begriffdefinition_14_18_0_f.htm

2 http://europa.eu.int/eur-lex/de/com/pdf/2001/com2001_0565de01.pdf

3 http://de.wikipedia.org/wiki/Armutsgrenze

4 http://www.un.org/esa/socdev/poverty/subpages/dpi1781e.htm

5 http://news.bbc.co.uk/1/hi/england/1896213.stm -3-

6 http://www.london.gov.uk/mayor/economy/docs/london_divided_all.pdf