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A London without povertyThe Joseph Rowntree Foundation’s manifesto briefing for

the London mayoral election 2016

A London without poverty

The Joseph Rowntree Foundation is an independent organisation working to inspire social change through research, policy and practice.

Our vision is for a prosperous UK without poverty where everyone can thrive and contribute. To achieve this we work in partnership with private, public and voluntary sectors, as well as with individuals and communities. Using evidence and experience, we search for the underlying causes of social problems and

demonstrate practical solutions in order to influence lasting change.


IntroductionLondon is a capital city of constant change, a global arena of innovation and opportunity. It is one of the richest cities in the world. But it also holds some of the UK’s poorest communities. Over two million Londoners live in poverty.

This manifesto briefing proposes a set of policies which we hope the London mayoral candidates will champion. These policies aim to ensure that the capital prospers for all Londoners to share in the capital’s prosperity, building on its strong economic environment for broad, sustained and inclusive growth.

What does poverty look like in London?

Poverty is when a person’s resources (mainly their material resources) are not sufficient to meet their minimum needs (including social participation).

In the capital, there has been a shift in the nature of poverty. Poverty is no longer characterised narrowly by worklessness and social renting in inner London. Increasingly, working people in private renting in outer London experience poverty too. This is a symptom of deep structural changes in the UK labour market. There has been a rise in precarious, poorly paid work and a ‘hollowing out’ of middle-income jobs to progress to. Combined with rapidly rising housing and childcare costs, these undermine the London that promises prosperity for all.

What can the Mayor do?

The Mayor of London has limited powers. But the Mayor does have a platform for implementing policies and championing causes that can have a huge impact on the lives of low-income households, not just in London but throughout the UK. One example is the

support successive Mayors have given to the Living Wage campaign, urging businesses and local authorities to pay staff living wages as a minimum. This campaign played a part in the Chancellor’s planned introduction of a National Living Wage by 2020.

JRF believes that London should be a place where people’s chances in life are not defined by their socio-economic background and that communities can work together to tackle disadvantage. These policy proposals address poverty across the lifecourse. These are policies the next Mayor could implement or champion in their first term.

The London mayoralty has proved to be a position that allows for radical thought and global ambition, keeping London among the best cities in the world. We hope that the mayoral candidates from all parties adopt these measures in their election manifestos for May 2016. Poverty is real in the UK, but it can be solved. The next Mayor of London has a vital role to play in doing so.

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ChildhoodOur evidence is very clear: what happens in childhood has a strong impact on each person’s chances throughout life. Poverty has a huge impact on the family home. A JRF review of parenting and poverty concluded that ‘living on a low income in a run-down neighbourhood does not make it impossible to be the affectionate, authoritative parent of healthy, sociable children. But it does, undeniably, make it more difficult.1 There is a wealth of evidence that children who grow up in low-income households have poorer mental and physical health than those who grow up in richer families. At an early age, children from better-off backgrounds score better in tests of cognitive, social and behavioural development. Poverty drives poorer educational attainment and weakens long-term life chances.2

Our evidence is very clear: what happens in childhood has a strong impact on each person’s chances throughout life.

The Mayor has no formal powers over school education. But Boris Johnson’s education inquiry led to the 2012 Going for Gold report3 and following actions, including a London curriculum and a dedicated unit at City Hall to secure new sites for free schools. This shows that some mayoral convening and campaigning can give space for mayor-led innovation. We believe the next Mayor should use their position to promote the following.

Campaign for higher quality childcare

In recent years, governments have made significant steps to expand the quantity of childcare available to families of all incomes, recognising its role in supporting higher labour market participation and improving work incentives, so increasing family incomes. JRF research4 shows that high-quality childcare can


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protect children against the negative impacts of poverty and improve their development, contributing to better educational and employment outcomes later in life. We now need a much stronger focus on quality, if we are to maximise the life chances of children in London.

High-quality childcare can protect children against the negative impacts of poverty and improve their development.

Currently, the UK system effectively protects against very low-quality childcare, but rarely provides childcare of the quality to deliver developmental benefits. Families living in high unemployment areas are less likely to be able to access childcare within normal working hours. State support for childcare costs is poorly targeted at low-income parents, leaving some struggling to afford childcare, and gives poor value for money - by taking a more universal approach to childcare we are subsidising those who can afford it, creating poor value on the expenditure from a poverty reduction point of view.

The Mayor does not have direct powers to drive up the quality of childcare in London, but could again play a vital championing and convening role. Our research suggests that the next London Mayor should champion:

• Moving towards a graduate-led, fully qualified childcare workforce, with wage levels across all types of provider similar to the current wages in the maintained sector. • Keeping the mixed market of private, voluntary and maintained sector providers, with child-minders and children’s centre-based care playing important roles.• Investing in a social enterprise programme to develop business models proven to deliver quality and flexibility.• Linking childcare providers much more closely to early intervention networks and improving provider’s support for

home learning, helping families to access services and give children the best start at home.5

Retain momentum behind closing London’s attainment gap

London has made great progress in closing the educational attainment gap. The London Challenge programme, which ran between 2003 and 2011, saw the performance of schools improve dramatically. Key Stage 4 results moved from among the worst in the country to the best during the period. The capital has led the way on this issue for decades.

London leads the way in closing the educational attainment gap. The next Mayor can keep Londonat the forefront of good practice.

Nevertheless, while still smaller than in the rest of the country, a persistent attainment gap remains between those who are on free school meals and those who are not. The next Mayor should look to build momentum towards completely closing the attainment gap in London, keeping the city at the forefront of best practice in this field.

Key to this will be continuing several initiatives that aim toimprove the quality of teachers and leaders in schools serving disadvantaged communities. These include Teach First, School Direct, Teaching Schools and the Future Leaders Trust. A drive towards improving current teachers’ Continuing Professional Development is equally important. This will help support current staff to improve and progress, to avoid disparities between teachers able to take advantage of leadership initiatives and longer serving staff.6


Integrating leadership and oversight of the education system in London

In England, the role of local authorities in education is declining fast. New Regional Schools Commissioners (RSCs) have been in place since 2014. The role and capacity of this new structure needs to be developed further. In particular, if RSCs are to become the main source of oversight and support, they should aim to improve performance across all schools in their area, not to promote a particular type of school.

In England, the role of local authorities in education is declining fast.

A recent report from the Education Select Committee7 raised concerns about the division of London into three different RSC areas. It cited Greater London Authority (GLA) concerns that the division was ‘inexpedient’ and ‘unsustainable’, creating confusion and complicating co-ordination of education services across the city. JRF supports the view that leadership and oversight of education in London should be integrated under one RSC, to ensure smoother operation across the metropolitan area. This arrangement would align more closely with the wider governance structures emerging under the government’s metropolitan devolution agenda.

Champion a network of ‘family hubs’

JRF evidence demonstrates that children’s prospects are strongly affected by their relationship with their parents, and their parents’ relationships with each other.8 Help for parents to best support their child’s development and early action to reduce the likelihood of family breakdown, or soften its impact, are an important part of any anti-poverty plan. We believe that the government should develop a network of family hubs to provide parents and families

with wraparound support and act as a medium for wider co-ordination and integration of services.

Help for parents and support during family breakdown are central to any anti-poverty plan.

In its report Fully committed,9 the Centre for Social Justice outlined similar proposals, these included:

• Using a ‘hub and spokes’ model; these build on larger children’s centres (shown to be more effective) with more numerous community-based services to maximise access to services, especially for those for whom travel to a centre would be a barrier. • Making family hubs the ‘go to’ place for parents to access services and information about any family-related issue.• Locating as many services as possible in family hubs, including birth registration, antenatal and postnatal services, childcare information, debt advice, relationship and parenting support, local activities for families and support for families who are separating. • Linking with local voluntary and community sector activities.

The Centre for Social Justice report also envisaged family hubs providing employment advice and substance misuse services. This would have clear advantages for some service users, but might not be appropriate for all. Local areas would need to think carefully about the client groups needing to access the range of services and ensure that the mix of users accessing services in one location was appropriate. Family hubs could also be linked to employment support services, extending co-ordination to form a family and employment hub network.10

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Working ageThe employment rate now sits at 74% in London, slightly behind the average across the UK, but continuing on an upward trend. However, unemployment remains persistently high in some boroughs. According to the Trust for London, the three with the highest levels are all in east London – Barking and Dagenham, Tower Hamlets and Newham. Here unemployment rates are between 8-10%, compared with a national average of 5%.11

Pay remains a problem for Londoners. The next Mayor must keep up the momentum for a London Living Wage.

Pay continues to be a problem in London. While wages returned to growth for most of the country in 2015, hourly pay continued to fall in the capital, leaving it lagging 12.4% behind pre-recession levels.12 In the 2015 Summer Budget, the Chancellor began to address wage stagnation by introducing a new National Living Wage of £7.20 an hour for those over 25. This will undoubtedly affect the living standards of many over-25s who work full-time in London. But the figure still falls far behind the voluntary London Living Wage (currently £9.40 an hour), which is set with regard to the cost of living in the capital. The current Mayor has been a robust advocate of the voluntary London Living Wage, encouraging many more employers to take it up. The number of London Living Wage employers nearly doubled in 2015. The next Mayor must build on this strong foundation and continue to advocate for the voluntary London Living Wage with employers across the city. We hope the next Mayor will be a vocal supporter of the new Living Wage Commission.

Poor earnings growth in the capital is partly the result of deeper structural changes in the labour market, both in London

and beyond. The loss of nearly 10% of the UK’s semi-skilled, middle-income jobs13 over the decade up to 2012 is suggestive of a ‘hollowing out’ of our labour market: employment growth is polarised at each end, with fewer ladders to progress in between. Four out of five low-paid workers will not have fully escaped low pay after ten years.14 The next Mayor will have to tackle job progression if they are to build a prosperous and inclusive capital.

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A prosperous, inclusive London needs jobs that allow workers to progress out of low pay.

This is an interconnected web of issues on the path to sustainable, inclusive growth in London. To begin to address it, we believe mayoral candidates should consider the following proposals.

Use the devolution of employment support to redesign the system, incentivising a focus upon earnings (as well as sustainable employment), and addressing the specific needs of those furthest away from the labour market

In the 2015 Autumn Statement, the Chancellor announced that the Mayor of London will be given the power to jointly commission (with London boroughs) employment support to assist long-term unemployed people and those with health conditions and disabilities to re-enter work. The Mayor could use the new powers to develop a stronger programme of employment services, based upon evidence of what works.

JRF research recommends re-orienting the employment service so it concentrates on higher employment and earnings.15 This will not only help to continue to push up employment figures, but will also increase participants’ chances of securing jobs starting at as high a level of pay as possible. It would give service providers a clear rationale to prioritise ongoing support, advice and access to training once people are in work, to help them progress to jobs with higher earnings or more hours. By incentivising an efficient match of labour to demand, it would maximise reductions in state support to individuals.

For this policy to be most effective, however, we need demand-side policies too. JRF recommends that the next Mayor’s

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office take a brokering role. This could involve developing a forum including representatives of sectors with skills shortages or specific challenges (like high staff turnover) and business support and skills providers. This forum could better map job roles and develop training packages to help people progress from one role to another. The forum could also build bridges between business and employment support services, encouraging a flow of suitable low-income candidates for jobs.

For those further away from the labour market, JRF research finds that many people with a disability or health condition want to work, and there is evidence that work is generally good for health. Individuals’ perception of their health condition has proved important in evaluations of previous programmes. Joining up employment support with condition management and occupational health services is crucial. But evaluation of the Work Programme finds advisers lack the skills and knowledge to do this. Better outcomes will require more experimentation with different types of support, combined with more specialist advisers. This could include co-location and joint working between employment support specialists and clinical teams. This has been shown to work for some conditions. Evidence also shows the effectiveness of a personal adviser building motivation and confidence, access to work experience, intermediate labour markets, individual placement support and subsidised employment. These are important lessons for the new Work and Health Programme recently announced by national government. They must also be applied to the devolved context and the work the next Mayor must do to deliver effective programmes in London.


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Create ‘first job opportunities’ using procurement budgets

The GLA has a significant public procurement budget, with procurement services managed by Transport for London.16 This could be used better to create jobs-with-training for young people from disadvantaged areas. Currently, Transport for London runs an apprenticeship scheme, providing 200 posts for young people across its supply chains. Better use of public procurement expenditure could support a widening of this scheme.

London is at the forefront of good procurement practice. The Mayor can create hundreds of jobs a year for the most excluded using procurement contracts.

JRF has produced a ‘social clause procurement model’; this demonstrates how contract clauses could create one job-with-training for a disadvantaged young person for every £1 million procurement contract value.17 The target beneficiaries are those furthest away from the labour market, including those who have never had a job or who are long-term unemployed. Local authorities across the UK have piloted this model in projects totalling £760 million. If the Mayor of London made this model standard practice for the GLA, this could create hundreds of jobs per year for the most excluded. London has been at the forefront of good procurement practice, evidenced by construction projects such as the Olympics and Cross Rail. Future procurement contracts should include social procurement clauses which create opportunities for those furthest away from the labour market.

Mayor’s taskforce on in-work poverty

Our report, Monitoring poverty and social exclusion 2015,18 showed that more than half of people in poverty were in a household where someone worked. This trend has continued, becoming particularly acute in London. A Trust for London report published last year showed that there are now 1.2 million Londoners in poverty living in a working family, up 70% in a decade.19 JRF research shows that the Chancellor’s National Living Wage will help to improve the living standards of two-parent families in London where both work full time, but the increase to the wage floor will still leave many behind.20

The Mayor can use their considerable power as convener to set up a taskforce on in-work poverty in London.

We recommend that the Mayor use their power as convener to set up a taskforce on in-work poverty in London. The taskforce should include representatives of trade unions and employers, particularly those in the retail, catering and care sectors, where pay is on average very low. The taskforce could look to develop sector-specific strategies that encompass workforce pay, productivity and progression. This should build on the excellent contacts and momentum behind the London Living Wage.


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Later life

Over successive parliaments we have broken the stubborn link between poverty and old age across the UK. London’s Poverty Profile report21 shows a 6% fall in pensioner poverty in inner London. The story of how we have tackled pensioner poverty nationally shows how, with concerted action over a long time, governments, employers and the third sector can make great progress towards sustained reductions in poverty.

18% of London’s pensioners still live in poverty, the highest rate in the UK.

Nevertheless, 18% of London’s pensioners remain in poverty, the highest rate across the UK, suggesting that continued efforts are required to build on the recent successes. We believe the following might sustain this positive trend.

Work with health and service providers to improve take-up of entitlements

Across the UK, take-up of some benefits by older people remains low. DWP statistics in 2014 show more than a third of pensioners entitled to Pension Credit are not receiving it. This represents a very large proportion of older people whose incomes are smaller than they should be and suggests that there is a significant constituency of older people in London who are entitled to further support. This picture is repeated to differing degrees across other benefits, including Housing Benefit (20% of eligible pensioners do not claim across the UK) and Council Tax reduction (40% do not claim). Take-up rates for Attendance and Carers Allowance are also likely to be open to improvement in the capital.


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By acting to improve take-up of benefits, the next Mayor could reduce poverty among older Londoners at minimal cost to GLA budgets.

By acting to improve take-up, the next Mayor could reduce poverty among older people struggling to make ends meet in London at minimal cost to GLA budgets. JRF evidence suggests that investment in local campaigns is the most effective approach. Typically these generate far more in additional benefit income than they cost to deliver. The Mayor should implement a city-wide marketing drive and a benefits training programme for service providers who have regular contact with older people, in particular GPs, nurses, housing and advice providers, with a view to improving take-up of entitlements across this age group.22

Work with employers to increase savings among young people through auto-enrolment

The biggest gaps between UK pensioners who are in income poverty and those who are not relate to whether or not they have occupational or private pensions. In 2013/14, only a quarter of pensioners overall lacked any kind of personal pension, compared with over half of those in poverty.23

To protect London’s future pensioners from poverty, the next Mayor should work with employers to reduce the numbers opting out from workplace pensions.

Policy change from April 2016, combining the New State Pension with a Pension Credit top-up, should address many of the needs of future pensioners. Automatic enrolment into workplace pensions for those aged over 21 and earning above £10,000 a year has also largely been a success. Once fully implemented, the policy aims to increase the numbers starting to save (or saving more) by nine

million across the UK, and the total amount saved by £11 billion a year. Median private pension income is projected to be £3,700 by 2050, compared with £2,200 if auto-enrolment had not been in place.24 These improvements are concentrated among low to median earners. The lowest quartile of earners is expected to see an increase of nearly 60% in their median private pension income at retirement. However, given this is from a very low base, this may not be enough to keep them out of poverty. Rates of opting out from auto-enrolment are higher for those aged over 50 and for part-time workers (but not by salary level).

JRF strongly recommends that auto-enrolment should continue, but supplemented by new initiatives to reduce opt-out rates, particularly among those at higher risk of poverty in later life. The next Mayor of London should work with employers to reduce opt-out rates for women, older workers, part-time workers and people from ethnic minorities through: greater advertising of schemes to employees; additional incentives not to opt out for high-risk groups; and landlord initiatives to reach workers living in social housing.25


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HousingThe critical driver of poverty in London is the crisis in the housing market. Combined with stagnating pay, rapidly rising housing costs are having a major impact on Londoners’ ability to maintain their living standards, and preventing most young Londoners from accumulating assets. There have been a number of demand-side measures over this parliamentary term to widen access to the property market. But the failure of successive governments to support the building of enough affordable homes has led to the costs of home-ownership spiralling and rents rising at a much faster pace than inflation. This has left the vast proportion of Londoners with little hope of ever being able to purchase property within the capital. Housing has become a top political priority for increasing numbers of Londoners.

Housing is increasingly the top political priority for Londoners.

Stock has transferred from the social rented and owner-occupied sectors into the private rented sector over many decades. Private renting has increasingly become the tenure of households in poverty. In 2013/14 there were 4.3 million people living in poverty in the private rented sector, two million more than a decade earlier.26 The termination of a private rented tenancy is now the largest driver of homelessness in London. For these reasons, taken in the context of a government fixation on home-ownership interventions that are unlikely to improve affordability for low-income Londoners, our recommendations here focus upon improving quality and affordability in the rented sector. This is not to diminish the need for a significant expansion of the supply of affordable homes in the capital.

The termination of a private rented tenancy is now the largest driver of homelessness in London.

Shift funding from low-cost home-ownership to affordable rents

Over the course of this parliamentary term, central government has chosen to focus policy on expanding home-ownership through demand-side subsidies. Most recently, this strategy has expanded into supply through the ‘starter homes’ initiative in the Housing


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and Planning Bill 2016. We welcome the shift to include supply-side measures. But the current proposals will not help those on the lowest incomes to improve their living standards or accumulate assets.

Introducing a Living Rent, pegged to local income, would provide a genuinely affordable and sustainable rental option for low-income Londoners.

Recent JRF research shows that only 3% of new social housing tenants will be able to afford the government’s starter homes, despite the 20% discount the government is offering. This suggests much more needs to be done to widen access to affordable housing among low-income groups.

JRF Right to Buy report, 201527

The Mayor of London has devolved responsibility over housing, including the housing investment powers exercised elsewhere by capital from the Homes and Communities Agency. The opportunities presented by these powers were bolstered recently by the higher levels of capital grant made available during the 2015 Autumn Statement. JRF proposes that the next Mayor use these powers to prioritise affordable rented properties over home-ownership (out of reach for most Londoners). One model for doing this would use subsidy to spur the development of rented properties, with rent levels pegged to local incomes to ensure genuine affordability. Under our proposals, rents would be set to 28% of local average lower quartile earnings, in perpetuity. In early 2015, JRF costed 16,800 homes per annum in London at £76k grant per unit, totalling £1.276 billion. This would provide a genuinely affordable rental option for low-income Londoners, in perpetuity, releasing pressure upon the private rented sector.

JRF proposes that the next Mayor use these powers to prioritise affordable rented properties over home-ownership.

Highlight the impact of local authority high-value sales

The Housing and Planning Bill 2016 effectively legislates to force local authorities to sell vacant, high-value housing stock to fund the extension of Right to Buy to housing association tenants. This will have a very damaging effect on social housing stock in London. Where higher proportions of stock are likely to breach the upper value limit which triggers sale under the legislation. The effect on the availability of social housing stock in London will be deep and immediate, with homes put up for sale upon vacancy, rather than housing families on waiting lists.


The mayoral candidates should publicly challenge the policy, highlighting its very concerning consequences for London. There is a strong case for funding the extension of Right to Buy through general taxation.28

Improve quality in the private rented sector through local authority licensing schemes

The previous Mayor developed the London Rental Standard as part of the vital drive to improve quality in the private rented sector. Although commendable, the ‘opt-in’ nature of this scheme has led to poor take-up. Only around 14,000 landlords had signed up by February 2016.29

The Mayor can make a compelling case for a mandatory licensing scheme across London, building on the London Rental Standard.

Local authorities such as Newham have also implemented mandatory borough-wide licensing schemes. These have been more successful at improving quality at the bottom end of the sector and tackling poor landlord practice. Despite this improvement in quality, popularity among landlords and tenants,30 and grant funding from the Department for Communities and Local Government, these schemes have now been blocked from further expansion across London. In April 2015, the then Communities Secretary removed the general approval for such schemes. This means any further schemes covering more than 20% of a borough’s geographical area or more than 20% of their private rented sector would need Secretary of State approval.

Given the pressure on London’s private rented sector, the Mayor could make a compelling case to the Communities Secretary for a city-wide mandatory licensing scheme, building upon the London Rental Standard. Should further powers be devolved to London,

the next Mayor should campaign to ensure that these include the power to approve future schemes.

The Mayor could also use a proportion of the housing budget to invest in local authority enforcement teams where pressure is greatest. This would ensure they make the most of Housing and Planning Bill measures to confront rogue landlords, and that they can properly target resources on those parts of the private sector which are unfit for tenants.

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References 1. (forthcoming 2016) Tackling poverty during childhood. York: Joseph Rowntree Foundation. Please visit https://www.jrf.org.uk/our-work/about-poverty for more information

2. As above

3. Greater London Authority (2012) The Mayor’s Education Enquiry, Final Report, Findings and Recommendations

4. See reference 1

5. As above

6. As above

7. Education Select Committee. (January 2016) The Role of Regional Schools Commissioners

8. See reference 1

9. Centre For Social Justice (2014) Fully Committed? How government could reverse family breakdown.

10. See reference 1

11. Aldridge, H. Barry Born, T. Tinson, A. and MacInnes, T. (2015) London’s Poverty Profile. New Policy Institute & Trust for London

12. D’Arcy, C. Five charts the London Mayoral candidates need to see on living standards. Resolution Foundation

13. Schmuecker, K. (2014) Future of UK labour market. York: Joseph Rowntree Foundation

14. Macinnes, T. et al. (2015) Monitoring Poverty and Social Exclusion 2015. York: Joseph Rowntree Foundation

15. (Forthcoming 2016) Working age chapter – anti-poverty strategy for the UK. York: Joseph Rowntree Foundation. Please visit https://www.jrf.org.uk/our-work/about-poverty for more information

16. As above

17. Macfarlane, R. (2014) Tackling poverty through procurement. York: Joseph Rowntree Foundation

18. MacInnes, T. Tinson, A. Hughes, C. Barry Born, T. and Aldridge, H.

(2015) Monitoring poverty and social exclusion 2015. York: Joseph Rowntree Foundation

19. See reference 11

20. Hirsch, D. (2020) Summer Budget MIS analysis. York: Joseph Rowntree Foundation

21. See reference 11

22. (Forthcoming 2016) Later life chapter – anti-poverty strategy for the UK. York: Joseph Rowntree Foundation. Please visit https://www.jrf.org.uk/our-work/about-poverty for more information

23. As above

24. As above

25. As above

26. Birch, J. (2015) Housing and poverty roundup. York: Joseph Rowntree Foundation

27. Clarke, A. et al. (2015) Understanding the likely poverty impacts of the extension of Right to Buy to housing association tenants. York: Joseph Rowntree Foundation

28. Department for Communities and Local Government (February 2016) Housing Associations and the Right to Buy

29. London Rental Standard - https://www.london.gov.uk/what-we-do/housing-and-land/renting/london-rental-standard

30. Residential Landlords Association, (2015) Election Manifesto 2015

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A London without poverty The Joseph Rowntree Foundation’s briefing for the London mayoral election 2016

For more information please contact:

Tom PetersPublic Affairs Manager Email: [email protected]: 020 7520 2080

www.jrf.org.uk

A London without povertyCDID reference: 3204ISBN: 978-1-910783-53-5

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