High living costs wipe out disposable income for many 'ENDIES'
Workers and families in the capital earning low to modest incomes, yet not so little as to be entitled to most benefits, are struggling to pay the bills and eat each month, according to research from Centre for London.
The report, ‘Hollow Promise’, highlights the pressures these workers are under and the sacrifices they have to make dubbing them ‘ENDIES’ – families employed but with no disposable income or savings.
Researchers estimated that there are about a million modest earners in London – a fifth of the London workforce, which equates to a working population the same size as Birmingham.
The low wage versus cost of living issue is particularly pronounced because London rents are about 50 per cent higher than the rest of the UK. For households with income between £20,800 and £28,500 per year, the costs of rent have increased 14 per cent in real terms over the last decade and rent now account for about 41 per cent of their incomes. And the chances of owning a home a slim with only three boroughs – Tower Hamlets, Newham and Barking and Dagenham – where buying a property is potentially affordable for two people earning that borough’s median wage.
In addition to high housing costs, public transport is now more expensive. Between 2008 and 2014 trips using pay-as-you-go Oyster cards went up in price by 61 per cent for bus journeys and 47 per cent for the underground, the report said. A Zone 4 resident on an annual salary of £22,000 spends the first 55 minutes of their working day just paying for their commute to and from work. And driving is not necessarily a cheaper option as the average London fuel bill has increased by more than 50 per cent above inflation between 2001 and 2011.
And working parents pay 25 per cent more in the city for childcare for their under-twos than anywhere else in the country.
Report author Charles Leadbeater said: “As this report shows, London is failing its modest earners. They take pride in working hard, and make an essential contribution, but as their wages have deflated, the cost of living in the city has shot up. Yet there are a range of innovations that could help make life easier for London's hard-pressed working families - above all through developing a new generation of decent affordable homes in good quality neighbourhoods.”
David Lammy, MP for Tottenham commented: “This report highlights the pressures that high living costs and declining wages are creating for millions of Londoners, not just the 640,000 that are in low paid jobs but also many of those on modest incomes.
“London at its best is a city of great opportunity for all, a place that is recognised across the world as somewhere where everyone has the chance get on in life. But rapidly rising living costs are now a real obstacle to that, and mean that more and more Londoners aren't able to benefit from the opportunities the capital offers them.”