More than a million Londoners who are defined as living in poverty are members of households in which at least one adult has a job, according to a new analysis.



The figures include 450,000 children who live in such households, and research estimates that cuts in working tax credits to families next April could make 640,000 children worse off.

The analysis is contained in the fifth London Poverty Profile, which is compiled by the New Policy Institute thinktank for the charity Trust for London. It indicates that the total number of Londoners in poverty now stands at 2.25 million. Of these, slightly more than half – 1.2 million – qualify as “in-work poor”, representing an increase of 70% in the past 10 years.

The study found that, although the numbers of unemployed adults and the proportion of people in workless households has fallen in the capital, the city’s overall poverty rate is 27%, much as it has been for the past decade. The rate for the rest of England is 20%.



The report also illuminates how the poverty picture is changing in some parts of the Greater London area, with two east London boroughs, Newham and Tower Hamlets, seeing significant falls in the numbers and percentages of benefit claimants there, while Brent and Ealing in the west now stand out for their high levels of low pay and unemployment.



Just over one fifth of people in London in all types of working households are in poverty, compared with 15% a decade ago. This is despite the present number of unemployed adults, just over 300,000, being the lowest since 2008, at a time of rapid increases in the capital’s population, and with the proportion of workless households being at a 20-year low of 10%.

The poverty threshold is defined as households with incomes of less than 60% of the national median after housing costs are included, consistent with standards used across the European Union.

The report says: “The increase in the number of people in poverty in London has been almost entirely among those in working families.” It points to low pay, limited working hours and the capital’s notoriously high housing costs as key reasons.

The poverty rate among working families where an adult is self-employed, not all adults work or they work only part-time is 35% and among those where all adults work full time or one works full time and one part time is 9%.

The report notes that while the number of people working in London, whose population has recently reached an all-time high of 8.6 million, are at record levels, the number of low-paid jobs in the capital has risen for the past five years and now stands at nearly 700,000. These pay an hourly rate lower than the voluntary London Living Wage, currently £9.15, which is set annually at a level calculated as meeting basic living costs in the capital.

The increase in low-paid jobs has occurred despite the number of companies paying the London Living Wage doubling to 400 in the 12 months to November 2014, according the Greater London Authority.

The Poverty Profile anticipates that the government’s controversial plan to cut in-work tax credits next year is likely to make 640,000 London children worse off. Overall, 1.1 million London children are in families that receive tax credits. The Child Poverty Action Group says the report shows how “incredibly dangerous” it would be to cut tax credits and predicts that child poverty in London, already running at 38%, would rise higher still.

Housing costs have long been a major cause of London poverty in general. The profile shows that when low income is measured before housing costs are taken into account, the London rate in the three years to 2013-14 was only 15% and “about average” in comparison with the rest of England.

The new figures show a shift in the distribution of poverty among different tenure types, with the greatest number – 860,000 (of whom 260,000 are children) – now in the fast-growing private rented sector, which currently accommodates about 30% of all households in London. The report points to a perennial failure of housebuilders and councils to meet to meet their targets for the supply of “affordable” housing in London as driving low-income households into the private rented sector.

The New Policy Institute’s Hannah Aldridge, one of the authors of the report, criticised the government’s “starter homes” initiative, saying that these dwellings, capped at £450,000 in London, “won’t solve the problem”. She said there should be housing suitable for a wide income range and more powers to enforce standards in the private rented sector.

Mubin Haq, director of policy at Trust for London, said next year’s London mayoral election would be “a great opportunity” to address the full spectrum of poverty issues.

The Labour mayoral candidate, Sadiq Khan, said the report showed that a “perfect storm of the housing crisis, low pay and tax credit cuts” made the government seem “determined to punish working Londoners” and that this would put the city’s standing as a global economic centre at risk.

Facebook Twitter Pinterest ‘I’m always having to make hard choices’. Umiama Qureshi with son Kareem and daughters Zahra, in orange, Niala, in white, and Laila, in yellow. Photograph: Frank Baron/The Guardian

Case study: ‘It’s hand to mouth’

Umiama Qureshi, a lunchtime supervisor at a Croydon primary school and the single mother of four school-age children, plans carefully to make ends meet. When wages come in, she sets aside what she will need for paying her monthly “key bills” – the rent for her three-bedroom housing association home, gas bill, electricity bill, council tax – then carefully measures out the rest to ensure there is food on the table and enough to provide her brood, who range in age from 15 to eight, with economical treats.

She is adept at finding things to do for free, or cut-price deals for the capital’s attractions such as the London Eye. In the summer, the family go on caravan holidays in Havering or Camber Sands.

There’s not much margin for financial error. “It’s hand-to-mouth,” Qureshi says. “We manage. Worrying about it won’t change it.”

A recurring dilemma for Qureshi has been the best number of hours to work. Her present job, which she started recently, takes up 10 hours a week, leaving her free to be at home outside term time and when her children return from school. It means she can save on childcare costs, such as after-school clubs, which she had to make use of when she worked longer hours at a high street chain store.

She would like to earn more but worries about whether she would gain much: “I look at jobs ads and ask myself ‘If I got that, would I be better off or not? Would I lose more than I gained? Would we all end up worse off? Should I just give up on the idea?’

“I’m always having to make those hard choices. For me, it’s just part of life.”