This report, supported by Trust for London, examines the short and long-term implications of Covid on poverty and inequality in outer London, with a particular focus on employment, low pay, housing and the shift towards homeworking.
The report acknowledges the devastating impact that the pandemic has had on the lives of outer London’s five million residents – not least on people’s health and well-being – but seeks mainly to understand the after-effects and explore the options for change.
The findings complement previous research by the Smith Institute on poverty in outer London and other London-wide studies supported by the Trust for London.
The research was undertaken in the first half of 2021 and is based on desk research, data analysis, one-to-one interviews and roundtable discussions with the GLA, outer London boroughs and other stakeholders.
The report sets the scene regarding poverty in London and outer London and then divides into two main sections: section one considers the effects of Covid and the immediate crisis, and section two explores the longer-term implications of Covid, with particular regard to homeworking and planning for change.
The report makes a series of recommendations, which are listed in full after the conclusion.
Section one: Immediate impact of the Covid crisis
Impact of Covid
• Both inner and outer London have been hit hard by the pandemic, with high death rates compared with other regions. In previous recessions poverty rates have been most acute in inner London.
• Outer London has been just as badly affected as inner London in terms of covid death rates, furlough rates, unemployment (around 7% in both inner and outer London versus 5% in the UK), claimant count (8% in both inner and outer London outer London v 6% in the UK) and reduced hours. This is a continuation of the convergence that occurred between inner and outer London since the mid-2010s across a range of poverty indicators.
• The report notes that the pandemic has disproportionately affected the poorest areas the most. The claimant rate in six outer London boroughs, for example, is over 10% – higher than any of the inner London boroughs.
• Within outer London young people have been affected most, with unemployment rates at around 25% for 16–24-year-olds. Disabled people and some ethnic minority groups have seen a rise in unemployment rates to above 10%.
• The concentration of low-income residents in the private rented sector (PRS) risks a spike in evictions in outer London as the emergency measures are withdrawn. Outer London boroughs have seen a large rise in housing support for those in the PRS, many of which will now have rent arrears.
Responding to the crisis
• The report argues that outer London faces specific and immediate poverty challenges, which have been highlighted by Covid. These challenges – particular around youth unemployment and growing rent arrears – must be addressed quickly to avoid an increase in poverty in outer London.
• Low pay is major driver of poverty. Approaching a quarter (23%) of jobs performed by outer Londoners are paid below the London Living Wage. The report argues that now is the time to end outer London’s low pay status and deliver a wage-led recovery. The GLA and boroughs should adopt a sectoral approach in low paying sectors, making greater use of social clauses in procurement and commissioning. Sector-wide bodies would leverage funding streams and involve trade unions, employers and the public sector in efforts to drive up employment standards and productivity.
• The report calls for a more concerted effort to improve the take-up of the London Living Wage. Local authorities and other public sector employers, such as NHS Trusts, should ensure they are Living Wage employers and use their convening power to place pressure on local suppliers.
• The GLA and boroughs should seek to offer greater advice to businesses (capitalising on knowledge gained during the pandemic). Simple improvements could be made to working practices and employment standards (such as consistent and predictable hours).
• Despite emergency funding the outer London boroughs are under severe financial pressure. Government funding is needed to support the Covid recovery and address the specific poverty challenges in outer London.
Section Two: Longer-term implications of Covid – homeworking and planning for change
Shift to homeworking
• The report shows that Covid led to a significant shift to homeworking, with higher rates in London than the rest of the UK.
• Survey evidence suggests that large numbers of people who have worked from home want to continue to do so, and that many businesses have already begun changing their work practices. The report suggests that homeworking (and hybrid home/office working) could continue at a greater rate than prior to the pandemic – with lasting effects on outer London.
• The evidence shows that those in higher paid occupations are more likely to work from home. Nevertheless, there are significant implications for poverty and lower paid workers in outer London. Much will depend on whether people save up and consume when they do work in central London or if consumption patterns will be more localised to where people live (and now work).
• If there is a major shift towards homeworking, then there could more job opportunities locally for outer Londoners. The report shows that those in lower paid jobs work closer to where they live. Outer Londoners are also 25-50% more likely to be unemployed than those in inner London when holding for personal characteristics. More local jobs could therefore support efforts to tackle poverty (and in-work poverty) in outer London.
• The report also highlights the risks associated with homeworking. The types of jobs could change, suggesting potential skills mismatches and higher rates of unemployment during the transition. Equally, this shift, alongside changes in the location of activity, could create capital mismatches, which in turn could hinder a rapid recovery with higher rates of unemployment. These challenges could be compounded if new jobs are not accessible to lower income residents.
• There are also implications for housing. Homeworkers could trade proximity for space and move away from inner London. This could reduce housing pressures (but also economic activity). Equally it could increase demand for outer London properties with more space. Greater homeworking could lead to more localised consumption and greater value placed on local neighbourhoods and amenities. This in turn though could result in higher housing costs and segregated communities.
Planning for change
• The longer-term implications for outer London of increased homeworking are complex and uncertain. As such, it is vital that the GLA and the boroughs work together to better understand the impacts – not least on lower income household and on place, employment, skills, and pay.
• Planning for a changing world of work has been overly focused on inner London’s Central Activity Zone (CAZ). More attention must be given to the opportunities for outer London.
• Uncertainty should not preclude planning. The outer London boroughs should set out a vision for their areas if homeworking increases (as the CAZ has), and how this can support anti-poverty objectives.
• Outer London boroughs should have a clear set of metrics to assess the impact of homeworking on poverty and scale up interventions that are working. Greater support will be needed to help residents make the transition to homeworking, including access to suitable, low-cost workspace hubs.
• More support will also be necessary to achieve the skills transition to a new economy (and avoid unemployment), create jobs in high streets and polycentric business centres and manage the risks around displacement of poorer residents.
• Achieving these plans will require extra funding, but also more devolved local and city-wide powers. For example, the potential impacts of homeworking on rents makes reform of the expanded PRS and rent controls more of a necessity to ensure poorer households are not displaced. In addition, the boroughs should also be given renewed powers over permitted development rights which risk undermining efforts to regenerate high streets for work and leisure.
• The GLA should establish an Outer London Covid Recovery Taskforce. This could help inform and support the boroughs in their efforts to maximise the benefits of the shift homeworking, help engage local communities and offer a collective vision and stronger voice for a fairer and more prosperous outer London.