Peabody in the news

According to our new research Londoners on a low income are working harder but getting poorer because of rising living costs

We have developed an index of key indicators to track tenants’ economic wellbeing and prospects with the Social Market Foundation (SMF). The index includes both publicly available data (including official data sources of income, savings and living costs) and surveys of hundreds of Peabody tenants.

Our first Peabody Index, which will be published on a regular basis, shows that despite a 1% rent cut, tenants in social housing in the capital saw their annual income fall by almost £400 at the same time as more of them were in work.

The Index, which will be published on a regular basis, reveals that the unemployment rate among social housing tenants in London was 10.9% in the first quarter of 2018 while a year earlier, the rate was 14%. This gain in employment continues a longer trend towards work: the proportion of economically active social housing tenants in paid employment in London increased from 78% to 88% between Q1 2008 and Q1 2018.

Impact of rising costs

Despite this increase in employment, tenants found the rising cost of food and commuting to be the two major drains on resources. Less than half of tenants surveyed say they are keeping up with bills and credit commitments without any difficulties. For example:

  • 41% have reduced the quality or cost of their purchases (such as food) in the last 12 months
  • 35% cut back on heating and
  • 13% did without meals

Hundreds of people surveyed also used food banks, high-cost weekly payment stores, quick-cash or payday loans, or resorted to unlicensed lenders to make ends meet in the last year. Over 70% said they do not have any savings or investments to fall back on, showing the precarious situation many people find themselves in. 

The Index found that the same tenants cutting back on eating or heating are working in a variety of critical jobs for London’s economic growth and social cohesion: sectors such as construction, child-minding, factory work, bus and delivery drivers, teachers and teaching assistants, hospital workers and carers.

General trends

The Index findings provide some insight into the sluggish consumer spending figures released by the Office of National Statistics which say that household spending is the weakest for three years, dragging the economy down in the first quarter of the year.

The Index also shows that housing and commuting costs in the private sector are highly unaffordable across much of the of the capital, highlighting the need for social housing. There is no borough in the capital where someone with a gross income of £19,500 can privately rent and commute into travelcard Zone 1 while spending less than 80% of their disposable income.

Peabody Chief Executive Brendan Sarsfield said:
"Low-income Londoners are working hard, doing jobs that literally keep the city running. This trend represents a real risk to London's continuing growth and underlines the need for more low-rent housing. This would boost household income and the economy, putting more money back in the pocket of hard-working Londoners."

Scott Corfe, SMF Chief Economist, said:
"This is a clear challenge to politicians at all levels to do more to ease the squeeze on the incomes of people doing the jobs that London’s services and economy depend on.

"The Peabody Index uses hard economic data to give policymakers clear evidence on which to base decisions about social housing. The reality of the London housing market is that social housing is the only viable way for many people in vital jobs to live and work in the capital."

The first index comes just weeks after we announced that we will freeze our higher Affordable Rents and move towards the Mayor of London’s new social rent level.