The Peabody Index
We've been tracking the experiences of low earners in London. Research reveals that they have seen a real terms decline in their income since 2010.
London is one of the wealthiest cities in the world but many people are struggling to meet the demands of high rents, transport costs, and living expenses.
- Download a copy of The Peabody Index 2019 (pdf, 398kb)
As a social landlord, part of our mission is making sure our tenants' voices are heard and represented in wider social policy. In the latest edition of the Peabody Index, we and our partners the Social Market Foundation (SMF) have continued to track the measures in the Index and investigate the extent to which work is providing a significant, secure route to higher living standards in the capital. We consider the interests of all low-income Londoners, including those living in social housing.
Low earners in London have seen a real terms decline in their incomes since 2010 (after accounting for inflation).
This is despite slight real income growth and growing levels of employment in the last year. Research reveals:
- In the same period Londoners' wage growth has lagged behind the rest of the country, leaving people on low incomes in the capital worse off and unable to meet their rising living costs.
- Full-time employees with bottom decile wages have seen their incomes increase by 15 per cent in ten years, but inflation (on the headline UK Consumer Price Index) was 25 per cent over the same period (2008-2018). In real terms wages have fallen.
- Private rents in London have risen by 27 per cent in the last decade: almost twice as fast as the median wages of full-time employees.
Why work isn’t paying
While wage inequality has narrowed in the rest of the country, it has increased in London. Moreover, those on low incomes disproportionately work in industries and occupations where wage growth has been most sluggish. In addition:
- Lower income households in London have not benefited from increases to the minimum wage ('National Living Wage') to the same extent as elsewhere.This suggests that without some additional support (such as social security or submarket rents), living in London doesn’t pay for those on low incomes.
- Despite high employment rates, half of Peabody’s working tenants earn below the London Living Wage and 53 per cent said they had not received a pay rise in the last three years.
There are few prospects for progression as many low-income Londoners are working zero-hours contracts and are unable to work their desired number of hours; lower paid jobs are also less likely to offer training and progression opportunities.
Just 2 per cent of our residents said they felt "significantly better off" compared to the same time last year, compared to 15 per cent who felt "significantly worse off".
As a housing association, we emphasise the importance of affordable housing supply in improving the quality of life for those on low incomes. But more affordable homes alone aren't enough to improve living standards; we also need to create quality work that delivers decent incomes. Government and other stakeholders, including employers like us, must tackle poor-quality employment and look at potential solutions to improve pay. This could include a real living wage or a London-specific premium to the minimum wage (National Living Wage), as well as increasing career progression opportunities for lower earners.
In a context of substantial political uncertainty around the UK's exit from the European Union, Government must also ensure that the welfare system provides an adequate safety net for households who find themselves in financial difficulty.
Our detailed findings are outlined in our our report and a full report of the findings from publicly available data sources is available on the SMF website.
We've got over 150 years of experience and expertise. We strive to do things in a way that adds the most value for our residents and communities.
The Peabody Group owns and manages more than 66,000 homes across London and the South East. We also have 8,000 care and support customers.
Peabody runs an extensive number of community programmes which are open to all Londoners.