Does public investment into employment and skills programmes create and worsen in-work poverty?  Caroline Masundire reflects on the challenge in London and why we need to focus on poverty reduction rather than just any old job.

The challenge facing people who are unemployed or stuck in low paid employment in London is unprecedented.

Whilst we know the narrative that people should be better off in work, in London this is not always the case because of the cost and type of housing on offer, job insecurity, the quality of jobs and the benefit cap.

More than a quarter of Londoners live in poverty (27%) and the majority of people in poverty are in working households. This comes from my ‘go to’ resource of choice – the London Poverty Profile*, which also highlights the differences in each of the London boroughs.

A recent find on twitter highlighted how worse off people in low pay are in London. They are more likely than anywhere else in the country to have experienced the greatest rise in living costs, yet the lowest growth in wages, well behind those in Scotland, the East and South East of England.

And there are differences in how this plays out in different parts of the capital.

According to the London Poverty Profile*, there are five outer London boroughs reported to have the highest proportion of jobs that are below the London Living Wage (£9.75 phr). Landlord possession rates (figures for London are more than double national rates) are also higher in outer London and there are more people in poverty who are renting privately than in social housing.

These statistics chime with the work we have been doing in several London boroughs over the past 12 months to help better understand local needs and design appropriate solutions.  

Many people are living in precarious circumstances directly linked to reduced income and ability to afford housing:

  

  • for those in work
  • those needing to find work because of welfare reform changes
  • and those that cycle in and out of work because they cannot sustain employment.

Our experience of reviewing local employment initiatives is that whilst they are rightly focused on helping people get a job, there can often be little evidence or tracking to measure the impact of their intervention in helping a person sustain that job and improve their financial situation.

The quality and pay level of a job should be equally important as getting a job in the first place. 

There needs to be a shift in focus from getting a job, to getting into a London Living Wage job, as there is a danger that investments being made to help people get back to work, could be making in-work poverty worse.

We also think that employment interventions used to help manage service demand, or support early intervention, might not lead to the savings for services such as housing and social care that councils expect.

Rocket Science has developed a model and cost benefit analysis that helps to determine council savings linked to poverty reduction. This information makes a compelling case for councils and local partners to focus their employment interventions on securing London Living Wage jobs, or help those in lower-paid jobs to access better paid employment.

By shifting employment interventions to focus on poverty reduction, this brings sustained returns for the person in terms of increased income, as well as tangible savings for the council.

 

Caroline is an Associate Director at Rocket Science based in our London office.  You can check out her profile here.