London’s poorest households hardest hit by tax and welfare changes

New research reveals London’s poorest households will be hardest hit by tax and welfare changes

• City Hall analysis shows Government’s tax and welfare changes will put 100,000 more Londoners, including 75,000 children, into poverty
• Single parents and disabled Londoners will be hardest hit
• Sadiq warns Government must reverse the effects of the benefit freeze and review welfare changes
• Mayor launches pilot project to support low income families

One hundred thousand more Londoners, including 75,000 children, will be forced to live in poverty as a result of the Government’s damaging welfare changes, according to new research published by the Mayor Sadiq Khan.

Analysis commissioned by the Mayor shows that the poorest Londoners will be hardest hit by the Government’s tax and welfare changes, while those already better off are set to gain.

Sadiq has today written to the Secretary of State for Work and Pensions, Amber Rudd, calling on her to reverse the effects of the freeze to working age benefits, pause the roll-out of Universal Credit and make a series of commitments to help disabled Londoners.

The findings in today’s report indicate that the benefit freeze is having the greatest negative impact on households in London. This is alongside changes to housing allowance rates, the move from Disability Living Allowance to the Personal Independence Payment, the ‘Bedroom Tax’ and the implementation of the two-child limit - which restricts claims to various benefits, including child tax credits, to just two children.

The analysis makes clear that the overall loss of income through changes to benefits and tax credits is not offset by the recent changes to Universal Credit and increases to the National Living Wage.

By contrast, the wealthiest 50 per cent of Londoners – those less reliant on welfare and who will benefit more from tax cuts - will see an average overall increase in their household income of £210.

The findings reveal that, by 2021/22:

• Households with children and at least one disabled person are set to lose around £3,800 a year on average.
• London’s single parent households, which are overwhelmingly run by women, will be at least £2,400 a year worse off on average.
• The Government’s tax and welfare reforms will put an extra 75,000 London children in poverty and see women on average lose against men in virtually all scenarios. This includes as much as £600 where a woman is a household’s primary earner.
• The poorest black Londoners will lose an average of £870 a year following the changes – significantly more than the poorest Asian or white Londoners
• The capital’s social renters face an average loss in household income of £1,200 per year. By contrast, Londoners who own their properties outright or have a mortgage stand to gain an average of £700 and £110 respectively.

Sadiq believes poverty in London is neither inevitable nor acceptable and he is committed to supporting where he can the poorest Londoners who will feel the impact of welfare changes most severely. Working in partnership with the Child Poverty Action Group, the Mayor is launching a pilot project in primary schools across four boroughs - Southwark, Newham, Ealing and Royal Borough of Kensington & Chelsea – to help ease the pressure on families with low incomes. He has funded dedicated advisors to offer parents on low incomes advice on making welfare claims, as well as information on how to access their full benefit entitlement.

Today, the Mayor visited Colville Primary School in North Kensington, which is part of the pilot project. The school hosts a breakfast and afterschool club with free places for low-income families, providing parents with access to childcare as well as supporting free activities like music lessons and school visits. They are also testing a range of new measures including partnering with employment skills providers to support unemployed parents.

The Mayor of London, Sadiq Khan said: “This report confirms what many of us feared and repeatedly warned against. The Government’s ideological policy changes, as part of their austerity-driven shrinking of the size of the state, are an assault on the aspirations of hard-working Londoners and hit the most disadvantaged in our society hardest.

“These regressive policies are anti-women, anti-family, and discriminate against disabled Londoners. They risk plunging tens of thousands more children into poverty and leave schools and local authorities – whose resources have already been cut to the bone – to plug an impossible gap. It is already a disgrace how many Londoners are trapped in poverty and struggling to get by – the last thing the city needs is even more pushed into poverty by the heartless actions of the government.

“The Government must radically reconsider its approach and immediately reverse the damage done by the benefits freeze to prevent Londoners paying the price of its failed austerity experiment.”

Deputy Mayor for Social Integration, Social Mobility and Community Engagement, Debbie Weekes-Bernard, said: “This report shows that the Government’s welfare changes will only serve to increase poverty and entrench inequality in London.

“London is a place where everyone should be able to succeed but policies like these threaten that potential. Inequality and poverty is not inevitable, but we cannot work toward a fairer capital with a welfare system that is unfit for purpose.”

Chief Executive, Child Poverty Action Group, Alison Garnham, said:“London families have endured years of social security cuts and the damage is showing, with thirty seven per cent of the capital ’s children now living below the poverty line, most of them in working households. That isn’t right.

“Schools see the impact of poverty in their classrooms every day. Many provide basics like clothes and food to pupils who would otherwise just go without. Colville Primary and other London schools in our pilot are saying ‘it is time to act’. They want their parents to have the support they are entitled to and they want all their children to be able to thrive.

“Ultimately the solutions to poverty rest with Government but there are lots of creative ways in which schools can help to tackle the problem in the capital and we’re looking forward to working alongside staff to develop and implement these ideas so that no London child is left behind.”

Headteacher, Colville Primary School, Jagdeep Birdi, said: “I’m delighted the Mayor has come to see how we work to support our diverse and cohesive community through our extracurricular programmes.

“Many parents are not fully aware of the benefits they are entitled to and this pilot has allowed us to share information and advice which has ultimately empowered whole families at the school.”