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  • Published in Analysis

Europe’s fastest growing city is built on a huge and growing divergence between the wealthy few and the poor - Chris Bambery looks at the figures

Poor vs Wealthy

Where is poverty greatest in England? The North East… the North West? No. The answer is the place where wealth is greatest – London!

Twenty-eight percent of London’s population – 2.1 million people – are mired in poverty. The number grew by 440,000 between 2011 and 2012 when the study was carried out.

These are the findings of the London Poverty Profile report, published this week by the New Policy Institute in conjunction with the Trust for London.

When you hear David Cameron bleating on about the Tories representing “hard working people” we should remember that rising prices, falling wages and soaring housing costs are pushing those very people into economic difficulty. Remember too his promise at the Tory conference that he would help them “keep more of their money.”

In 2012 just under 600,000 jobs in London were paid below the London Living Wage (£8.55 per hour) – 40 percent higher than five years ago. Over 40% of part-time jobs and 10% of full-time jobs are low paid. The number working part-time because they could not find full-time work almost doubled over five years, from 100,000 to 190,000.

Across Britain wages have failed to keep up with the cost of living, but that’s worse in London. Rents in the capital rose by nine percent last year. The cost of single bus journey has increased by 56% under Tory mayor Boris Johnson and a zone 1-6 travel card in £440 a year more than when he became Mayor.

Housing is the big factor. Another report this week found that property prices in Notting Hill and Kensington are now, on average, 33% higher than in the previous peak in 2007. Produced by estate agents Graysons, it concludes:

'The capital continues to be the city of choice for the world’s wealthy with the highest number of ultra high net worth individuals, that is those with assets over US$30 million, of any city in Europe.'

Last week a think tank, the Centre for Economics and Business Research, forecast London property prices would leap a staggering 43.5 percent by 2018, pushing the average London home price up to £556,000.

Writing in the New York Times on “London’s Great Exodus,” Michael Goldfarb notes that:

'An astonishing £83 billion worth of properties were purchased in 2012 with no financing — all cash purchases.'

Goldfarb bemoans the fact that middle class professionals are being forced out of the city but he makes the point that:

'The ordinary uses of the city have been changed beyond recognition. London was never a cheap place to live, but now more expensive property means more expensive everything else: restaurants, cinemas, bars and theater tickets.

And as for services, the minimal tax paid by those who have made property into money means that a city whose population has increased by 14 percent in the last decade can’t afford to build new schools. There will be a capacity shortfall of an estimated 90,000 places by 2015. Children won’t be turned away from school, but class sizes will grow to untenable proportions.'

Chancellor George Osborne is keeping perfectly calm about the casino that is the London property market.

London Poverty Profile does not celebrate this property bubble. Instead it warns that the cost of housing is the critical factor as spiraling prices in central London have a knock-on effect on rent and mortgage bills across the capital, adding that that the biggest impact of the rising costs is on those renting privately, with 830,000 living in privately rented accommodation now in poverty. That is double the figure in 2003.

Their research also shows poverty is shifting from inner city London to the outskirts, as rents in central London become unaffordable and housing benefit caps force people to relocate to cheaper, less central areas. About 58% of the 2.1 million people in poverty in London now live in outer London, whereas 10 years ago it was 50%.

But 13 out of 19 outer London boroughs are now unaffordable for the bulk of those receiving housing benefit.

This is the epicenter of  'booming Britain'. Neoliberal enthusiasts are falling over themselves to praise the capital for leading the UK out of the wilderness. That Europe’s fastest growing city is built on a huge and growing divergence between the wealthy few and the poor many escapes them. For them London is as good as it gets. That tells you all you need to know about those running the United Kingdom.

From Communiqué

Chris Bambery

Chris Bambery

Chris Bambery is an author, political activist and commentator, and a supporter of Rise, the radical left wing coalition in Scotland. His books include A People's History of Scotland and The Second World War: A Marxist Analysis.

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