A London Councils Member briefing

Living on the Edge

Overview

January 2016

The Trust for London’s Poverty Profile, which uses official data to reveal patterns of poverty and inequality in the capital, shows that the proportion of Londoners living in poverty in outer London has been growing over the past decade. With this in mind the cost of commuting from, and within, outer London is a significant factor for an increasing number of households on low incomes.

The Living on the Edge study, commissioned in 2015 by London Councils, London TravelWatch and Trust for London, found that a significant minority of London residents who commute from outer London to zone 1 are taking slower routes to work because they are cheaper for them. It also found that low earners in London have to work significantly longer than the average Londoner before they have covered their commuting costs for the day. Low-earning Londoners have identified a range of incentives to make commuting more affordable, including new ticketing options and better promotion of existing schemes.

London’s Poverty Profile 1 shows that the spread of people living in poverty across London has changed, with increasing proportions living in outer London.

10 years ago, of the London residents living in poverty, half were in inner London and half in outer London, but the percentage in inner London has now fallen to 42 per cent (940,000) and risen to 58 per cent (1.3 million) in outer London.

A person is assumed to live in poverty if they earn less than 60 per cent of median income after housing costs. Applying this definition, the London Poverty Profile finds that the majority of people living in poverty in London are in a working family.

In autumn 2015, London Councils, London TravelWatch and Trust for London commissioned a study to better understand the choices people in low income jobs and jobseekers living in London have to make about how to travel to work and the impact that this has on their lives.

Background

The number of people living in poverty in London has been increasing for a number of years and an increasing proportion live in outer London. London Councils, together with London TravelWatch and Trust for London recently commissioned research to explore the impact of travel costs on low paid workers living in outer London. This briefing outlines the main findings of that research.

1 Trust for London

The study particularly focused on those Londoners that live in outer London but travel to central London to work (assumed to be zone 1).

This study was carried out through a combination of quantitative and qualitative research, which included an omnibus survey of London residents that achieved 2,854 respondents, discussions with 48 Londoners in focus groups, 12 interviews with jobseekers living in outer London and five interviews with individuals whose first language was not English.

Living on the Edge - findings and conclusionsThe mean monthly travel costs for all London residents was found to be just under £100, which equated to approximately 7 per cent of mean individual income or 5 per cent of mean household income of participants. The percentages of individual incomes being spent on commuting were higher for 16 to 24 year-olds (12.7 per cent), manual workers (9.2 per cent) and commuters from outer boroughs to zone 1 (8.8 per cent). The higher than average percentage for commuters travelling from outer boroughs to zone 1 can, at least in part, be explained by higher monthly travel costs (an average of approximately £160), as a result of travelling further and through more of London’s travel zones. Those in the 16-24 age group and manual workers spend less than the average London worker per month on commuting (approximately £15 or 15 per cent) but they still find that this takes up a higher than average percentage of their incomes.

There is evidence that lower income Londoners are sacrificing speed and convenience in favour of reduced cost commutes. A significant minority of Londoners who commute into zone 1 do not take the quickest or best journey available to them (36 per cent or 500,000) and are, instead, more influenced by other factors such as cost or the number of interchanges. Approximately 9 per cent of London residents (or a projected 70,000) who commute from outer London to zone 1 are taking slower routes to work because of cost. The time of the commute was also found to have a significant impact on travel choices for very low earners (earning less than £600 per month).

The research found that low income earners are more likely to commute by bus. Bus users were more likely to say that they plan their journey to work on the basis of cost, but the study doesn’t conclude that higher bus use among low income earners is necessarily because buses are more affordable. It could instead be explained by the availability of alternatives near their homes or workplaces. Commuters from outer London reported that bus-only journeys are not always feasible for travelling into zone 1 because of the time taken, the probability of delays and the number of buses that need to be taken.

Travel costs are impacting on household budgets across the capital. One in five (a projected 156,000) commuters from outer London to zone 1 reported that they cut spending on things like utilities, food and clothing to pay for travel to work. The findings suggest that higher earners are more likely to do this. The report suggests that this may be due to better “financial literacy” among higher earning groups, or that lower earners have already made all of the compromises they can.

To avoid paying higher costs to commute to zone 1, a number of participants in the focus groups that were living in outer London explained that they had considered getting a job closer to home, but that the reduction in travel costs would not compensate for the loss in salary. Some felt trapped by the lack of practical choices available and the rising costs.

Many of the focus group participants also complained of a lack of comfort and value for money on their commutes, particularly in peak hours. There was a clear preference to work more flexibly and travel during quieter off-peak periods. However, for the majority of those taking part in the focus groups, the jobs that they had did not often allow this.

Travel costs are impacting on household budgets across the capital

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Analysis

Through the interviews carried out, jobseekers made the point that travel costs impact on the extent to which it is financially beneficial for people to go to work. Transport for London (TfL) has identified that a significant proportion (40 per cent) of jobseekers consider a lack of transport as a barrier to getting work, while a quarter say that the cost of transport presents a problem with getting to interviews. Once in work, low earners in London have to work significantly longer than average to cover their commuting costs for the day. London residents earning more than £600 per month have to work an average of approximately 20 minutes every working day to pay for that day’s commuting costs. This increases to an average of 54 minutes for those earning £200 to £599 per month and 1 hour 56 minutes for people earning less than £200 per month. For manual workers, the research found that travel to work accounts for almost one tenth of an individual’s average earnings.

Discussions with Londoners indicated that they are concerned about travel costs rising in the future, which may lead to greater numbers of people travelling for longer to cut costs.

Participants in the study had the opportunity to identify potential improvements which might ease concerns about the affordability of travel costs. These focused on transport initiatives rather than wider social policies that could have a beneficial impact. Suggestions included:

• Improving awareness of the Jobcentre Plus Travel Discount, which offers jobseekers half-price travel on public transport for a period of three months.

• Improving awareness of the recent reductions to the daily cap for Oyster and contactless card users to benefit part-time workers.

• Incentives to travel off-peak, including the re-introduction of off-peak travelcards.• Greater support for purchasing season tickets.• The introduction of part-time season tickets.• Concessionary fares or tax-free tickets for low-paid workers.• More bus and train services in the early morning, late evening, at night and at weekends

to support Londoners that work outside of usual business hours.

The report recognises that some of these will be difficult to implement in the current economic climate. The government’s decision (in the Spending Review 2015) to phase out TfL’s resource grant by 2019/20 (worth over £700 million in 2019/20) may make tackling this issue more challenging, if TfL is unable to make sufficient savings from the efficiencies and income from assets assumed by government.

The Living on the Edge report suggests that further research and monitoring on the travel choices available to the lowest earners in London should be undertaken. This would allow consideration of the impact of further welfare reform changes, which London’s Poverty Profile suggests may lead to some low-income families making even more sacrifices to remain in London.

Commentary

Discussions with Londoners indicated that they are concerned about travel costs rising in the future

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“Links:Living on the Edge (pdf)

London’s Poverty Profile 2015 (pdf)

Understanding the travel needs of London’s diverse communities (pdf)

This member briefing has been circulated to: Portfolio holders and those members who requested policy briefings in the following categories: Transport and Environment

London Councils, 591/2 Southwark Street, London SE1 0AL www.londoncouncils.gov.uk/members-area

Author: Steve Craddock, Principal Policy and Projects Officer (T: 020 7934 9832)Click here to send a comment or query to the author