How can Labour Tackle Poverty and Inequality in London?

SUMMARY

• London, despite being the economic engine of the UK, is home to millions who live in poverty and shocking levels of inequality.
• Government funds designed to increase growth or reduce inequality have for years ignored London, including the Plan for Neighbourhoods and the Pride in Place programme.
• London, being an electoral stronghold, may not benefit from further policy from Labour.
• Could devolution help London tackle poverty? Experimenting with more wide-ranging policy and then fiscal devolution may empower the Mayor to make improvements.

London, despite being the economic engine of the UK, is home to millions who live in poverty and shocking levels of inequality.

There were 24% of Londoners in poverty in 2022-23, which constitutes 2.2 million people – nearly double the size of Birmingham. A third of children are growing up in poverty. In some boroughs, nearly half of the children are growing up in poverty. Despite the extent of poverty in what is one of the country’s most unequal places, recent years have seen regional socio-economic problems defined as non-London ones. Levelling up may have been much maligned, but over £12bn was distributed to local authorities in the UK under the levelling up banner. London received relatively little of this funding. Whilst the North East benefitted from £433.87 per head, London only received £59.73.

Labour’s landslide election victory of 2024 was at its most red in London, with 59 of the 73 constituencies in the capital representing Labour MPs. Labour came into power promising to provide opportunity for all and dismantle the divisive approach to addressing regional inequality of the previous government. Does this mean that the tide has turned when it comes to policies to tackle poverty and inequality in the capital?

Will Labour help people living in poverty in London?

It is generally accepted, by those inside and outside the Labour party, that it has been tough for Labour since their election win of 2024. They trail in the opinion polls to Reform and are coming under pressure from the Green Party, Liberal Democrats and other forces including independent candidates and potentially new parties as well. Labour’s response to these political challenges has been to double down on its commitment to improving economic growth as well as trying to prove it can be tough on immigration and patriotic as the next man (assuming that man is Nigel Farage).

Where poverty and inequality is concerned, Labour has yet to lift the two-child benefit cap, which would benefit many children in London. It has though quickly reverted to type where regional inequality is concerned by inventing another programme to close the gap between regions and provide resources for areas of socio-economic need. Since the late 1970s, there have been over 60 different funds designed to increase growth or reduce inequality at the local or regional level – on average one every six months. In early March 2025, the Deputy Prime Minister announced the Plan for Neighbourhoods distributing £20m over a nine-year period to 75 different areas across the country, none of which were in London.

Does Labour’s Pride in Place programme affect London?

Just six months later, the Plan for Neighbourhoods was folded into the larger, more ambitious Pride in Place Programme. Pride in Place extended the investment of £20m into 250 neighbourhoods of circa 10,000 population defined by the government as ‘doubly disadvantaged’ by both the highest deprivation levels and weakest social infrastructure. As with the Plan for Neighbourhoods, none of these neighbourhoods were in London. Alongside the Pride in Place programmatic support the Pride in Place Impact Fund was also launched. The fund provides £1.5m for 95 local authority areas in England, Scotland and Wales. Seven local authorities in the capital receive funding via this strand, equating to 0.2% of funding from the Pride in Place programme – a lower percentage than it received through levelling up.

For Londoners in need, it is dispiriting to see the government repeat its predecessors’ approach to regional inequality and ignore London. Pride in Place offers no guarantees of success. The track record of regeneration initiatives is very patchy. But it provides resources that are controlled by communities at the neighbourhood level where the interactions between housing, employment and welfare shape the lives of those facing the greatest challenges. London, being a Labour electoral stronghold, does not appear to be reaping benefits thus far where this area of policy is concerned, perhaps precisely because it is such a stronghold or perceived as such. In reality, many Labour constituencies face political threats from left and right. While London is being overlooked where regional inequality initiatives are concerned, as with the Conservative government, the attention remains on parts of the Midlands and the North that will form key electoral battlegrounds when the next election comes around.

Could devolution help London tackle poverty?

The fate of London’s poorest people remains in the hands of central government, but it may be that their best hope for real change lies with evoking what happens closer to home. Labour remains committed to devolution and although again the bulk of the work will be in shifting power away from Westminster to parts of the country without elected mayors, more devolution to London remains a commitment.

Under the present Labour mayor, there has been commitments to try and affect poverty and inequality. One of the four ambitions in its Plan for Growth published in February 2025 was raising the household weekly income for the lowest earning households. Its Inclusive Talent Strategy followed later in the year. However, as welcome as these plans are, the ability of the Mayor to achieve them is limited. In education while he controls the Adult Skills Budget, he has no remit relating to schools, further or higher education. Nor, as in other major global cities, can he raise money through taxation.

Experimenting with more wide-ranging policy and then fiscal devolution may empower the Mayor to do what central government isn’t doing on poverty and inequality. It also has the potential to avoid accusations of metropolitan bias from opponents on the right as it won’t come at the expense of resources for other regions. And so long as Labour still holds onto City Hall, it allows more radical approaches than the government feels it can commit to, helping to satisfy its many left-leaning supporters in the capital.

No easy answers or short-term fixes to poverty and inequality in the UK exist in or out of London. But new approaches are needed – putting power in the hands of those who can most affect change should be one of them.

Digested Read produced by the author with editorial support from Anya Pearson.