London is becoming dangerously inequal — the consequences of inaction are severe

Cities will always contain stark inequalities between rich and poor. As Plato wrote two millennia ago, they are “a combination of many … two at least — one of rich folk, the other of poor”. That has been true of great cities such as London, New York, and Paris and is still the case now. But are cities such as London reaching the point where that divide is forcing an exodus that will ultimately make it unsustainable?

Hardly a week goes by without news of another state school in London planning to shut its doors or merge with a neighbour because of falling school rolls. March 2025 saw staff, pupils and parents at two Islington primary schools threatened with closure hire old Routemaster buses to launch a public appeal for a halt.

Part of the reason is a demographic “timebomb” that is expected to see a 13 per cent fall in the primary and nursery school population in England by 2032, according to the Department of Education. That fall will impact London more significantly: the number of five-year-olds in the capital is forecast to fall by almost a tenth. The projected student enrolment for reception classes in London — the entry year into primary school — is expected to decline by almost 8 per cent from 96,424 students to 89,121 in the four years to 2027 alone, according to data from London Councils, which represents the 32 London boroughs and the City of London.

The reasons are multiple. Several inner London primary schools are set to close or combine due to declining enrolment, as families relocate to find more affordable housing and childcare options, and European residents departed first after Brexit and then during the Covid-19 pandemic.

On top of that are the pressures from the cost of living, primarily housing. Historic rises in house prices have put property purchase out of the reach of many, pushing the poorest groups into rented housing. But rents have been pushed up as demand has risen; data from the Office for National Statistics show living costs for private renters rose faster than any other group in 2024.

Private renter households experience highest inflation in 12 months to December 2024

Weak rental laws put the power in the landlord’s hands making six-month tenancies standard and until recently allowing non-reason evictions. That is before one thinks about illegal overcrowded lets. So, these tenants will too flee in pursuit of more affordable homes. Those who want to keep their jobs in the capital will have to commute longer distances, leaving them more tired as a result.

London faces significant poverty issues, with 2.2 million of its nine million residents living in poverty - the second highest rate in any English region according to new Joseph Rowntree Foundation findings. Child poverty is even more severe, affecting over one-third (34.8%) of London's children. The report warns that rising social housing rents could worsen poverty levels, as benefit caps may leave low-income tenants without adequate coverage for housing costs.

But London’s population is not shrinking, so these urban emigrants are being replaced by new blood. Housing developments in London are catering for single people and young couples coming to take high-paid jobs in the city, before moving out to have families. Where more affordable “social” housing is built it is often as a few units attached to a private development (which are often negotiated away by the developer who insists that including those makes project financially unjustifiable).

Is it fanciful to think this cannot continue and could lead to a fracturing of the city? Not according to an academic study by King’s College London, which warns that wealth inequality risks triggering “societal collapse” within the next decade. Growing poverty alongside increasing wealth inequality and an excess of elite individuals in society tends to lead to societal breakdown unless deliberate measures are taken to prevent this outcome, it warns. Although focused on the UK it is likely applicable to its biggest nine million-strong city.

London faces economic pressures that are dispersing long-standing ethnic communities and altering neighbourhood cultural identities, it notes. The city is experiencing social unrest with violent demonstrations between rival groups, coordinated attacks targeting government and corporate facilities, shortages of essential supplies like food and fuel, healthcare systems under strain, and transportation failures caused by extreme weather conditions. Despite having greater resources available to manage these challenges, London is still confronting violence and disorder from protesters and rioters who have come from elsewhere.

The hope is that policymakers both in London and nationally can take action now to avert that. The Mayor of London, Sir Sadiq Khan, and London Councils have set out a 100-page growth plan that includes a goal to raise the “real household weekly income” of the lowest-earning 20 per cent of Londoners by 20 per cent within a decade.

There is an emerging consensus on how to achieve that. University of Oxford professor Ian Goldin in his book Age of the City written with Economist writer Tom Lee-Devlin, identifies three pillars — fairer schooling, fairer housing, and fairer public transport. Dave Hill, a journalist and author specialising in London, suggests better health, skills and jobs, more affordable housing, and nurturing small businesses.

The vision of a sustainable city can never be fully realised when a quarter of its population is struggling to make ends meet, often barely surviving. The wealth gap in the UK presents serious and growing challenges, but they are not impossible to overcome. With strong political will, a variety of effective policies, regulations, and reforms can be introduced and accepted by the public to tackle the risks associated with this disparity. Urgent action on wealth inequality is necessary, as the consequences of inaction are far too severe.