London has the highest poverty rate in England, a stark reality that sits uneasily alongside its reputation as a global powerhouse. The city’s higher wages do not compensate for its punishing housing costs, leaving the average Londoner considerably worse off than their counterparts elsewhere, according to analysis by the Resolution Foundation. Even before housing costs, the capital’s poverty rate is comparable to the national average, but once rent and mortgages are factored in, 27% of Londoners live in poverty compared to 22% nationally. This is the defining fault line of the north-south divide—not a simple story of northern deprivation versus southern affluence, but a crisis of affordability that is reshaping lives across the entire country.
The north-south divide: a grievance recast
When Andy Burnham, the mayor of Greater Manchester, called London “the world’s greatest capital city” this week, he was not endorsing the status quo. His pitch for moving part of No 10’s team north is less about fleeing the capital than escaping the gravitational pull of Westminster and Whitehall. Burnham, whose popularity is built on a proudly northern identity, wants people to find good careers where they are. He argues that universities should spread graduates around the country, not funnel them south. The Political Quarterly, in a special edition on London and its housing crisis, has taken up the question: can it be done?
The historic resentment of London as a “vampire sucking life from the provinces” long predates William Cobbett. For the right, London is the citadel of left-leaning elitism and, in the Trump-Vance caricature, a multicultural crime-ridden swamp. For the left, it is a gilded enclave of City bankers who are takers, not makers. But Burnham understands that the real London is in a growing crisis. Its allure draws ambition and talent, but many people are forced to leave their home towns for the chance of a job with a future. The result is a “living standards exodus” from the capital, driven by high housing costs and inequality. Productivity growth in London has been negative since the 2008 financial crisis, with economic growth now driven by more people working longer hours rather than genuine improvements in output.
London’s housing crisis: the heart of the problem
The scale of the housing crisis in London is staggering and its causes are multiple. Private renters in the capital spend approximately 40% of their income on housing, compared to a national average of 36%. In early 2025, seven in ten Londoners said their rent or mortgage payments had increased in the past 12 months. Unsurprisingly, 24% of London renters believe they may need to leave the capital within the next year to find affordable rent. In 2025, London house prices stood at 10.6 times average earnings. By 2023, median prices were 12 times median earnings, according to researchers at the London School of Economics. In the north-east, by contrast, house prices were five times earnings. Only the richest Londoners or those who bought decades ago escape the trap of the capital’s highest cost of living. Londoners, on average, endure the longest commutes in England.
The current fall in London house prices, far from easing the strain, has brought housebuilding to a halt. Professor Tony Travers of the London School of Economics notes that 300,000 homes with planning permission remain unbuilt due to rising construction costs, high interest rates, a lack of construction workers, and post-Grenfell regulations requiring second staircases in high-rises. In England alone, there are around 175,000 privately owned, empty non-residential properties that could potentially be converted into homes. Yet the obstacles to building remain formidable. The obligation on developers to make 35% of homes affordable dramatically slowed construction, prompting Sadiq Khan, the mayor of London, to reduce the quota to 20% for a limited time. Seven London councils are taking him to judicial review over this decision, but Khan argues that “20% of something is better than 35% of nothing.”
The human cost is visible in the homelessness figures. In early 2025, over 183,000 Londoners—more than one in fifty—were homeless and living in temporary accommodation. Boroughs collectively spend £4 million every day on accommodation for homeless Londoners. The number of households in temporary accommodation reached its highest level on record in March 2025: 73,310 households, a 12% increase from the previous year. The total number of children living in temporary accommodation also hit a record high, at 169,050. Meanwhile, 320,000 households are on waiting lists for social housing in the capital. The crisis is worsened by the government’s freeze on local housing allowance, the benefit that covers private rents, which is causing evictions for those unable to pay rising rents—often for squalid conditions. But the state, critics argue, should not be subsidising private landlords indefinitely.
The loss of nearly 2 million council homes through Margaret Thatcher’s right-to-buy scheme has never been more keenly felt. Calls for rent controls, capping rises at no more than inflation, are backed by 71% of people in England. No London mayor has ever met their housing targets, but in 2022/23, Khan’s City Hall started work on twice as many council homes as the rest of England did in the previous year. Under his previous affordable housing programme (2016–2023), Khan was allocated approximately £4.8 billion and exceeded his target of 116,000 affordable homes, including some 23,000 council homes—the highest since the 1970s. However, the current Affordable Homes Programme for 2021–2026 has struggled: the target was initially 60,000 starts, later reduced to between 17,800 and 19,000 by March 2026, but as of December 2025 only 7,878 homes had been started. City Hall blames construction inflation, skill shortages, regulatory delays, and high interest rates. Khan’s manifesto pledge includes building 40,000 more council homes by 2030; since 2018, over 25,000 have been built or are underway.
What could work: new towns, green belt, and the Burnham vision
Burnham has called for the entire £39 billion housing budget to be spent on social housing. Professor Travers calculates that this would build 200,000 council homes nationally, meaning private developers would need to build the rest to reach anywhere near Labour’s target of 1.5 million homes. The government’s current spending on social housing is primarily through the Affordable Homes Programme, which has £11.5 billion in funding for 2021–2026, aiming to build up to 180,000 homes by March 2029. Of that, £7.5 billion is for areas outside London and £4 billion for London. But the majority of the government’s total housing budget—over £26.8 billion in 2021/22—is spent on housing benefits, with only 12% allocated to building or improving homes.
One model that has worked in the past is new towns. In the decades after the second world war, new towns were built and London’s population fell as people moved out. The current government is planning seven new towns, each expected to deliver at least 10,000 homes, with integrated schools, jobs, green space, and transport. Enfield has become the first test, with 21,000 homes due for Crews Hill—a chunk of green belt that has inevitably met strong resistance from the new Conservative-led council. The authors of the Political Quarterly special edition argue that there is no solution to the London crisis without using green belt land. Professor Travers suggests rolling the belt a mile further out, reclaiming it from the far side. Green belt land, he notes, takes up one and a half times the space used by all cities and towns combined, and little of it is accessible to those it is supposed to benefit. The green belt covers approximately 12.6% of England’s land area, with the largest portion—5,085 km²—surrounding London. While 93.1% of the green belt was undeveloped in 2022, the concept of “grey belt”—semi-developed urban land—is being considered as a potential solution.
New towns were always resisted as socialist urbanisation. The farming town of Stevenage rebelled against the postwar Labour planning minister Lewis Silkin, vandalising his car and renaming the railway station “Silkingrad.” The Liberal Democrat MP for Surrey Heath, Al Pinkerton, inadvertently offered a reminder of the choices to be faced when he complained at Prime Minister’s Questions that a new hospital he had lobbied for was going to be built on “the last remaining fragment of the ancient Frimley Common.” The prime minister criticised him for demanding a new hospital and then opposing its construction because, as Pinkerton had told his constituents, “If the hospital goes ahead, there will be no golf course.” There are 94 golf courses around London; the 43 that are publicly owned would provide enough homes for 300,000 people, according to the article, and research indicates that building on golf courses within London’s “H2 zone” could deliver over 85,000 dwellings. In total, there are 121 golf courses in London covering 4,581 hectares. Only golfers, the argument goes, would regard them as anything but environmental blights.
Burnham’s broader devolution agenda includes establishing a “No. 10 North” in Manchester, intended as the “nerve centre of a rewired Britain,” giving regional mayors greater control over housing, transport, utilities, employment, and industrial policy. The UK is one of the most centralised economies among developed countries, with subnational tax revenue less than 5% of the total. His plan aims for “good growth in every postcode” and “the biggest rebalancing of power” in British history, including favouring British companies in public procurement and expanding technical education. But bucking market forces is hard. A 1960s ban on new office buildings in London made sky-high profits for existing office property owners. Enfield’s new town will need to be overridden by a new development corporation run by the London mayor: localism can only be allowed to go so far. Regional power is with mayors, not Nimbys.
The London conundrum mirrors so many national dysfunctions, north and south. There are solutions, but they require the political daring to put the public good above private interest, the public purse above the private pocket.
