Ethnic Minority Communities are in extreme poverty in East London

I recently advised Shazna Rahman*, a Bangladeshi Muslim woman in Newham. She came to seek debt advice from me at Toynbee Hall, a charity in Tower Hamlets that helps communities in poverty. She was wearing full black burkah. This is a piece of clothing covering her body completely. It was not the manifestation of her faith that struck me most, but the reality of her difficult and hard life. Her children were taken away from her by Social Services because she was unfit to look after herself and her children due to a highly traumatised divorce that resulted in a mental breakdown. She moved from Tower Hamlets to Newham into private accommodation. She claimed housing benefit to pay for her rent.  After a few years, she became homeless when her private landlord wanted to rent the property out to a professional couple who would pay more. Newham council put her in temporary accommodation because she was deemed in priority need due to her mental health.

Her personal circumstances made me think about the state of poverty that many ethnic minority residents in Newham, Tower Hamlets and Hackney experience. These boroughs are in the heart of the East End. Ethnic minority residents form a significant proportion of the population in these boroughs. According to Newham Council’s data,  46% of the borough’s population are Asian and 18 % are black - Afro-Caribbean.  In Tower Hamlets, 41% of the borough’s population are of Asian background,  32% of whom are of Bangladeshi origin. In Hackney, the largest ethnic minority group is Afro-Caribbean at 23.1% followed by Asian at 10.5% according to 2011 Consensus.

Shazna’s initial contact with me over a year ago was about her inability to pay £27,000 in loans and credit debts. I was able to support her with a temporary outcome by offering minimum payment to her creditors. But there appears to be an endemic problem in the East End according to research carried out by the Money Advice Service.  I began wondering how prevalent indebtedness was in her borough. Newham has been categorised as the UK capital of indebtedness.  22.7% of its population are in debt. Tower Hamlets has the same level of people in debt as Newham.  Hackney was not far from it - 20.9%.

There is a correlation between ethnic minority communities in these boroughs, and their disproportionate impoverishment in East London. According to the Trust of London, 37% of the population in Newham live in poverty; in Tower Hamlets it is 39%. Hackney’s poverty rate is just below Newham and Tower Hamlets at 36%.  This may be due to gentrification which is higher. Bangladeshi children in Tower Hamlets were highly likely to be deprived. 43% of children in Tower Hamlets live in poverty; the highest rate in the UK. Black African children were identified as being the second most deprived group.  According to the Joseph Rowntree Foundation: 

“Lone-parent families were much more prevalent among Black African and Black Caribbean households.  Lone-parent households are known to have higher risk of poverty due to the pressures of combining work and childcare for lone parents.” Hackney has the highest infant mortality rate compared to any other borough. 5.4 babies die per 1,000 live births.

In terms of employment in these three boroughs, 35.6% of employees in Newham are in low paid jobs; the highest percentage in London and 10% higher than the London average and only lower than the poverty rate in Tower Hamlets.   In Tower Hamlets, 19.8% of ethnic minority UK nationals are unemployed, compared to the UK average of 7.8% and a London average of 8.3%. 11.7% of ethnic minorities in Hackney are unemployed. 

1 in every 25 residents in Newham are in temporary accommodation and the prime cause of their homelessness is the ending of a private sector tenancy.  Shazna’s reasons of homelessness illustrate the true characteristics of many ethnic minority residents in Newham. She was given notice to quit by her private landlord’s desire to let his property to a non-benefit claimant. In Tower Hamlets, 4 in every 1000 applicants were accepted by the council as homeless.  In Hackney, the figure is slightly higher: 7 in every 1000 application.

In Hackney’s private rented housing, lone parent households, couples with children, white other, black African and Asian ethnicities are more likely to live in substandard accommodation than the average household.  According to Melanie Rochford, director of Hackney Foodbank:  

‘We see a lot of single parents. Many focused on feeding their kids, paying the rent and paying for items like school uniforms and utilities but don’t have enough to eat — they start to get into arrears with the rent.  Any kind of delay in benefit payment can be the final straw.  We’re hearing about poor nutrition in children and we’re seeing parents who go hungry.’  

Ethnic minority communities in these areas also hit hard by recent welfare reform. Bedroom Tax and benefit cap have reduced income from those who are in receipt of means tested benefits in all the three boroughs. Until 7 November 2016, a couple with children would be capped at £500 per week in London, whilst for single claimants it was £350.  From 7 November, the cap was reduced further for those who live in London to:

- £442.31 a week if you are a couple or have children and live in London

- £296.35 a week if you are a single person and live in London.

In Tower Hamlets, Universal Credit was rolled out in March 2017. Of all local authority tenants who were on universal credit following rollout, 83% were in arrears. 

From 24 July 2018, everyone who is of working age, and requires welfare benefit support is to claim universal credit in Newham. Data is yet to be analysed as to how communities in the borough have dealt with it. The roll out of the benefit will be extended to Hackney from October 2018. 

Local government budgets have been significantly reduced because of welfare reforms. To maximise local income, council’s in the country introduced policies where the poorest residents were required to contribute towards their council tax bill. In Newham, at least 20% of the council tax bill needs to be paid by working households regardless of whether they can afford to pay.  

It was the fear of not being able to pay her council tax bill that saw Shazna come back to seek advice from me a few months ago because her existing Employment Support Allowance did not cover the cost of paying what Newham council wanted her to pay. As a result she is now in arrears. The fear of the bailiff knocking on her door made her feel anxious and she wanted advice.  According to Money Advice  Trust, Newham Council made the most bailiff referrals in the last 12 months (2016/17) - 55,652. This is 50% of bailiff referrals as a percentage of the total properties according to Money Advice Trust. 

Following the direction of Newham Council, Hackney Council, from April 2018, reduced council tax support from 15 to 17% for its working age households. Individuals who are on Jobseekers Allowance and Employment Support Allowance will find that they need to prioritise between paying for food or the council tax bill. 

In Tower Hamlets residents have been exempted from paying council tax due to  their low income. Individuals who are self-employed, however, are deemed to pay full council tax without means testing their ability to pay for it.  This blanket approach has resulted in several Tower Hamlets residents seeking advice from me. Most of them are ethnic minority Bangladeshis.

Shazna’s experience tells me a great deal about the life of many forgotten minority communities in the East End. Welfare reform and policies are resulting in people  who were already in a precarious financial situation being tipped over the edge. The challenge for someone like Shazna is whether to pay her food or visit her local foodbanks.   Her burka, in my opinion, covers the harsh reality she is living in East London. When she began to feel comfortable speaking about her troubled life to me, after a few advice sessions, she no longer wore the burka.

*Shazna Rahman is not her real name. To protect her identity and privacy I changed her name and slightly changed her factual situation.