Consumer Insight Report 2019 London

A comprehensive view of London consumers from Which?'s consumer insight tracker and other data sources.

Foreword from Which? chief executive, Anabel Hoult

During my time at Which? I’ve quickly recognised that one of our greatest strengths is understanding what consumers want and need. They are at the heart of everything we do and we’re constantly striving for change in the areas where we feel that people deserve better.

Our Consumer Insight reports are a really important step in demonstrating our knowledge base and our understanding of consumers across the UK. For the first time we’ve produced 12 reports covering Wales, Scotland, Northern Ireland and the nine regions of England which highlight the spending habits, optimism, trust and worry of consumers in these areas.

This is a unique body of work, the first of its kind, which has allowed us to compare trends across the UK. As a result of these reports, we know that more people in Yorkshire and the Humber were satisfied with their household income (55%) than the UK average (50%); we also know that more Londoners felt financially squeezed (32%), compared to 27% on average in the UK.

Introduction to Which?


Which? is the largest consumer organisation in the UK with over 1.3 million members and supporters, nearly 190,000 of whom are based in London. We operate as an independent, apolitical, social enterprise working for all consumers and funded solely by our commercial ventures. We receive no government money, public donations, or other fundraising income. Which?’s mission is to make individuals as powerful as the organisations they have to deal with in their daily lives by empowering them to make informed decisions and by campaigning to make people’s lives fairer, simpler and safer.

Methodology

Populus, on behalf of Which?, has conducted bi-monthly surveys of more than 2,000 consumers per survey across the UK since 2012 to gauge perception of and attitudes to the consumer landscape, known as the Consumer Insight Tracker. These data are weighted to be demographically representative of the UK population, and are published on consumerinsight.which.co.uk. To understand the key consumer attitudes in 2018, Which? has boosted these data to a minimum of 1,000 consumers representative of each region and nation of the UK. This report is based on a sample of 1,502 respondents from London.

We have supplemented our own data with figures from other organisations to present a more comprehensive comparison between the trends identified in our consumer tracker data and the facts around earnings, economic growth and unemployment. In this report, we have made use of data from the Office of National Statistics (ONS), Economic Statistics Centre of Excellence (ESCoE), the Resolution Foundation, UK Finance and the Office of Rail and Road (ORR).

Executive summary


This year for the first time, Which? has published research seeking to unpick trends in the optimism, trust and worry felt by people living in London, offering a snapshot of how consumers feel about their financial future and the trust they have in public services and vital industries like rail and broadband.  

Several measures of satisfaction in this region demonstrated lower figures than the UK average, with 61% of Londoners content with their standard of living, compared to 68% of the UK. Similarly, two fifths (44%) of Londoners were comfortable with their current financial situation, a figure lower than the UK average of 49%. Satisfaction with household income was also lower, with 44% of people in London content compared to half of UK consumers.

Social and financial satisfaction


The trends emerging from our consumer tracker data here are clear; fewer of those in London were satisfied with their life overall (57% to 65%), their standard of living (61% vs 68%), household income (44% vs 50%) and the amount of leisure time that they have (58% vs 67%) than the UK on average. Similarly, two fifths (41%) of Londoners were dissatisfied with the level of their household savings, the same as the UK, which suggests that a significant proportion of the population would like to be saving more.

Although the average Londoner appeared to be less satisfied than the average UK consumer, factors like age also changed the outlook held by consumers in this region. For example, 58% of over 65s were satisfied with their household savings, a number significantly higher than the UK average of 43%, while 39% of 35-64 year olds would say they were satisfied with their household’s income compared to the London average of 44%.

57% of people living in London were satisfied with their life overall, while 61% were satisfied with their household’s standard of living and 44% with their household’s level of income. These are all noticeably below the national averages.
61%
were satisfied with their household’s standard of living

Proportions of people satisfied with:

Financial outlook


Across our Consumer Insight Report for London, we have observed a varying degree of similarity between the perceptions and outlooks held by UK consumers and those in this region. Using data from the ONS and ESCoE (Economic Statistics Centre of Excellence), we can establish a baseline understanding of the London economy as a foundation for our analysis. The unemployment rate in the region at the end of 2018 was 4.5%, higher than the UK’s 4%. However, economic growth in London was twice that of the UK average, with a figure of 2.9% to 1.4%. However, Which?’s own research points to some clear deviations in outlook and optimism demonstrated by people living in London compared to those of the UK average.

Just two fifths (44%) of Londoners felt that their financial situation was good, compared to the UK figure of 49%. However, there was a greater sense of better things to come for Londoners as 34% thought their position would improve, compared to 26% of the UK as a whole.

Consumer finances outlook:

 

 

Note: Does not sum to 100% due to the exclusion of ‘neither’ and ‘don’t know’

Consumer spending


Establishing the spending habits of consumers in London is an important step in understanding consumer priorities. In this section, Which? has analysed ONS Living Costs and Food Surveys for 2015/16 and 2016/17, along with ONS data on relative regional consumer price levels of goods and services for 2016, in order to articulate the demands of costs and spending in London. These statistics revealed that consumer expenditure in London averaged £778 a week, significantly higher than the UK average figure of £647, while prices were 7.2% higher than the UK average.

These figures can be contextualised by the median earnings figure for London, which was £30,311 compared to £24,006 for the UK as a whole. This suggests that greater earnings offer some explanation as to why people in London were spending more each week, along with the higher prices identified above.

Further Which? Analysis of ONS data reveals that on average, households in London spent around 34% of all their expenditure on housing, utilities and communication, 10% on transport, 29% on groceries, goods and services and 19% on recreation. When looking at the actual monetary outgoings recorded by consumers in London, it appears that people living here were spending more than the UK average on housing, recreation and groceries

Household spending per week

 

Spending expectations


We asked consumers in London how likely they were to increase or decrease their expenditure on certain commodities and services over the next few months. While a large proportion said they were likely to keep their spending the same, more than a quarter (28%) of people were looking to reduce their spending on non-essential expenses like eating out, socialising and alcohol.

Energy was the commodity that the largest proportion of consumers said they were expecting to increase their spending on (30%), followed by running a car (29%). Breaking down this data by demographic, 39% of over 65s said they were likely to increase their spending on energy, compared to just 20% of 18-29 year olds who expected to do the same.

Interestingly, two areas where a significant proportion of consumers were likely to keep their spending the same were mobile phone payments (73%) and broadband (75%). This may be because many consumers will be tied to a minimum contract period before they are able to switch telecoms provider, despite the fact that many consumers could benefit from faster broadband speeds at a cheaper price, if they switched to a different package.

The trends identified in London matched those of the average UK consumer when it comes to identifying the most likely areas that consumers were expecting to spend both more and less in the year ahead.

Consumer concern

In addition to how people felt about their own finances in relation to their income and standard of living, Which? also looked into trends of consumer concern across London. The figures suggest that the majority of people living here were worried about public spending cuts (66%), while 65% were worried about Brexit and 63% worried about food and energy prices.

At the other end of the scale, fewer consumers in London were worried about the cost of more discretionary items, such as cars (31%) and clothing (32%). When breaking down the results by demographic, more 18-34 year olds were worried about mortgage rates (64% vs the regional average of 55%) and housing costs (69% vs 59%). Tellingly, 51% of this age group were renters, which explains the preoccupation with the likely costs associated with moving, whether this be to a rented or purchased property.

Top 5 consumer worries in London 

Trust in industries and services


Beyond tracking financial outlook and intentions for managing personal finances into the next year, we also sought to pinpoint the industries and public services that consumers in London felt could be trusted to act in the consumer interest.

Across the UK, there was a clear threshold of trust in the health service, with 75% of people trusting their general practitioner (GP) and 73% trusting the NHS. This trust was shared by Londoners, in that these were the public services where more consumers in London would trust providers to act in their best interests. However the trust scores were slightly lower; for example, 68% said they believe that hospitals can be trusted and 67% felt that the NHS and GPs can be trusted.

We also found that 56% of Londoners trust the food and groceries industry above all other private sectors, with car dealerships and estate agents sitting lowest in the range with a trust figure of just 11% respectively. This cynicism toward the car market was shared by the UK as a whole, just 9% of whom feel that it was worthy of their trust.

Our findings around trust are interesting as they suggest that (in addition to other factors like price, level of industry regulation, and familiarity with the purchase process) consumers might be less trusting of transactions they make with industries where there is an imbalance of knowledge between the consumer and provider. For example, a car dealer is likely to know far more about the performance and value of a vehicle they are selling than the average consumer, just as an estate agent may know more about a property and the process of renting or buying a home. This is where Which? seeks to provide consumers with the information they need to deal more confidently in these transactions.

Financial difficulty

Identifying trends of financial difficulty is a key output from Which?’s Consumer Insight Tracker1. In our measure there are five signs of financial difficulty that we monitor, ranging from the least severe (cutting back only) through to the most severe (defaulting on a loan, bill, mortgage, or rent payment). As such, Which? asked people whether their households had experienced some form of financial squeeze within the past few months which might have necessitated them taking one of these actions, in order to reduce the pressure. We then supplemented our own survey results with the findings of the Resolution Foundation’s ‘Low Pay Britain 2018’ report to identify the extent to which respondents’ experience of feeling financially squeezed forms part of a broader trend of financial difficulty in London.


Our figures suggest that 32% of Londoners were feeling squeezed, a statistic noticeably higher than the UK average, where 27% of people identified as having experienced financial difficulty. This figure decreased to 17% of over-65s, a UK-wide trend where this demographic were less likely to have found themselves in financial difficulty. When contextualising these findings with the Resolution Foundation’s report, 20% of workers in London were earning less than the Living Wage2. This compares to the South East which has the lowest proportion of people earning below this benchmark (19%) and the UK wide figure of 23%.

Signs of financial difficulty in London

The figures below are taken from our Consumer Insight Tracker data on financial difficulty and demonstrate how those experiencing financial squeeze sought to reduce the pressure.

The 5 levels of financial difficulty

Note: These are proportions for those experiencing at least one form of financial difficulty, not overall prevalence.

1. The Financial Distress Index estimates the extent to which the households in an area are experiencing financial difficulty relative to all other areas. Areas are ranked out of 100, where 100 is most distressed and 1 is least, and these figures articulate how financially squeezed respondents are feeling.
Which? surveyed 14,138 people between January and December 2018 and asked them about their financial experiences. The most severe financial difficulty they had faced in the past month determined their 'Financial Squeeze' group.
Estimates of financial distress were then calculated for each 2011 Output Area Classification group, then extrapolated down to individual output areas. Averages at the higher level geographies were calculated and weighted by Census 2011 household population estimates.
Please note these statistics are estimates, and are not directly measured from the survey.

2. By Living Wage, we refer to the voluntary rate set by the Living Wage Foundation as a minimum standard to cover living costs rather than the government's compulsory 'National Living Wage’. At the time of writing, UK rates are £9/hr and £10.55/hr in London.

Financial difficulty by constituency

We used our Consumer Insight Tracker data on financial difficulty, together with the ONS’s 2011 Output Area Classification data to estimate the extent to which households in each constituency and region were experiencing financial squeeze relative to other areas. We also sought to understand whether the trends of financial strain could be explained by the financial realities of people living in London, by analysing the figures for median earnings and loan data provided by the ONS3.

In this region, the median figure for annual earnings was £30,311 compared to £24,006 for the UK as a whole, while the proportion of loans to average earnings was 3.2%, compared to 3.9% for the UK as a whole.

Our analysis shows that all of the five most financially squeezed UK constituencies were located in the London region. However, none of these constituencies were those with the lowest median earnings, nor those with the highest ratio of loans to earnings. Instead, all of the constituencies with the lowest earnings were those situated in the east of London. At the other end of the scale, Orpington was the least squeezed constituency situated out of the city centre, to the south. These geographic influences suggest that those living in urban areas are exposed to a particular set of pressures (for example, the higher costs of goods and services) that impact the level of financial squeeze experienced, compared to those living in less urban, more rural areas of the region.

3. ONS ASHE annual gross earnings 2018 (interim)

 

Key financial difficulty statistics for Westminster Parliamentary Constituencies


Map 1: Financial difficulty for Westminster Constituencies in London

Map 2: Most financially squeezed constituency,              East Ham

Map 3: Least financially squeezed constituency, Orpington

Which? campaigns in London


Which? campaigns consistently on a number of issues as part of our mission to uncover consumer detriment and push for positive change. As a result of our work, we can share insights into the unique experience of London-based consumers with both their broadband coverage and the rail service.

Broadband

As part of our Fix Bad Broadband campaign, we offer consumers a broadband speed-checker tool, inviting people to identify their service speed and enabling us to analyse the consumer experience of broadband connections across the UK.

The UK Government has identified a download speed of 10Mbps as the minimum speed required to fully participate in digital society. The new broadband Universal Service Obligation (USO) will provide consumers with a legal right to request a broadband connection with a download speed of at least 10Mbps4. Ofcom has responsibility for implementing the USO, and it should be in place by 2020.

Our map of best and worst coverage suggests that Londoners living toward the south experienced better coverage from their broadband provider than those living toward the east of the city.

Proportion of consumer broadband speed tests achieving 10Mbps or above

Rail

Which? publishes an annual Rail Satisfaction Survey, a poll that seeks consumer insight on a range of factors affecting their train travel, from punctuality to seat availability which contribute to an overall customer score5.

Our survey yielded a customer score of 50% for both London Overground and Transport for London, placing performance squarely mid-table, while services passing through the region, such as London Northwestern Railway and Virgin Trains West Coast both received scores placing them towards the upper half of the table (58% and 57% respectively). At the other end of performance, Southern received a customer score of just 34%. Additional data available from the Office of Rail and Road (ORR) gives insight into the range of train cancellations for passengers in London, with Govia Thameslink the least reliable; with a cancellation rate of 6%.

In addition to our Rail Satisfaction Survey, in 2018 Which? also undertook an analysis of two months of rail regulator data and found that fewer than half of all rail passengers were satisfied with how their complaints were dealt with by train companies. Of the train operating companies who provide services within London, 49% of CrossCountry passengers who responded to the ORR’s survey were satisfied with their experience of the complaints handling process. This figure compares to 31% of Heathrow Express passengers, 28% of Southeastern passengers and just 20% for Govia Thameslink.  The range of figures demonstrated here evidences how different train companies serving the same region are providing complaints handling experiences of vastly differing qualities.

Both the cancellation rates set out by the ORR and our data on satisfaction with complaints handling explain how the rail industry still has some way to go in recognising passengers as consumers, as we called for in our super-complaint of 2015. This is why we will continue to call for a railway that works for passengers and not just the industry through our Train Pain campaign.

To find out more, visit our Consumer Insight page at consumerinsight.which.co.uk, where you can access our latest research on a range of issues, and detailed data on consumer attitudes, perceptions and concerns broken down to the constituency level across the UK.

4. The minimum technical standard for connections made under the USO will be: minimum download speed of 10Mbps; minimum upload speed of 1Mbps; additional quality parameters: medium response times, a minimum data cap pf 100GB and a contention rate of 50:1 (i.e. a maximum of 50 users share one bandwidth)

5. The customer score is based on satisfaction with the brand and likelihood to recommend. Satisfaction and recommendation contribute 50% each to the overall customer score, and a respondent must answer both questions for their answers to contribute towards a customer score. For both satisfaction and recommendation, we apply a weighting to each response.