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Toynbee was born on the Isle of Wight. Toynbee was the second daughter of the literary critic Philip Toynbee (by his first wife Anne), granddaughter of the historian Arnold J. Toynbee and great-great niece of philanthropist and economic historian Arnold Toynbee after whom Toynbee Hall in the East End of London is named. After attending Badminton School, a girls' independent school in Bristol, followed by the Holland Park School, a state comprehensive school in London (she had failed the Eleven Plus examination), she won a scholarship to read history at St Anne's College, Oxford, despite gaining only one A-level. During her gap year she worked for Amnesty International in pre-independence Rhodesia, before being expelled by the government, and she published a first novel, Leftovers, in 1966.

After 18 months at Oxford, she dropped out, finding work in a factory and a burger bar and hoping to write in her spare time. She later said "I had a loopy idea that I could work with my hands during the day and in the evening come home and write novels and poetry, and be Tolstoy... But I very quickly discovered why people who work in factories don't usually have the energy to write when they get home." She went into journalism, working on the diary at The Observer, and turned her eight months of experience in manual work (along with "undercover" stints as a nurse and an Army recruit) into the book A Working Life (1970).

Toynbee's partner is David Walker, the former social affairs editor of The Guardian, with whom she has co-authored two books reviewing the successes and failures of New Labour in power. She was previously married to the late Peter Jenkins, also a journalist, who died in 1992.

Toynbee worked for many years at The Guardian before joining the BBC where she was social affairs editor (1988–1995). At The Independent, which she joined after leaving the BBC, she was a columnist and associate editor, working with then editor Andrew Marr, a distant cousin. She later rejoined The Guardian. She has also written for The Observer and the Radio Times; at one time she edited the Washington Monthly USA.

Following in the footsteps of Barbara Ehrenreich's Nickel and Dimed (2001), she published in 2003 Hard Work: Life in Low-Pay Britain about an experimental period voluntarily living on the minimum wage, which was £4.10 per hour at the time. She worked as a hospital porter in a National Health Service hospital, a dinnerlady in a primary school, a nursery assistant, a call-centre employee, a cake factory worker and a care home assistant, during which time she contracted salmonella. The book is critical of conditions in low pay jobs in the UK. She also contributed an introduction to the UK edition of Ehrenreich's Nickel and Dimed: On (Not) Getting By in America.

Currently Toynbee serves as President of the Social Policy Association. She is chair of the Brighton Festival, and deputy treasurer of the Fabian Society.

Polly Toynbee and her first husband Peter Jenkins were supporters of the Social Democratic Party breakaway from Labour in 1981 – both signing the Limehouse Declaration. Toynbee stood for the party at the 1983 General Election in Lewisham East, garnering 9351 votes (22%), and finishing third. She later became something of a rarity in refusing to support the subsequent merger of the SDP with the Liberals (to form the Liberal Democrats), reacting instead by moving back towards Labour when the rump SDP collapsed.

Although she has been consistently critical of many of Tony Blair's New Labour reforms, she said in 2006 that he and Gordon Brown had led "the best government of my lifetime". During the 2005 General Election, with dissatisfaction high among traditional Labour voters Toynbee wrote several times about the dangers of protest voting, "Giving Blair a bloody nose". She urged Guardian readers to vote with a clothes peg over their nose if they had to, to make sure Michael Howard would not win from a split vote. "Voters think they can take a free hit at Blair while assuming Labour will win anyway. But Labour won't win if people won't vote for it".

Having advocated Brown to succeed Blair as Prime Minister, she continued to strongly endorse him in the early part of his premiership. By spring of 2009, she became sharply critical of Brown, arguing that he had failed to introduce the social democratic policies he promised, and was very poor at presentation too. She subsequently called for his departure, voluntary or otherwise. In the European Elections of June 2009 she advocated a vote for the Liberal Democrats.

Polly Toynbee supports the stigmatisation of the use of racial epithet and outdated ethnic labels.

An atheist, Toynbee is an Honorary Associate of the National Secular Society, a supporter of the Humanist Society of Scotland and was appointed President of the British Humanist Association in July 2007.

In 2004 the Islamic Human Rights Commission awarded Toynbee the 'Most Islamophobic Media Personality' title in the Annual Islamophobia Awards - a claim she strongly contested. She pointed out she is simply a consistent atheist, and is just as critical of Christianity and Judaism. She wrote: "The pens sharpen – Islamophobia! No such thing. Primitive Middle Eastern religions (and most others) are much the same – Islam, Christianity and Judaism all define themselves through disgust for women's bodies."

Toynbee has been described as "the queen of leftist journalists", and in 2008 topped a poll of 100 "opinion makers", carried out by Editorial Intelligence. She was also named the most influential columnist in the UK.

In December 2006, an advisor to Tory leader David Cameron claimed Toynbee should be an influence on the modern Conservative Party, causing a press furor. Cameron later clarified this to say he was impressed by one metaphor in her writings - of society being a caravan crossing a desert, where the people at the back can fall so far behind they are no longer part of the tribe. He added, "I will not be introducing Polly Toynbee's policies." Toynbee expressed some discomfort with this embrace, adding, "I don't suppose the icebergs had much choice about being hugged by Cameron either." In response to the episode, Boris Johnson, at the time a Conservative MP and journalist who had been severely criticised by Toynbee, rejected any association with Toynbee's views, writing that she "incarnates all the nannying, high-taxing, high-spending schoolmarminess of Blair's Britain. Polly is the high priestess of our paranoid, mollycoddled, risk-averse, airbagged, booster-seated culture of political correctness and 'elf 'n' safety fascism".

Toynbee was awarded an Honorary Degree by London South Bank University in 2002. In 2005, she was made an Honorary Doctor of The Open University for "her notable contribution to the educational and cultural well-being of society". The University of Leeds awarded her third Honorary Doctorate in 2008.