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Poverty in the UK: statistics

Published Tuesday, November 15, 2016

This note sets out information on the levels and rates of poverty in the UK, including historical trends and forecasts for future years.

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This note sets out information on the levels and rates of poverty in the UK, including historical trends and forecasts for future years. The focus here is on poverty defined in terms of disposable household income, although poverty may be defined in different ways and there is no single, universally accepted definition.

Various poverty measures based on disposable household income are in common use and the trend can look quite different depending on the measure used. Two commonly used measures are:

  • people in relative low income – living in households with income below 60% of the median in that year;
  • people in absolute low income – living in households with income below 60% of (inflation-adjusted) median income in some base year, usually 2010/11.

So the ‘relative low income’ measure compares households against the rest of the population in that year, while the ‘absolute low income’ measure looks at whether living standards at the bottom of the distribution are improving over time. A low income measure can also be combined with an assessment of whether households have access to key goods and services, for a measure of low income and material deprivation.

Income can be measured before or after housing costs are deducted (BHC or AHC). Poverty levels tend to be higher based on income measured after housing costs, because poorer households tend to spend a higher proportion of their income on housing.

In 2014/15:

  • 10.1 million people were in relative low income BHC (16% of the population), up 500,000 from the year before.
  • 9.4 million were in absolute low income BHC (15%), down 500,000 from the year before.
  • 13.5 million were in relative low income AHC (21%), up 300,000 from the year before.
  • 12.9 million were in absolute low income AHC (20%), down 700,000 from the year before.

Looking specifically at children:

  • 2.5 million children were in relative low income BHC (19% of children), up 200,000 from the year before.
  • 2.3 million were in absolute low income BHC (17%), about the same as the year before.
  • 3.9 million were in relative low income AHC (29%), up 200,000 from the year before.
  • 3.7 million were in absolute low income AHC (27%), down 100,000 from the year before.

Source: DWP Households below average income, 2014/15

Over the longer-term, there has been a reduction in poverty rates since the late 1990s for children, pensioners and working-age parents, although the likelihood of being in relative low income has increased for working-age adults without dependent children.

The Institute for Fiscal Studies estimates that the number of people in relative low income will stay roughly unchanged up to 2015/16, after which it is projected to increase. The share of people in relative low income is projected to be around 18% in 2020/21, the same as in 2007/08. The rate of absolute low income on the other hand is expected to have fallen between 2013/14 and 2015/16 and is then projected to stay flat to 2020/21.

Although this note discusses income-based measures of poverty, these have been criticised by the current Government as failing to acknowledge the root causes of poverty and resulting in skewed policy responses that try to lift those just below the poverty threshold to just above it. For further background, see the Library’s briefing paper prepared for Second Reading of the Welfare Reform and Work Bill.

 

Commons Briefing papers SN07096

Author: Feargal McGuinness

Topic: Incomes and poverty

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