This note sets out information on the levels and rates of poverty in the UK, including historical trends and forecasts for future years.Jump to full report >>
This briefing paper focuses 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:
So the ‘relative low income’ measure compares the households with the lowest incomes 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.
Looking specifically at children:
Source: DWP Households below average income, 2016/17
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 has previously projected that the share of children in relative low income will increase sharply between 2015/16 and 2021/22, assuming no change in government policy.
While the proportion of children in relative low income after housing costs is expected to be around 7% points higher by the end of the period, poverty rates for pensioners and working-age adults without dependent children are projected to remain about the same. The overall effect is that the share of the total population in relative low income is expected to increase by 2% points by 2021/22.
The share of people in absolute low income after housing costs is expected to remain flat between 2015/16 and 2021/22, but again there are marked differences between population groups. Rates of absolute low income are expected to decrease slightly for pensioners and working-age adults without children. The rate for children is expected to increase by around 4% points, largely as a result of tax and benefit changes.
These projections were published before the release of the most recent poverty estimates for 2016/17.
Although this note discusses income-based measures of poverty, these have been criticised by government ministers since 2010 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. The Welfare Reform and Work Act 2016 removed four child poverty targets previously set out in the Child Poverty Act 2010, and instead introduced statutory ‘life chances’ indicators relating to children in England living in workless households and educational attainment at the end of Key Stage 4 (age 16).
A policy paper published by the Department for Work and Pensions in April 2017, Improving Lives: Helping Workless Families, set out seven other non-statutory indicator areas, relating to parental conflict; poor parental mental health; drug and alcohol dependency; problem debt; homelessness; early years; and youth employment.
Commons Briefing papers SN07096
Author: Feargal McGuinness
Topic: Incomes and poverty