This item was published during the term of a previous administration that ended in April 2007
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Households below average income
27/03/2007
The Executive has today released estimates of the proportions and numbers of children, working age adults and pensioners living in low income households in Scotland in addition to figures relating to progress towards the new Department for Work and Pensions (DWP) / HM Treasury Child Poverty Targets (tiers 1 and 2) as well as new analysis on material deprivation and household debt. These estimates are derived from the Department for Work and Pensions' Households Below Average Income (HBAI) analysis, which is based on the Family Resources Survey (FRS).
Individuals in absolute low income:
- Absolute low income is a measure of whether those in the lowest income households are seeing their incomes rise in real terms.
- The current low income estimates for 2005-06 show that the number of individuals in absolute low income households before housing costs fell from 980,000 in 1998-99 to 550,000 in 2005-06. This is a decrease of 44 per cent
- The number of individuals in low income households after housing costs was 1,130,000 in 1998/99, falling to 600,000 in 2005-06. This is a decrease of 47 per cent
Individuals in relative low income:
- Relative low income is a measure of whether those in the lowest income households are keeping pace with the growth of incomes in the economy as a whole
- The number of individuals in relative low income households before housing costs fell by 11 per cent, from 980,000 in 1998-99 to 870,000 in 2005-06
- After housing costs numbers fell by 13 per cent, from 1,130,000 in 1998-99 to 980,000 in 2005-06
- Under all measures there has been little change since last year
Absolute low income:
Absolute low income is a measure of whether those in the lowest income households are seeing their incomes rise in real terms.
Children
- In 1998-99 the number of children in low income households before housing costs was 300,000 (28 per cent of all children). This had fallen by 57 per cent to 130,000 children in 2005-06 (12 per cent of all children). (note this is tier one of the new child poverty target - see below)
- After housing costs the number of children in low income households fell by 58 per cent, from 330,000 in 1998-99 (31 per cent of all children) to 140,000 in 2005-06 (14 per cent of all children)
Working age adults (WAAs)
- In 1998-99 the number of working age adults in low income households before housing costs was 450,000 (15 per cent of all WAAs). This had fallen by 29 per cent to 320,000 in 2005-06 (11 per cent of all WAAs)
- After housing costs the number of working aged adults in low income households fell by 30percent, from 570,000 in 1998-99 (19 per cent of all WAAs) to 400,000 in 2005-06 (13 per cent of all WAAs)
Pensioners
- In 1998-99 the number of pensioners in low income households before housing costs was 230,000 (26 per cent of all pensioners). This had fallen by 57 per cent to 100,000 in 2005-06 (11 per cent of all pensioners)
- After housing costs the number of pensioners in low income households fell by 74 per cent, from 230,000 in 1998-99 (27 per cent of all pensioners) to 60,000 in 2005-06 (6 per cent of all pensioners)
- There has been little change in the estimated number of children, working aged adults and pensioners in absolute low income poverty since last year
RELATIVE LOW INCOME
Relative low income is a measure of whether those in the lowest income households are keeping pace with the growth of incomes in the economy as a whole.
Children
- The number of children in relative low income households before housing costs has fallen by 30percent, from 300,000 (28 per cent of all children) in 1998-99 to 210,000 in 2005-06 (21 per cent of all children). (note this is tier two of the new child poverty target)
- After housing costs the number has fallen by 24 per cent from 330,000 (31 per cent of all children) in 1998-99 to 250,000 in 2005-06 (24 per cent of all children)
Working age adults (WAAs)
- The number of working age adults in relative low income households before housing costs has increased slightly over the period, from 450,000 in 1998-99 to 470,000 in 2005-06 (15 per cent of all WAAs)
- After housing costs the number as also increased slightly over the period, from 570,000 in 1998-99 to 590,000 in 2005-06 (19 per cent of all WAAs)
- Since last year there has been an estimated increase of 30,000 working aged adults in relative low income poverty after housing costs
Pensioners
- The number of pensioners in relative low income households before housing costs has fallen by 22 per cent, from 230,000 (26 per cent of pensioners) in 1998/99 to 180,000 in 2005-06 (20 per cent of all pensioners)
- After housing costs the number has fallen by 35percent from 230,000 (27 per cent of pensioners) in 1998-99 to 150,000 in 2005-06 (16 per cent of all pensioners)
- There has been little change in the estimated number of children and pensioners in relative low income poverty since last year
THE NEW CHILD POVERTY MEASURE
A new child poverty measure has been developed by the DWP in response to the Prime Minister's 1999 announcement that the UK Government is committed to eradicating child poverty within in a generation. The Scottish Executive share's this vision.
In April 2002, the DWP launched the 'Measuring Child Poverty Consultation' in order to develop a long term measure of child poverty.
The new measure forms the basis of a joint DWP/HM Treasury child poverty target of halving child poverty by 2010 and eradicating child poverty by 2020.
The measure consists of three tiers:
Tier 1, Absolute low income: Number and proportion of children in households whose equivalised income before housing costs is below 60percent of inflation adjusted median income in 1998/99. This is a measure of whether the poorest families are seeing their incomes rise in real terms.
Tier 2, Relative low income: Number and proportion of children in households whose equivalised income before housing costs is below 60percent of median income in the same year. This is a measure of whether the poorest families are keeping pace with the growth of incomes in the economy as a whole.
Tier 3, Material deprivation and low income combined: Number and proportion of children that are both materially deprived and are in households whose equivalised income before housing costs is less than 70 per cent of the median in the current year. This is to provide a wider measure of children's living standards.
In order to estimate material deprivation under tier three, 21 new questions have been added to the Family Resources Survey. The exact methodology for combining the results from these questions and calculating the third tier has not yet been published by the DWP / HM Treasury. For more information and summary results for each of the material deprivation questions please see 'Material deprivation analysis'.
To allow better international comparisons, the new child poverty measure uses the modified OECD equivalisation scale and, to reflect the year in which the commitment to eradicate child poverty was made, the base line year for the absolute measure (tier 1) is 1998-99. For consistency, from this year onwards all low income poverty estimates are published using this methodology. To allow comparisons to be made, detailed low income tables showing low income poverty estimates under the previous methodology (McClements equivalence scale and 1996-97 base year) can be found in the publication.
Results for tiers 1 and 2
Tier 1 represents children in absolute low income and is a measure of whether the poorest families are seeing their incomes rise in real terms.
- In Scotland, the proportion of children in tier 1 is down from 28 per cent (300,000) in 1998-99 to 12 per cent (130,000) in 2005-06. This is a decrease of 57 per cent.
- The number of children in tier 1 has not changed since last year.
Tier 2 represents children in relative low income and is a measure of whether the poorest families are keeping pace with the growth of incomes in the economy as a whole.
- In Scotland the proportion of children in tier 2 is down from 28 per cent (300,000) in 1998-99 to 21 per cent (210,000) in 2005-06. This is a decrease of 30 per cent
- The number of children in tier 2 has not changed since last year
NEW HOUSEHOLD DEBT AND MATERIAL DEPRIVATION ANALYSIS
A new suite of questions on household debt and material deprivation have been added to the Family Resources Survey. The questions are used to help formulate an indicator of deprivation and have been taken from three existing surveys (Families and Children Survey (FACS), British Household Panel Survey (BHPS) and Poverty and Social Exclusion Survey (PSE)).
The new questions examine a large number of items that can be associated with standard of living, hardship is defined by respondents': -
- Ability to afford a number of items that most other people agree families ought to have
- Their other 'unmet needs'
- Whether they are managing their money and staying clear of problem debts - that is debts they cannot repay and are 'getting behind' with the repayments
There is recognition that no single measure is adequate, but taken together they add up to sensitive measure of family material well-being or hardship.
A full list of questions asked are provided at the end.
Household Debt
Please note that estimates are provided for children and working age adults only, as the vast majority of pensioners reported to having no bills in arrears.
The before housing costs figures show:
- 84 per cent of children live in households with no bills in arrears
- 91 per cent of working age adults live in households with no bills in arrears
- 30,000, or 11 per cent of children living in the lowest income households, live in households that have three or more household bills in arrears, this compares to less than 5,000, or 1 per cent of children living in the highest income households
- 30,000, or 6 per cent of adults living in the lowest income households, live in households that have three or more household bills in arrears, this compares to less than 5,000, or less than half a percent of adults living in the highest income households
- 20,000, or 11 per cent of children living in households that are in official low income poverty (below 60percent of median), live in households that have three or more household bills in arrears
- 30,000, or 6 per cent of adults living in households that are in official low income poverty (below 60 per cent of median), live in households that have three or more household bills in arrears
Material deprivation analysis
The new material deprivation questions will be used calculate the third tier of the new DWP / HM Treasury Child Poverty Target. This new suite of questions was arrived at through analysis of existing UK deprivation data to identify a set of questions which best discriminates between poor and non-poor families .
Although the material deprivation questions have been added to the FRS, the exact methodology for calculating the third tier has not yet been published by the DWP / HM Treasury. However summary results for each of the material deprivation questions are provided.
Respondents were asked:
- If they had an item
- Wanted but couldn't afford an item
- Or if they didn't want or need an item
Please note that all the figures relate to the numbers of children in the household regardless of whether the questions were asked of the children or of the adults of the household.
From the child specific questions:
- From the first question row of the table, 25 per cent or 60,000 children living in the lowest income households do not have outdoor space to play safely, this compares to 7 per cent or 10,000 children in the highest income households
- 56 per cent or 130,000 children living in the lowest income households, live in households that would like, but cannot afford to go on at least one weeks holiday a year away from home, this compares to 3 per cent or less than 5,000 children in the highest income households
From the adult specific questions:
- 40 per cent or 90,000 children living in the lowest income households, live in households that would like, but cannot afford home contents insurance, this compares to 1percent or less than 5,000 children in the highest income households
- 67 per cent or 160,000 children living in the lowest income households, live in households that would like, but cannot afford to make regular savings of £10 month or more, this compares to 2percent or less than 5,000 children in the highest income households
- 11 per cent or 30,000 children living in the lowest income households, live in households that cannot afford to keep their homes warm during the winter, this compares to 2percent or less than 5,000 children in the highest income households