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Indicators of progress: Definitions, data, baseline and trends information

Milestone 19: Reducing the proportion of older people with low incomes

Indicators

This milestone is measured by two main indicators - relative low income and absolute low income. A third indicator on persistent low income is also being developed and some preliminary results are included at the end of this section.

Relative and absolute low income can be measured using a number of different thresholds. The accepted GB and European Standard ¹ for producing headline indicators of people in low-income households is households with income below 60% of the GB median net equivalised income ². It is also important to consider additional indicators based on a range of thresholds of mean and median income to gain a fuller picture. A full range of indicators is portrayed in tables 19c to 19f.

Relative low income compares income against the mean or median in the same year. Absolute low income compares income against the mean or median level in 1996/97 in real terms - uprated using the Retail Prices Index. Figures include the self-employed. Relative and absolute thresholds are discussed in more detail in the article "Measures of Low Income Amongst Scottish Households".

Availability of data

Data are obtained from the Households Below Average Income (HBAI) analysis. This analysis is based on the Family Resources Survey, run by the Department for Work and Pensions (DWP), which surveys around 2,200 Scottish households each year. The size of the Scottish sample is being doubled as from survey year 2002/03, a measure which will help to reduce the level of sampling variation in the data.

Information is available at Scotland level and can be split by gender. Owing to the current sample size further information on pensioners with low incomes cannot be made available at sub-Scotland level, or by age or by ethnicity.

The HBAI analysis uses equivalisation factors to take account of variations in the size and composition of the households in which individuals live. As the equivalisation scale used in HBAI does not take account of the additional costs associated with having a disabled person in the household, any breakdown by disability could be misleading.

Reports for previous years have only contained figures for the proportion and not the number of pensioners in low income households - this was as a result of methodological problems with the HBAI data. DWP have now revised their methodology and we are able to provide estimates of numbers of pensioners in low income households as well as proportions. As a result of the change in methodology, some of the figures for proportions in Tables 19c to 19f differ slightly from those published in the last report. These differences are, however, very small and do not alter any of the general trends. As part of an ongoing programme to improve data quality, there will be further revisions to this data series when full results from the 2001 Census become available.

Pensioners in relatively low income households

Looking at the headline measure of pensioners in households with income below 60% of the median GB household income after housing costs, the figure of 24 per cent for 2000/01 shows a fall of 2 percentage points on 1999/00 and 4 percentage points on the baseline figure for 1996/97. Since 1996/97, the trend in the percentage of pensioners living in relatively low income households is downwards although there have been some small fluctuations in the intervening years.

Considering the additional information available in Tables 19c and 19d, the conclusion is that, since the baseline year of 1996/97, the percentage of pensioners living in relatively low income households has fallen for 9 of the 10 measures.

Chart 19a: Proportion of pensioners living in relatively low income households

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as pensioners in households with income below 60% GB median after housing costs.

Pensioners in absolute low income households

The headline measure of pensioners in households with income below 60% of the median GB household income after housing costs suggests that the percentage living in absolute low income households has fallen sharply since the mid 1990s.

Chart 19b: Proportion of pensioners living in absolute low income households

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as pensioners in households with income below 60% GB median after housing costs.

Looking at the additional information in Tables 19e and 19f, across all measures there has been a noticeable reduction since the baseline year of 1996/97 in the percentage of pensioners living in absolute low income households.

Broad Conclusions

The proportion of pensioners living in households with low income in absolute terms has fallen significantly - suggesting an improvement in general living standards. When measured in relative terms the proportion has fluctuated slightly in the years since 1996/97 but overall still shows a downward trend.

Table 19c: Proportion and number of pensioners living in households below 50% and 60% of the mean income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the relevant year's GB mean income (Relative measure)

Source: Households Below Average Income : Department for Work and Pensions

Table 19d: Proportion and number of pensioners living in households below 50%, 60% and 70% of the median income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the relevant year's GB median income (Relative measure)

Source: Households Below Average Income: Department for Work and Pensions

Table 19e: Proportion and number of pensioners living in households below 50% and 60% of the mean income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the 1996/97 GB mean incomes in real terms (Absolute measure)

Source: Households Below Average Income : Department for Work and Pensions

Table 19f: Proportion and number of pensioners living in households below 50%, 60% and 70% of the median income thresholds in Scotland over the period 1994/95 to 2000/01 relative to the 1996/97 GB median incomes in real terms (Absolute measure)

Source: Households Below Average Income: Department for Work and Pensions

Gender Analysis

Charts 19g and 19h show how the proportion of pensioners in income poverty varies by gender. It should be noted that it is the income levels of the household and not the individual which classes an individual as living in income poverty. For example, in a household with 2 pensioners, it will either be the case that both pensioners will be in income poverty or neither of them will be. These results are therefore influenced by single pensioner households or households where all adults are of the same gender.

Charts 19g and 19h show that, generally, female pensioners are more likely to live in households in income poverty than male pensioners. It should be noted that the main purpose of charts 19g and 19h is to give an indication of the differences between men and women. They are not designed to accurately measure changes over time - the information is based on sample sizes which are particularly small for pensioners and this may well account for much of the year-on-year fluctuations in the figures.

Chart 19g: Percentage of pensioners living in relatively low income households, breakdown by gender

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as pensioners in households with income below 60% GB median after housing costs.

Chart 19h: Percentage of pensioners living in absolute low income households, breakdown by gender

Source: Households Below Average Income: Department for Work and Pensions
Note : Defined as pensioners in households with income below 60% GB median after housing costs.

Persistent low incomes

Data on the proportion of persons remaining in poverty over a period of time has been obtained from the British Household Panel Survey (BHPS). This annual survey is longitudinal and therefore enables comparison to be made between a person's or household's income position at different points in time. Although the BHPS has been running since 1991, it was only in 1999 that the Scottish sample was boosted to enable more robust Scottish estimates to be produced.

Information published by the Department for Work and Pensions on persistent low incomes gives the proportion who have been in low income households in at least 3 of the previous 4 years. It is our intention, once 4 years worth of boosted Scottish data is available, to replicate this information for Scotland.

Table 19i illustrates the situation for pensioners in households in Scotland which were interviewed in both 1999 and 2000. Please note that, as this information comes from a separate source, the results are not directly comparable with those produced from the HBAI analysis in tables 19c to 19f. The BHPS figures are included to provide an indication of movements in and out of income poverty.

The broad conclusions from Table 19i are:

• Almost 70 percent of pensioners were in households which remained outwith income poverty in both 1999 and 2000, while only 7 per cent lived in households which were in income poverty in both years.
• The income poverty status of just under a quarter of pensioners changed over the course of a one year period.

Table 19i : Pensioners in Low Income Households ³ in 1999 and 2000

Source: British Household Panel Survey
Notes: Low income households are defined using the 60% median before housing costs measure.

Footnotes

1 Recommendation of the Statistical Programme Committee, November 1998.

2 For a detailed description of the methodology used to calculate these figures please refer to the following website: http://www.dss.gov.uk/asd/hbai/hbai2001/contents.html.

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