Social Justice - a Scotland where everyone matters: Indicators of Progress 2003

Social Justice
a Scotland where everyone matters
Indicators of Progress 2003

OLDER PEOPLE

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

This milestone uses two measures - relative low income and absolute low income. A third measure 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 for producing headline indicators of people in low-income households is households with income below 60% of the GB median net equivalised income. 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 19f to 19i.

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 Annex A "Measures of Low Income Amongst Scottish Households".

(a) 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 proportion in low income has fallen by almost a third since 1996/97. The current proportion for 2001/02 is 20 per cent compared to 29 per cent in 1996/97. This should be seen in the face of a substantial increase in median income. Since 1996/97, all indicators in Tables 19f and 19g show the proportion of pensioners in relative low income has fallen.

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

chart

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.

The proportion of pensioners living in households with incomes below 50% of the median after housing costs has fallen only slightly - from 11 per cent to 8 per cent.

As incomes are equivalised to calculate the low income thresholds, the cash value of the threshold differs according to the type of household. A person living alone is counted in relative low income under the 60% median low income measure if their income is less than 91 per week, while a couple with no children would be counted in low income if their income was less than 165 per week.

Looking at the relative and absolute measures, the proportions of pensioners in low income after housing costs compared to before housing costs are similar. This suggests that housing costs take up a similar proportion of income (perhaps very little) for those on low and high incomes.

There is evidence that the proportion of pensioners receiving non-state pension has increased in recent years, from 50 per cent in 1996/97 to 55 per cent in 2001/02.

(b) Pensioners in absolute low income households

The headline absolute measure of the proportion 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 by two thirds since 1996/97 - from 29 to 9 per cent.

Tables 19h and 19i show a reduction, across all measures, of pensioners in absolute low income since 1996/97.

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

chart

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.

Gender Analysis

Charts 19c and 19d show the proportion of pensioners in relative and absolute income poverty by gender. The analysis for 2001/02 suggests that men and women are equally likely to live in relatively low income households (analysis for the previous eight years had shown that there were (marginally) more women than men in relatively low income households.

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, either 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. It should be noted that the main purpose of charts 19c and 19d 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 19c: Percentage of pensioners living in relatively low income households, breakdown by gender

chart

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

chart

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.

(c) Persistent Low Income

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 19e illustrates the situation for pensioners in households in Scotland which were interviewed in the three years 1999, 2000 and 2001, based on the relative household income before housing costs for that year. 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 19f to 19i. The BHPS figures are included to provide an indication of movements in and out of income poverty.

Also note that the sample size for pensioners in the BHPS is still very small and so care should be taken in interpreting these results.

The broad conclusions from this analysis are:

Sixty-one per cent of pensioners were in households which remained outwith income poverty in all of the three years 1999, 2000 and 2001, while 15 per cent lived in households which were in income poverty in all three years.
Twenty per cent of pensioners lived in households which were in income poverty in at least two out of the last three years.

Table 19e: Pensioners in Low Income Households in 1999, 2000 and 2001

		Proportion of pensioners
		Not in low income households in either 1999 or 2000	In low income households in 1999 but not 2000	In low income households in 2000 but not 1999	In low income households in 2000 and 1999
Proportion of pensioners	Not in low income households in 2001	61	4	6	5
Proportion of pensioners	In low income households in 2001	9	0	0	15

		Percentage of pensioners
Proportion of pensioners	In Low Income for all of the last 3 years	15
	In low income households in at least two of the last three years	20
	Not in low income households in at least two of the last three years	80
	Not in Low Income at all in the last 3 years	61

Source: British Household Panel Survey

Background data

Table 19f: 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)

Year	Below 50 % of the median				Below 60 % of the median
	Before housing costs		After housing costs		Before housing costs		After housing costs
	%	No. ('000s)	%	No. ('000s)	%	No. ('000s)	%	No. ('000s)
1994/95	22*	190*	28*	240	42*	370*	45*	390
1995/96	23	200	28	240*	44*	380*	43*	370*
1996/97	25*	220*	30*	250*	45*	380*	46*	390*
1997/98	20	170*	28	240*	39	340*	41	360*
1998/99	24	210*	28*	250*	42*	370*	42*	370*
1999/00	24	210*	30	260*	41	360*	41	360*
2000/01	23	200*	27*	240*	40	350*	39	340*
2001/02	20	180	24	210	38	340	38	340

Source: Households Below Average Income : Department for Work and Pensions
Note: * - Revised (see Data Availability and References section below)

Table 19g: 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)

Year

Below 50 % of the median

Below 60 % of the median

Below 70 % of the median

Before housing costs

After housing costs

Before housing costs

After housing costs

Before housing costs

After housing costs

No. ('000s)

1994/95

190*

27*

230

38*

340*

43*

380*

1995/96

90*

200*

220*

350*

40*

350*

1996/97

11*

90*

11*

90*

25*

210*

29*

250*

42*

360*

370*

1997/98

90*

170*

220*

290*

320*

1998/99

80*

90*

180*

26*

230*

37*

320*

38*

340*

1999/00

12*

100*

120*

200*

230*

330*

340*

2000/01

70*

11*

90*

180*

210*

300*

35*

310*

2001/02

160

170

290

310

Source: Households Below Average Income: Department for Work and Pensions
Note: * - Revised (see Data Availability and References section below)

Table 19h: 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)

Year	Below 50 % of the mean				Below 60 % of the mean
	Before housing costs		After housing costs		Before housing costs		After housing costs
	%	No. ('000s)	%	No. ('000s)	%	No. ('000s)	%	No. ('000s)
1994/95	25*	220	32*	280	46*	410*	47*	410*
1995/96	28	240*	33	280*	46*	400*	47	410*
1996/97	25*	220*	30*	250*	45*	380*	46*	390*
1997/98	19	160	25	220*	36	310*	39*	340*
1998/99	18	160*	23*	200	37*	330*	38*	340*
1999/00	19	170*	21	190*	34	300*	37	330*
2000/01	14	120*	15*	130*	29	250*	29	260*
2001/02	10	90	9	80	23	200	23	200

Source: Households Below Average Income : Department for Work and Pensions
Note: * - Revised (see Data Availability and References section below)

Table 19i: 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)

Year

Below 50 % of the median

Below 60 % of the median

Below 70 % of the median

Before housing costs

After housing costs

Before housing costs

After housing costs

Before housing costs

After housing costs

No. ('000s)

1994/95

100*

12*

110*

25*

220*

32*

280*

42*

370*

45*

400*

1995/96

100

12*

100*

240*

280*

44*

380*

1996/97

11*

90*

11*

90*

25*

210*

29*

250*

42*

360*

370*

1997/98

10*

160*

220*

280*

320*

1998/99

70*

150*

200*

34*

300*

35*

310*

1999/00

90*

10*

90*

160*

180*

31*

270*

34*

300*

2000/01

50*

14*

120*

130*

220*

240*

2001/02

170

18*

160

Source: Households Below Average Income: Department for Work and Pensions
Note: * - Revised (see Data Availability and References section below)

Availability of data and References

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. Through Scottish Executive funding, 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.

Due to a minor change in the DWP methodology for deriving working-age adult and pensioner results, there have been minor revisions to previous years' data in last year's SJAR for these groups (asterisks denote the changes). The figures in this report define pensioners as all those adults above state retirement age. This is in contrast to previous publications in which pensioners were defined as all adults living in families where the head of the family was over state pension age (which would exclude some pensioners living in households headed by a non-pensioner, and would include some working age adults headed living in a household headed be a pensioner). Some figures for previous years have, therefore, changed slightly from those published in previous reports.

For a detailed description of the methodology used to calculate these figures please refer to:

Department for Work and Pensions: Households Below Average Income
http://www.dwp.gov.uk/asd/hbai/hbai2001/contents.asp

HOUSEHOLDS BELOW AVERAGE INCOME (HBAI) ANALYSIS 2001/02 - FIGURES FOR SCOTLAND USING THE RANGE OF LOW INCOME THRESHOLDS, 1994/95 - 2001/02
www.scotland.gov.uk/library4/FCSD/OCEA/00016688.aspx

Low Income Dynamics 1991 to 2001
http://www.dwp.gov.uk/asd/hbai.asp.

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