The Scottish Government

Title

Solidarity. Purpose Target.

Associated Target

To increase overall income and the proportion of income earned by the three lowest income deciles as a group by 2017.

Brief Description

The GES identifies the Government's desired characteristics of growth, which are set out as a set of golden rules - one of which is Solidarity (social equity). The Solidarity golden rule is to ensure that opportunities - and incentives - are provided for all to contribute to Scotland's sustainable economic growth. Over the time period there will be a reduction in income inequality.

The target is to increase the total sum of equivalised net income (adjusted for inflation) of all individuals living in private Scottish households, and increase the proportion of that income received by the lowest earning 30 per cent of the population.

Strategic Objective(s) to Which Indicator Relates

This indicator informs progress in relation to all five Strategic Objectives:

Wealthier and Fairer;
Healthier;
Smarter;
Safer and Stronger; and
Greener.

More Detailed Definitions

Definitions of Keywords

The income measure used is equivalised net disposable income before housing costs. This is income from all sources (including earnings, benefits, tax credits, pensions, and investments) after deductions for income tax, national insurance contributions, council tax, pension contributions and maintenance payments but before deductions for housing costs such as rent and/or mortgage payments. The data will be adjusted for inflation and presented in the most recent year's prices.

Equivalisation sums the income of all householders, adjusts it to reflect the composition of the household, and applies the resulting income to all householders. This is an adjustment made to household incomes that attempts to adjust for the fact that larger families require larger incomes to achieve similar standards of living.

Private Scottish Households refers to all households that are not communal establishments such as hostels, prisons or hospitals, for example.

Deciles are created by ranking all individuals in private households by their income, then splitting them into 10 evenly sized groups. The lowest three deciles are the 30 percent of the population with the lowest income. The total income of that group is divided by the total income of all deciles to arrive at the proportion of income earned by the lowest three deciles.

Evidence Source

The data source is the Family Resources Survey (Households Below Average Income dataset). The unit of measurement is the individual.

Baseline and Past Trends

Baseline: Total equivalised net income and the percentage received by the lowest 3 deciles in 2006/07.

For past trend information see Scotland Performs website:

http://www.scotland.gov.uk/About/scotPerforms/purposes/solidarity

Methodology for Data Source

The Family Resources Survey is a sample survey including approximately 4,500 households in Scotland. The responses of these households are weighted and grossed up to be representative of all private households in Scotland.

Incomes are equivalised (to take into account household composition) using the OECD equivalisation scale.

Once equivalised, weighted and grossed, the total income of every individual is summed to arrive at the Total Income figure.

The equivalised, weighted and grossed data are ranked and split into ten evenly sized groups (deciles). The total income of the lowest three are summed and divided by the Total Income of all deciles, to arrive at the proportion of income received by the lowest 3 deciles.

As the data are from a sample survey all estimates are subject to sampling error. Due to the complex sampling framework the confidence intervals are difficult to calculate and are not currently available.

Data Ownership and Quality Assurance

Households Below Average Income is a National Statistics dataset owned by Department for Work and Pensions.

Publication of Data

Data for 2006/07 and previous years are available on the Income and Poverty Statistics website ( http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty) and on Scotland Performs ( http://www.scotland.gov.uk/About/scotPerforms/purposes/solidarity).

Future figures will be published annually during March in "Scottish Households Below Average Income", on the Income and Poverty Statistics website and on Scotland Performs.

Methodology for Recent Change Arrow on Scotland

The evaluation is based on:

An increase in overall income of £5,000 million or more since last year, and the proportion of income earned by the lowest three deciles increasing by 1 percentage point or more from last year's figure suggests that the position is improving.

A decrease in overall income of £5,000 million or more since last year, and the proportion of income earned by the lowest three deciles decreasing by 1 percentage point from last year's figure or more suggests the position is worsening. Any other combination of changes suggests that the position is more likely to be maintaining than showing any change.