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2 Low-income indicators (Great Britain):
- a) a reduction in the proportion of children living in households with relative low incomes;
- b) a reduction in the proportion of children living in households with low incomes in an absolute sense; and
- c) a reduction in the proportion of children living in households with persistent low incomes.
Baseline and trends: Baseline year –1998/99. Data for the three indicators are presented in the chart and tables below, though information for the persistent low-income indicator is only shown in the table. While the table aims to provide a comprehensive picture of progress by including data for a range of low-income thresholds, the chart and commentary focus on the 60 per cent of median income threshold for the relative and absolute indicators.
Percentage of children living in low-income households (Great Britain)
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The proportion of children living in households with relative low incomes fell between 1998/99 and 2005/06, from 24 per cent to 20 per cent on the before housing costs measure and from 33 per cent to 29 per cent on the after housing costs measure. The proportion of children living in households with absolute low incomes showed a large fall from 24 per cent to 12 per cent on the before housing costs measure and from 33 per cent to 17 per cent on the after housing costs measure. Seventeen per cent of children lived in a household with a low income in at least three out of four years, on the before housing costs measure, at the baseline (1997–2000) which fell to 11 per cent in 2002–05.
Twenty-two per cent of children lived in a household with a low income in at least three out of four years, on the after housing costs measure, at the baseline (1997-2000) which fell to 17 per cent in 2002–05.
| Relative low income | Absolute low income | ||||||
|---|---|---|---|---|---|---|---|
| Low-income threshold | 50% of median* |
60% of median |
70% of median |
50% of median* |
60% of median |
70% of median |
|
Baseline
|
1996/97 | 12% | 25% | 35% | 14% | 27% | 37% |
| 1997/98 | 13% | 25% | 35% | 14% | 26% | 36% | |
| 1998/99 | 13% | 24% | 35% | 13% | 24% | 35% | |
| 1999/2000 | 12% | 23% | 35% | 10% | 21% | 33% | |
| 2000/01 | 11% | 21% | 33% | 9% | 17% | 29% | |
| 2001/02 | 10% | 21% | 33% | 7% | 14% | 25% | |
| 2002/03 | 10% | 20% | 32% | 7% | 13% | 22% | |
| 2003/04 | 11% | 20% | 32% | 7% | 13% | 23% | |
| 2004/05 | 10% | 19% | 32% | 7% | 12% | 21% | |
| 2005/06 | 11% | 20% | 31% | 7% | 12% | 21% | |
Baseline
|
1996/97 | 23% | 33% | 41% | 25% | 35% | 43% |
| 1997/98 | 23% | 32% | 40% | 24% | 33% | 41% | |
| 1998/99 | 23% | 33% | 40% | 23% | 33% | 40% | |
| 1999/2000 | 22% | 32% | 40% | 19% | 30% | 38% | |
| 2000/01 | 20% | 30% | 39% | 15% | 25% | 34% | |
| 2001/02 | 19% | 30% | 38% | 12% | 22% | 31% | |
| 2002/03 | 19% | 28% | 37% | 11% | 19% | 27% | |
| 2003/04 | 19% | 28% | 37% | 11% | 19% | 27% | |
| 2004/05 | 17% | 27% | 37% | 10% | 17% | 25% | |
| 2005/06 | 19% | 29% | 38% | 10% | 17% | 25% | |
|
* Households reporting the lowest incomes may not have the lowest living standards. The bottom 10 per cent of the income distribution should not, therefore, be interpreted as having the bottom 10 per cent of living standards. This is a particular issue for lower thresholds, such as 50 per cent of median. Other higher thresholds are less affected by this. Changes to Households Below Average Income data before 2003/04 were due to changes to the Family Resources Survey grossing regime, either through the method used or taking on board new, post-census population information. Further details are available at: www.dwp.gov.uk/mediacentre/pressreleases/2005/feb/iad-170205-frs.pdf. More recent changes since then are due to methodolgical improvements. |
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| 1991-94 | 1992-95 | 1993-96 | 1994-97 | 1995-98 | 1996-99 | 1997-2000 | 1998-2001 | 1999-2002 | 2000-03 | 2001-04 | 2002-05 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Before housing costs | Below 60% of median | 20% | 18% | 17% | 17% | 17% | 16% | 17% | 17% | 17% | 15% | 13% | 11% |
| Below 70% of median | 29% | 29% | 29% | 28% | 28% | 27% | 27% | 26% | 27% | 26% | 24% | 22% | |
| After housing costs | Below 60% of median | 25% | 23% | 23% | 24% | 24% | 23% | 22% | 22% | 21% | 19% | 17% | 17% |
| Below 70% of median | 33% | 33% | 32% | 32% | 31% | 30% | 30% | 30% | 30% | 30% | 28% | 26% | |
Note: Some of the figures have seen small revisions since the last Households Below Average Income (2004/05) report. This is due to changes to the base dataset made by the data suppliers of the British Household Panel Survey. Changes to Households Below Average Income data before 2003/04 were due to changes to the Family Resources Survey grossing regime, either through the method used or taking on board new, post-census population information. Further details are available at: www.dwp.gov.uk/mediacentre/pressreleases/2005/feb/iad-170205-frs.pdf. More recent changes since then are due to methodolgical improvements. |
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Definition: A child is an individual aged under 16, or an unmarried 16 – 18-year-old on a course up to and including A level standard (or up to and including Highers in Scotland).
Low-income thresholds are 50, 60 and 70 per cent of median household income (before and after housing costs):
a) relative low income – median income moving each year;
b) absolute low income – median income fixed at 1998/99 levels in real terms; and
c) persistent low incomes – low incomes in three out of four years (60 and 70 per cent of median only).
Data for thresholds of median income and full definitions are available in Appendix 3 Households Below Average Income 1994/95–2004/05. Methodological improvements have led to some amendments to the data for persistent low income, though the trend has not changed.
Data source: Households Below Average Income information based on Family Resources Survey and British Household Panel Study data.
Further information
The percentage of children living in low income households in Great Britain for various breakdowns of society, including by region and ethnicity, can be found in the latest Households Below Average Income 1994/5-2005/06 report at: www.dwp.gov.uk/asd/hbai/hbai2006/pdf_files/chapters/chapter_4_hbai07.pdf 
The Persistent low income series is published in the report Low Income Dynamics Paper, 1991-2005: www.dwp.gov.uk/asd/hbai/low_income/Low_income-dynamics_1991-2005.pdf
A further breakdown of persistent low-income results for children is located in Tables 8.2 BHC (before housing costs) and 8.2 AHC (after housing costs) on pages 52 and 53.
Research Evidence
“The economic position of large families”
www.dwp.gov.uk/asd/asd5/rports2005-2006/rrep358.pdf
"Families with children in Britain: Findings from the 2004 Families and Children Study (FACS)”
www.dwp.gov.uk/asd/asd5/rports2005-2006/rrep340.pdf
"Outcomes for children of poverty”
www.dwp.gov.uk/asd/asd5/rrep158.asp
“The role of work in low income families with children – a longitudinal qualitative study”
www.dwp.gov.uk/asd/asd5/rports2005-2006/rrep245.pdf
“The dynamics of deprivation: the relationship between income and material deprivation over time”
www.dwp.gov.uk/asd/asd5/rports2003-2004/rrep219.asp
“Low income families and household spending”
www.dwp.gov.uk/asd/asd5/rrep192.asp
Further Breaks
Rural Urban analysis
Analysis: Local Authority classification - England 1
Baseline data: 1996/97 Estimates are based on a three year average.2
Current data: 2004/05 Estimates are based on a three year average.3
Relative Low Income:4
- The 2004/05 data shows a reduction in the percentage of children living below 60% GB median relative low income measure for all Rural and Urban areas since 1996/97.
- The most significant reductions have been in Rural R50, (from 18% to 14%) Significant Rural (20% to 16%) and Other Urban (23% to 19%) measured under Before Housing Costs. 5
- For the same period the After Housing Costs measure has shown a larger percentage point reduction; Large Urban (from 34% to 28%) Other Urban (33% to 27%) and Rural R50 (25% to 20%).
Absolute Low Income:
-
Larger percentage reductions are recorded for Urban than Rural measured under Absolute Low Incomes.
-
Before Housing Costs, the largest percentage point change has been in Other Urban (from 25% to 10%), and two rural categories have reduced greatly with 12 percentage point reductions, Significant Rural (to 9%) and Rural R50 (8%).
-
After Housing Costs reflects a considerable reduction for Urban and Rural areas of this reporting period. Of particular interest 19 percentage point change for Other Urban (to 16%), Large Urban with 18 percentage point change (17%) and a 17 percentage point reductions for Rural R50 (11%).
More information at: http://www.defra.gov.uk/rural/ruralstats/ofa.htm (this link will take you to the Department for Environment, Food and Rural Affairs website)