The percentage of people living in households with an 'absolute' low income was 17 per cent (before housing costs) in 2011-12 – nearly a million higher than when the coalition government took office in 2010-11 – according to the latest official Households Below Average Income (HBAI) statistical report.
The HBAI report uses three main measures of low income/inequality:
Relative low income – where someone lives in household that receives less than 60 per cent of the average (median disposable) income in the year in question.
Absolute low income – where someone lives in household that receives less than 60 per cent of average (median disposable) income in 2010-11 adjusted since then by inflation.
Income inequality – measured by the Gini coefficient, on a scale from zero (perfect equality) to 1 (perfect inequality).
- Average incomes overall fell 3 per cent in real terms in 2011-12 compared with 2010-11. Incomes across the distribution fell as earnings and benefit income grew more slowly than the cost of living (measured by the RPI).
- The percentage of individuals living in households with a relative low income (before housing costs) was 16 per cent. This was unchanged from 2010-11 and continued the lowest level since the 1980s. Levels remained static mainly because real incomes for households near the bottom of the income distribution fell by roughly the same as those for households at the average.
- In 2011-12, the percentage of individuals living in households with an absolute low income was 17 per cent before housing costs. This was 1 percentage point, or 900,000 people, higher than in 2010-11. The main reason was that incomes across the distribution grew by less than RPI inflation in 2011-12, while the absolute low income threshold was uprated by RPI inflation.
- The proportion of children in households with an absolute low income before housing costs rose in 2011-12 by 300,000 or 2 percentage points – the first such increase since the early 1990s. The proportion of children in combined low relative income and material deprivation, and in severe (relative) poverty, continued to fall (though not by statistically significant amounts). The proportion living in households on a relative low income remained flat.
- Income inequality remained broadly unchanged between 2010-11 and 2011-12 (Gini coefficient 0.34), as incomes fell by broadly similar amounts across the entire distribution. Having fallen between 2009-10 and 2010-11, income inequality was now at levels last seen in the middle of the previous decade, having reached historic highs in recent years.
Responding to the figures, the Chair of the Social Mobility and Child Poverty Commission, Alan Milburn, commented: 'Today’s figures show that progress towards reducing child poverty is at risk of stalling... Action is needed to put a floor on the living standards of children in households on the lowest incomes. It would be wrong for the poorest in society to pay the biggest price for the country’s economic problems'.
Source: Households Below Average Income: An Analysis of the Income Distribution 1994/95–2011/12, Department for Work and Pensions
Links: Report | Statistical press release | DWP press release | Action for Children press release | Barnardos press release | Child Poverty Commission press release | Childrens Society press release | CPAG press release | DRUK press release | Family Action press release | FCT press release | IFS press release | JRF press release | Labour Party press release | NPI press release | Oxfam press release | Scottish Government press release | TUC press release | Unicef press release | BBC report (1) | BBC report (2) | Guardian report
See also: Jonathan Cribb, Andrew Hood, Robert Joyce and David Phillips, Living Standards, Poverty and Inequality in the UK: 2013, Report R81, Institute for Fiscal Studies