Press release

Statistics release: households below average incomes

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The number of people in relative poverty has fallen by 100,000 over the past year.

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The number of people in relative poverty has fallen by 100,000 over the past year, new annual statistics (Household Below Average Income (HBAI)) out today (1 July 2014) show.

Despite the recession and experts’ predictions to the contrary, the proportion of all individuals in relative poverty stayed statistically level, while in-work poverty fell with 200,000 fewer working age adults in families where someone works in poverty.

The percentage of individuals in relative poverty is at the lowest level since the 1980s, while inequality remained flat since falling from an all-time record seen in 2009/10.

Median real incomes remained broadly unchanged between 2011/12 and 2012/13 (up £2 to £440 under CPI) and the percentage of those in absolute low income is still near historic lows.

Relative poverty has fallen in the UK since 2009/10, despite rising across Europe, including in France and Germany.

Under separate statistics out today, pensioner incomes have also risen in real terms for the first time in 3 years.

Work and Pensions Secretary, Iain Duncan Smith said:

Despite the deepest debt-fuelled recession in living memory when £112 billion was wiped off the economy, we have protected the most vulnerable families from falling behind with 300,000 fewer children in poverty since 2010.

Today’s figures underline the need to stick to the government’s long-term economic plan of restoring a strong economy that creates jobs, and a tax and welfare system that helps people into work and makes work pay.

Despite the tough economic climate, employment has increased by nearly 1.7 million since 2010 and there are now record numbers of people in work and a record rate of women in work. These employment increases are not reflected in the HBAI statistics, which is likely to be due to uncertainty from being based on a sample survey.

Recent changes in the definition of disability means that this set of figures are not directly comparable with previous HBAI statistical releases, and shouldn’t be compared with previous years.

The government remains committed to making work pay. Welfare reforms with the introduction of the Universal Credit will improve the lives of some of the poorest families in our communities, making 3 million households better off and lifting up to 300,000 children out of poverty.

These figures do not take into account the further reductions in poverty from the expected increase of 300,000 additional people in work due to Universal Credit.

The government remains committed to the goal of ending child poverty in the UK by 2020. We want to break the cycle of disadvantage based on the principle that where someone starts in life should not determine where they end up. With a child in a workless family around 3 times as likely to be in relative poverty than a family where at least 1 parent works, work is the best route out of poverty.

The government recently published the Child Poverty Strategy which sets out what is being done to tackle the root causes of child poverty such as worklessness, educational failure and family breakdown.

In targeting education as a route out of poverty, we are giving disadvantaged pupils an additional £14,000 throughout their school career – a £2.5 billion commitment this year through the Pupil Premium. We are providing more nursery and pre-school provision, this includes 260,000 disadvantaged 2 year-olds receiving 15 hours a week at nursery as well as 20% more hours of funded pre-school for all 3 and 4 year olds

Since 2010 the number of children aged under 16 in workless households has fallen by 290,000 and poor children are also doing better than ever at school, with the proportion of children on free school meals getting 5 good GCSEs including English and maths increasing from 31% in 2010 to 38 per cent in 2013.

The government has taken action to support families, including the largest ever increases in the income tax personal allowance, funding successive council tax freezes and increasing the National Minimum Wage. With the economy growing we have just seen the largest rise in employment for over 40 years and unemployment is falling.

More information

Read the latest Households below average income (HBAI): 1994/95 to 2012/13 statistics

Relative poverty is the most commonly used poverty line – 60% of median income.

Absolute poverty gives the number of individuals with income below 60% of median income in 2010/11, adjusted for inflation.

HBAI figures are based on a survey, and therefore subject to uncertainty – the falls noted above are not considered statistically significant.

The Consumer Price Index (CPI) remains a better measure of inflation than the Retail Price Index (RPI). The RPI is no longer a National Statistic, and is thought to overstate the effect of inflation.

Median incomes used to calculate relative poverty

Weekly median income (before housing costs) in 2012/13 compared to 2011/12

For a couple with no children saw no change at £440 a week.

For a single person with no children saw no change at £295 a week.

For a couple with two children fell £1 to £673 a week.

For a single person with two children saw no change at £528 a week.

Weekly poverty threshold (before housing costs) in 2012/13 compared to 2011/12

For a couple with no children saw no change at £264 a week.

For a single person with no children saw no change at £177 a week.

For a couple with two children saw no change at £404 a week.

For a single person with two children saw no change at £317 a week.

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Published 1 July 2014