Cost of Living Support: Impact on Households Below Average Income FYE 2023 low-income statistics
Updated 15 April 2024
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This publication is available at https://www.gov.uk/government/publications/cost-of-living-support-impact-on-households-below-average-income-fye-2023-low-income-statistics/cost-of-living-support-impact-on-households-below-average-income-fye-2023-low-income-statistics
Published 21 March 2024
Introduction
During financial year ending(FYE) 2023, the UK government announced and implemented additional support to families with several cost of living support schemes, depending on people’s circumstances. This was in response to heightened cost of living (CoL) pressures driven by high inflation, linked to global supply chain pressures and the war in Ukraine.
This support is included in the households below average income (HBAI) estimates of household income for FYE 2023, with receipt of payments imputed based on respondent characteristics. This publication explores the impact of removing the imputation of these payments on the estimates of individuals in low income households published in the HBAI FYE 2023 Accredited Official Statistics.
The analysis will look at the impact of the cost of living support schemes on the overall population as well as children, working-age adults, pensioners, and individuals in families where someone has a disability. It looks at how many were brought below the income-based poverty thresholds (absolute and relative poverty both before and after housing costs) as well as the impact on the poverty rates for each group.
Methodology
Most of the schemes were introduced at pace, in a timeframe which made it difficult to adapt the family resources survey (FRS) questionnaire to capture them. As each support scheme came with clear eligibility guidelines, receipt of the payments was imputed based on respondent characteristics.
These were:
A Cost of Living Payment for households on a qualifying low-income benefit or tax credits. A payment of £650 was paid in 2 lump sums of £326 and £324 to households already in receipt of the eligible benefits. This payment was made on top of any benefit payments received by the claimants.
A Disability Cost of Living Payment for households on a qualifying disability benefit. A lump sum payment of £150 was paid to those already in receipt of the eligible benefits. To be eligible for the payment, households must have received a payment (or later receive a payment) of one of these qualifying benefits before 25 May 2022.
A Pensioner Cost of Living Payment for households entitled to a Winter Fuel Payment for winter 2022 to 2023. Up to £300 was paid with eligible households’ normal payments from November 2022. This is in addition to any other Cost of Living Payment received.
An Energy Bills Support Scheme grant of £400 to help with rising energy costs. The payment was received by customers between October 2022 and March 2023 either as a monthly credit on bills, applied directly to the meter or paid as a voucher. Households in Northern Ireland were not eligible for this scheme, but equivalent support of £600 per household was provided.
Households in receipt of the Guarantee Credit element of Pension Credit or were on a low income and have high energy costs also received a one-off discount on their energy bill under the Warm Home Discount scheme. The rebate increased from £140 to £150 and was discounted automatically from bills. A further £200 was available in Wales for those in receipt of qualifying benefits (through the Wales Fuel Support Scheme).
A £150 non-repayable rebate for households in England in council tax bands A to D, known as the Council Tax Rebate. This was in response to the rising cost of household bills in 2022 to 2023.
Further details on the methodology used to impute receipt are in the FRS Background Information and Methodology document.
Removing the imputation has the effect of reducing household incomes of those in receipt of these payments, as well as reducing the median household income. This analysis assumes no behavioural changes because of the loss of this additional income such as seeking additional income from alternative sources.
Main findings
Table 1 shows the impact of removing the imputed cost of living support on the number and rate of the overall population in low income using the four main income-based poverty measures from HBAI (absolute and relative poverty both before housing costs (BHC) and after housing costs (AHC)).
1.3 million more people would have been in absolute poverty after housing costs in FYE 2023, a 2 percentage point increase, without the additional cost of living support provided.
| Overall - Relative or absolute BHC or AHC | Number and rate | FYE 2022 | FYE 2023 | FYE 2023 No CoL support | CoL support impact |
|---|---|---|---|---|---|
| Relative BHC | Number (millions) | 11.0 | 11.4 | 12.0 | -0.6 |
| Relative BHC | Rate | 17% | 17% | 18% | -1% |
| Relative AHC | Number (millions) | 14.4 | 14.3 | 15.1 | -0.8 |
| Relative AHC | Rate | 22% | 21% | 23% | -1% |
| Absolute BHC | Number (millions) | 8.9 | 9.5 | 10.7 | -1.2 |
| Absolute BHC | Rate | 13% | 14% | 16% | -2% |
| Absolute AHC | Number (millions) | 11.4 | 12.0 | 13.3 | -1.3 |
| Absolute AHC | Rate | 17% | 18% | 20% | -2% |
Table 2 shows the impact of removing the imputed cost of living support on the number and rate of children in low income using the various income-based poverty measures.
An additional 300,000 children would have been in absolute poverty after housing costs in FYE 2023, a 2 percentage point increase, without the additional support provided.
| Children - Relative or absolute BHC or AHC | Number or rate | FYE 2022 | FYE 2023 | FYE 2023 No CoL support | CoL support impact |
|---|---|---|---|---|---|
| Relative BHC | Number (millions) | 2.9 | 3.2 | 3.3 | -0.1 |
| Relative BHC | Rate | 20% | 22% | 23% | -1% |
| Relative AHC | Number (millions) | 4.2 | 4.3 | 4.5 | -0.2 |
| Relative AHC | Rate | 29% | 30% | 31% | -1% |
| Absolute BHC | Number (millions) | 2.2 | 2.6 | 3.0 | -0.3 |
| Absolute BHC | Rate | 16% | 18% | 20% | -2% |
| Absolute AHC | Number (millions) | 3.3 | 3.6 | 3.9 | -0.3 |
| Absolute AHC | Rate | 23% | 25% | 27% | -2% |
Table 3 shows the impact of removing the cost of living support on the number and rate of working age adults in low income using the various income-based poverty measures.
An additional 600,000 working age adults would have been in absolute poverty after housing costs in FYE 2023, a 2 percentage point increase, without the additional support provided.
| Working Age - Relative or absolute BHC or AHC | Number or rate | FYE 2022 | FYE 2023 | FYE 2023 No CoL support | CoL support impact |
|---|---|---|---|---|---|
| Relative BHC | Number (millions) | 6.0 | 6.0 | 6.3 | -0.3 |
| Relative BHC | Rate | 15% | 15% | 15% | -1% |
| Relative AHC | Number (millions) | 8.1 | 8.1 | 8.4 | -0.3 |
| Relative AHC | Rate | 20% | 20% | 21% | -1% |
| Absolute BHC | Number (millions) | 5.0 | 5.1 | 5.6 | -0.6 |
| Absolute BHC | Rate | 12% | 12% | 14% | -1% |
| Absolute AHC | Number (millions) | 6.6 | 6.9 | 7.5 | -0.6 |
| Absolute AHC | Rate | 16% | 17% | 19% | -2% |
Table 4 shows the impact of removing the cost of living support on the number and rate of pensioners in low income using the various income-based poverty measures.
An additional 400,000 pensioners would have been in absolute poverty after housing costs in FYE 2023, a 3 percentage point increase, without the additional support provided.
| Pensioners - Relative or absolute BHC or AHC | Number or rate | FYE 2022 | FYE 2023 | FYE 2023 No CoL support | CoL support impact |
|---|---|---|---|---|---|
| Relative BHC | Number (millions) | 2.1 | 2.2 | 2.4 | -0.2 |
| Relative BHC | Rate | 18% | 19% | 20% | -2% |
| Relative AHC | Number (millions) | 2.1 | 1.9 | 2.2 | -0.3 |
| Relative AHC | Rate | 18% | 16% | 18% | -2% |
| Absolute BHC | Number (millions) | 1.7 | 1.8 | 2.1 | -0.3 |
| Absolute BHC | Rate | 14% | 15% | 18% | -3% |
| Absolute AHC | Number (millions) | 1.4 | 1.4 | 1.8 | -0.4 |
| Absolute AHC | Rate | 12% | 12% | 15% | -3% |
Table 5 shows the impact of removing the cost of living support on the number and rate of people in low income in families where someone is disabled using the various income-based poverty measures.
An additional 700,000 people in families where someone is disabled would have been in absolute poverty after housing costs in FYE 2023, a 3 percentage point increase, without the additional support provided.
| Disability in the family - Relative or absolute BHC or AHC | Number or rate | FYE 2022 | FYE 2023 | FYE 2023 No CoL support | CoL support impact |
|---|---|---|---|---|---|
| Relative BHC | Number (millions) | 5.0 | 5.0 | 5.3 | -0.4 |
| Relative BHC | Rate | 20% | 20% | 21% | -1% |
| Relative AHC | Number (millions) | 6.6 | 6.2 | 6.6 | -0.4 |
| Relative AHC | Rate | 27% | 24% | 26% | -2% |
| Absolute BHC | Number (millions) | 3.9 | 4.0 | 4.6 | -0.6 |
| Absolute BHC | Rate | 16% | 16% | 18% | -3% |
| Absolute AHC | Number (millions) | 5.2 | 5.0 | 5.8 | -0.7 |
| Absolute AHC | Rate | 21% | 20% | 23% | -3% |
Overall, the cost living support provided by the government had a larger impact on pensioners and disabled individuals’ poverty rates, partially reflecting the additional support directed towards these groups with the disability and pensioner Cost of Living Payments. Pensioner payments were also more universal by being linked to Winter Fuel Payments.
Pensioners may have also benefitted more than other groups from the other support as well due to generally living in smaller households meaning the same amount of money goes further due to household income equivalization accounting for differences in household sizes.
Statement of compliance with the Code of Practice for Statistics
The Code of Practice for Statistics (the Code) is built around 3 main concepts, or pillars:
-
trustworthiness – is about having confidence in the people and organisations that publish statistics
- quality – is about using data and methods that produce statistics
- value – is about publishing statistics that support society’s needs
The following explains how we have applied the pillars of the Code in a proportionate way.
Trustworthiness
The figures were created following internal DWP interest in understanding the impact of these cost of living support schemes on household incomes and individuals in low income. They are being published to give equal access to all those with an interest in them.
Quality
The households below average income (HBAI) report presents information on living standards in the United Kingdom and is the foremost source for data and information about household income, and inequality in the UK. It provides annual estimates on the number and percentage of people living in low-income households.
The analysis presented in this publication is based on the HBAI data for FYE 2023.
Value
Releasing this information serves the public interest in how the government supported the public through the cost of living crisis in FYE 2023. The figures also help reduce the administrative burden of answering Parliamentary questions, Freedom of Information requests and other forms of ad hoc enquiry and serves public.
Further information and feedback
Lead analyst: Elaine Squires
Analyst: Paul Crust
Contact DWP Press Office if you have any questions or feedback.