United Kingdom
The impact of housing costs
Key points
- The numbers of people in low income is always lower on a 'before deducting housing costs' measure than on an 'after deducting housing costs' measure, although the gap has narrowed over the last decade.
- The proportion of people in low income in Southern England is much higher on an 'after deducting housing costs' measure than on a 'before deducting housing costs' measure.
Graph 1: Over time
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Graph 2: By region
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Why this indicator was originally chosen
This indicator shows how the number of people in low income households after deducting housing costs compares with the number before deducting housing costs. This is done in recognition of the government's apparent plans to adopt the before deducting housing cost measure for its future poverty targets whereas common practice to date has been to use the after deducting housing cost measure.
Definitions and data sources
The first graph shows the number of people in households below 60% of contemporary median income for each year since 1979, both before and after deducting housing costs.
The second graph shows how the proportion of people who are in households below 60% of contemporary median income varies by region, again both before and after deducting housing costs. To improve its statistical reliability, the data is the average for the latest three years.
The data source for both graphs is Households Below Average Income, based on the Family Resources Survey (FRS) since 1994/95 and the Family Expenditure Survey (FES) for earlier years. The analysis of the FES dataset was undertaken by the IFS. The data relates to the United Kingdom, although this has required Great Britain figures for the years 1994/95 to 2001/02 to be scaled up as Northern Ireland was not included in the survey for these years. Income is disposable household income. All data is equivalised (adjusted) to account for differences in household size and composition. The self-employed are included in the statistics. Note that in 2007 DWP made some technical changes to how it adjusted household income for household composition (including retrospective changes) and, as a result, the data is slightly different than previously published figures.
Overall adequacy of the indicator: high. The FRS and FES are both well-established annual government surveys, designed to be representative of the population as a whole.
Relevant 2007 Public Service Agreements
Overall aim: Halve the number of children in poverty by 2010-11, on the way to eradicating child poverty by 2020.
Lead department
HM Treasury.
Official national targets
Reduce by a half the number of children living in relative low-income by 2010/11.
Other indicators of progress
Number of children in absolute low-income households.
Number of children in relative low-income households and in material deprivation.
Previous 2004 targets
Halve the number of children in relative low-income households between 1998/99 and 2010/11, on the way to eradicating child poverty by 2020, including:
- reducing the proportion of children in workless households by 5% between spring 2005 and spring 2008; and
- increasing the proportion of parents with care on Income Support and income-based Jobseeker's Allowance who receive maintenance for their children by 65% by March 2008.
By 2008, be paying Pension Credit to at least 3.2 million pensioner households. While maintaining a focus on the most disadvantaged by ensuring that at least 2.2 million of these households are in receipt of the Guarantee Credit.
Relevant government policies
- National minimum wage
- Tax credits and their predecessors
- Increases in child benefit
- Pension credit and its predecessors
- Second state pension
The numbers
Graph 1
| Year | After deducting housing costs | Before deducting housing costs |
|---|---|---|
| 1979 | 7.4M | 7.2M |
| 1980 | 8.4M | 8.3M |
| 1981 | 7.9M | 7.4M |
| 1982 | 7.7M | 6.7M |
| 1983 | 7.9M | 7.0M |
| 1984 | 8.4M | 7.1M |
| 1985 | 9.5M | 7.7M |
| 1986 | 10.5M | 8.7M |
| 1987 | 11.7M | 9.9M |
| 1988 | 12.8M | 11.7M |
| 1989 | 12.8M | 12.0M |
| 1990 | 13.3M | 12.5M |
| 1991 | 13.6M | 12.0M |
| 1992 | 14.3M | 12.5M |
| 1993/94 | 14.0M | 11.4M |
| 1994/95 | 13.9M | 10.7M |
| 1995/96 | 13.9M | 10.2M |
| 1996/97 | 14.5M | 11.1M |
| 1997/98 | 14.0M | 11.2M |
| 1998/99 | 14.0M | 11.1M |
| 1999/00 | 13.8M | 11.1M |
| 2000/01 | 13.4M | 10.7M |
| 2001/02 | 13.2M | 10.7M |
| 2002/03 | 13.1M | 10.6M |
| 2003/04 | 12.6M | 10.4M |
| 2004/05 | 12.1M | 10.0M |
| 2005/06 | 12.8M | 10.4M |
Graph 2
| Region | After deducting housing costs | Before deducting housing costs |
|---|---|---|
| East | 18% | 14% |
| East Midlands | 21% | 19% |
| London | 27% | 18% |
| North East | 23% | 21% |
| North West | 22% | 19% |
| Northern Ireland | 21% | 21% |
| Scotland | 20% | 18% |
| South East | 17% | 12% |
| South West | 19% | 15% |
| Wales | 22% | 21% |
| West Midlands | 23% | 20% |
| Yorkshire and The Humber | 22% | 19% |