United Kingdom
State benefit levels
Key points
- Over the last decade, the level of means-tested benefits for a couple with two children has risen by almost 50% after allowing for inflation while that for a couple with one child has risen by 30%. By contrast, Income Support for a couple with no children has not changed (apart from inflation) over the decade. Income Support for a single working-age adult without dependent children has likewise not changed.
- For the most recent year (to April 2009), however, the pattern is different, with real increases for all family types. This is because their benefit levels rose by around 6% for all family types whilst inflation was around 3% (RPI, excluding housing).
- Indeed, the level of means-tested for both pensioners and couples with two children is about 20% higher relative to average earnings that it was a decade ago. Most of this increase occurred in the period between 1998 and 2003, with no further increases until 2009.
- By contrast, the value of this benefit for working-age adults with no dependent children is about 15% lower relative to earnings in 2009 than it was in 1998. This is despite an increase in the most recent year (April 2009).
- The reason for the difference in the trends for working-age families with differing numbers of children is that all the increases in benefit levels for working-age families have been in the child element rather than the adult element, so the fewer the children in the family the lower the increase in the benefit level.
- Means-tested benefits for a working-age couple with no children are around half the low-income threshold. By contrast, for a pensioner couple, means-tested benefits are similar to the low-income threshold.
- Working-age adults with no dependent children constitute half of all adults in receipt of State benefits. The majority of these people are either sick or disabled.
Graph 1: Over time (re inflation)
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Graph 2: Over time (re earnings)
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Graph 3: Compared to low-income thresholds
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Graph 4: Shares by children
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Graph 5: Shares by reason
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Why this indicator was originally chosen
For most of the 1990s, the changes in the levels of out-of-work benefits for different family types all followed a similar pattern. Since 1998, however, some out-of-work benefits have risen much more sharply than others
The chosen indicator for tracking such developments is the level of out-of-work benefits relative to earnings, illustrating these trends for families with/without children and for pensioners.
Definitions and data sources
The first two graphs both show how the value of Income Support / Jobseeker's Allowance / Pension Credit has varied over time for selected family types. The selected family types are pensioner couples, couples with two children aged less than 11, couples with 1 child aged less than 11 and couples with no children. In each case, the base year is 1998, at which point the value of the benefits is set to 100.
In the first graph, the figures are deflated by the growth in price inflation (excluding housing costs) in each year. The data source for the inflation data is the ONS Retail Prices Index, using the series which excludes housing (CHAZ) as, for many benefit recipients, housing costs are paid for by Housing Benefit rather than the benefits shown in the graph.
In the second graph, the figures are deflated by the growth in average earnings in each year. So, for example, the value of Income Support / Jobseeker's Allowance for a couple aged 25 to 59 with no children was £100.95 in April 2009 and £79.00 April 1998, a growth of 28% in money terms; over the same period, average earnings grew by 53%; so the figure on the graph for April 2009 is 84 (100*1.28/1.53). The data source for the earnings data is the ONS Average Earnings Index, using the series which is seasonally adjusted (LNMQ). Average earnings jumped around a lot in early 2009 so it does actually matter precisely which 2009 earnings index is used. The April index has been used, partly because this is the month when benefits were uprated and partly because it was after most of the jumping around.
The family types were selected to best illustrate the differing trends over time. So, for example, single adults with no dependent children is not shown as it has followed similar trends to that for couples with no dependent children. No disability benefits have been included.
The 1998 start date was selected because this is the year when benefits levels for families with and without children began to follow differing trends.
For each family type, the third graph compares the value of the means-tested benefits above with the low-income threshold for that family type. The low-income threshold is the same as that used elsewhere, namely 60% of contemporary median disposable household income after deducting housing costs and after equivalising (adjusting) to account for differences in household size and composition. The data is for 2007/08 as this is the latest year for which the low-income thresholds are known. Note that, although the benefits and the low-income thresholds have similar scopes (they are both disposable income to pay for everything other than housing costs), these scopes are not identical because the low-income thresholds happen to be after water charges are deducted. These charges are, however, relatively small and do not materially affect the overall shape of the graph.
The fourth and fifth graphs provide a breakdown of the recipients of one or more 'key out-of-work benefits'. 'Key out-of-work benefits' is a DWP term which covers the following benefits: Jobseeker's Allowance, Income Support, Incapacity Benefit, Severe Disablement Allowance, Carer's Allowance and Pension Credit. In the fourth graph, the breakdown focuses on with/without children. In the fifth graph, the breakdown focuses on the reason why the person is in receipt of State benefits.
The data source for the fourth and fifth graphs is the DWP Work and Pensions Longitudinal Study. The data has been analysed to avoid double-counting of those receiving multiple benefits by matching data from individual samples. The data relates to Great Britain. The data is for February 2009, except for the division in the third group between with and without children, which is for August 2008.
Overall adequacy of the indicator: high. The statistics in the first graph are factual and those in other graphs are considered to be very reliable.
External links
- See the 2008 Joseph Rowntree Foundation report entitled The impact of benefit and tax uprating on incomes and poverty.
- See the 2007 IFS report entitled A survey of the UK benefit system.
- See the DWP site on benefit statistics.
- See the DWP site on Pension Credit.
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.
Overall aim: Maximise employment opportunity for all.
Lead department
Department for Work and Pensions.
Official national targets
None.
Other indicators of progress
Overall employment rate taking account of the economic cycle.
Narrow the gap between the employment rates of the following disadvantaged groups and the overall rate: disabled people; lone parents; ethnic minorities; people aged 50 and over; those with no qualifications; and those living in the most deprived Local Authority wards.
Number of people on working age out-of-work benefits.
Amount of time people spend on out-of-work benefits.
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.
As part of the wider objective of full employment in every region, over the three years to Spring 2008, and taking account of the economic cycle, demonstrate progress on increasing the employment rate.
As part of the wider objective of full employment in every region, over the three years to Spring 2008, and taking account of the economic cycle:
- increase the employment rates of disadvantaged groups (lone parents, ethnic minorities, people aged 50 and over, those with the lowest qualifications, and those living in local authority wards with the poorest initial labour market position); and
- significantly reduce the difference between the employment rates of the disadvantaged groups and the overall rate.
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
Graphs 1 and 2
| Year | Pensioner couple | Couple, 2 children aged less than 11 | Couple, 1 child aged less than 11 | Couple, no children | Earnings deflator | Inflation deflator |
|---|---|---|---|---|---|---|
| 1990 | £75.55 | £89.55 | £77.25 | £57.60 | 62.6 | 117.6 |
| 1991 | £83.15 | £96.90 | £83.55 | £62.25 | 67.8 | 127.6 |
| 1992 | £88.95 | £105.00 | £90.45 | £66.60 | 72.0 | 134.4 |
| 1993 | £95.25 | £108.75 | £93.70 | £69.00 | 74.7 | 138.4 |
| 1994 | £99.25 | £113.05 | £97.40 | £71.70 | 76.9 | 141.6 |
| 1995 | £101.05 | £115.15 | £99.20 | £73.00 | 79.9 | 145.0 |
| 1996 | £104.10 | £118.65 | £102.20 | £75.20 | 82.6 | 149.0 |
| 1997 | £106.80 | £121.75 | £104.85 | £77.15 | 85.7 | 152.2 |
| 1998 | £109.35 | £124.65 | £107.35 | £79.00 | 90.7 | 155.9 |
| 1999 | £116.60 | £134.95 | £114.75 | £80.65 | 94.4 | 159.0 |
| 2000 | £121.95 | £149.40 | £122.80 | £81.95 | 98.7 | 161.3 |
| 2001 | £140.55 | £160.65 | £129.20 | £83.25 | 103.7 | 163.2 |
| 2002 | £149.80 | £166.40 | £132.90 | £84.65 | 107.6 | 166.1 |
| 2003 | £155.80 | £178.50 | £140.00 | £85.75 | 110.7 | 169.0 |
| 2004 | £160.95 | £188.19 | £145.72 | £87.30 | 115.8 | 170.8 |
| 2005 | £167.05 | £192.01 | £148.13 | £88.15 | 120.9 | 173.3 |
| 2006 | £174.05 | £197.51 | £151.93 | £90.10 | 125.5 | 177.0 |
| 2007 | £181.70 | £204.13 | £156.68 | £92.80 | 129.7 | 182.7 |
| 2008 | £189.35 | £216.88 | £164.29 | £94.95 | 134.1 | 189.6 |
| 2009 | £198.45 | £230.47 | £174.36 | £100.95 | 138.5 | 194.4 |
Graph 3
| Group | Share |
|---|---|
| Couple, no children | 47% |
| Couple, 1 child aged less than 11 | 66% |
| Couple, 2 children aged less than 11 | 73% |
| Pensioner couple | 91% |
Graph 4
| Group | Millions | Share |
|---|---|---|
| Lone parents | 0.9M | 11% |
| Working age couples with dependent children | 0.3M | 3% |
| Working age without dependent children | 4.2M | 52% |
| Pensioners | 2.8M | 34% |
Graph 5
| Group | Millions | Share |
|---|---|---|
| Unemployed | 1.4M | 18% |
| Working age sick or disabled | 2.6M | 32% |
| Lone parents | 0.7M | 9% |
| Working age others | 0.6M | 7% |
| Pensioners | 2.8M | 34% |