United Kingdom

State benefit levels

Key points

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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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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.

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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 April indices of 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 April indices of the ONS Average Weekly Earnings Index (including bonuses, excluding arrears) using the series which is seasonally adjusted (K54U).

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 2008/09 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 data sources for the first three graphs are:

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.

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External links

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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:

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:

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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   117.6
1991 83.15 96.90 83.55 62.25   127.6
1992 88.95 105.00 90.45 66.60   134.4
1993 95.25 108.75 93.70 69.00   138.4
1994 99.25 113.05 97.40 71.70   141.6
1995 101.05 115.15 99.20 73.00   145.0
1996 104.10 118.65 102.20 75.20   149.0
1997 106.80 121.75 104.85 77.15   152.2
1998 109.35 124.65 107.35 79.00 90.2 155.9
1999 116.60 134.95 114.75 80.65 93.8 159.0
2000 121.95 149.40 122.80 81.95 98.9 161.3
2001 140.55 160.65 129.20 83.25 104.6 163.2
2002 149.80 166.40 132.90 84.65 108.4 166.1
2003 155.80 178.50 140.00 85.75 111.3 169.0
2004 160.95 188.19 145.72 87.30 115.6 170.8
2005 167.05 192.01 148.13 88.15 120.6 173.3
2006 174.05 197.51 151.93 90.10 125.6 177.0
2007181.70 204.13 156.68 92.80 131.3 182.7
2008189.35 216.88 164.29 94.95 137.6 189.6
2009198.45 230.47 174.36 100.95 139.7 194.4
2010202.40 235.29 177.72 102.75 140.4 205.9
2011209.70 248.01 185.68 105.95 144.5 218.8

Graph 3

Couple, no children46%
Single adult aged 25+51%
Couple, 1 child aged less than 1166%
Couple, 2 children aged less than 1175%
Lone parent, 1 child aged less than 1181%
Lone parent, 2 children aged less than 1190%
Pensioner couple92%
Single pensioner104%

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