United Kingdom

Location of low income

Graphs on this page:

Supporting information:

Key points

  • The proportion of people in low-income households is lower than a decade ago in all the regions of Great Britain except for the West Midlands.  More specifically, the regions fall into two broad groups:
    • Substantial falls: North East, North West, Scotland, South West, Wales and Yorkshire & the Humber.
    • Small falls: East, East Midlands, London and South East.
    • Small increase: West Midlands.
  • Because of the substantial fall in the North East, London now has a much higher proportion in low income than any other region.
  • The proportion of people on low income is generally highest in the large urban conurbations.  But, in rural/urban terms, all types of local authority district have at least a sixth of their population in low income.
  • Apart from the rural/urban divisions above, data on rates of low income is not available at a sub-regional level.  This is partly because the sample sizes of the relevant survey (the Family Resources Survey) are nowhere near sufficient to provide such estimates and partly because the survey is not designed to be representative at a sub-regional level.  The two maps in this indicator therefore have to use different data, namely data about benefit recipiency.  As discussed below, however, such statistics are likely to underestimate the relative prevalence of low income in rural areas.
  • For people of working-age, the only directly relevant available data relates to those in receipt of out-of-work benefits.  However, as a) this does not include anyone who is in low income because they are low paid and b) it includes everyone in receipt of out-of-work disability benefits even though they are not means-tested, variations in its geographic prevalence are not necessarily a good proxy for variations in the geographic prevalence of low-income working-age people. 1  For example, the proportion of low-income people who are in working families (as opposed to workless ones) is much higher in rural areas than in urban areas, at least in England (see the indicator on low income by work status in rural England).  As a result, the relative ranking of rural areas by benefit recipiency will tend to place them lower in the rankings than would be the case for low income.
  • For children, the out-of-work benefits data is an even less reliable proxy for those on low income because most disabled people are classified as having an ‘unknown’ number of children.  This is, in turn, because it does not affect their benefit entitlement and is therefore not asked on the benefit application form. 2
  • For people of pensionable age, the best sub-regional data relates to those in receipt of the guaranteed Pension Credit.  As this is a means-tested benefit available to most low-income pensioners, variations in its geographic prevalence should be a reasonably good proxy for variations in the geographic prevalence of low-income pensioners.  It does, however, have one potential bias due to the fact that non-take-up rate for this benefit is much higher for those in owner occupation than for those in rented accommodation (see the indicator on take-up of benefits by older people).  As a result, the relative ranking of areas with relatively little rented accommodation (e.g. rural areas) will tend to place them lower in the rankings than would be the case for low income.

Why this indicator was originally chosen

Geographic variations in the prevalence of low income are clearly of interest.

Definitions and data sources

The first graph shows the proportion of the population on low income by region.  For each region, the first column shows the average proportion on low income for the years 1994/95 to 1996/97 and the second column shows the average proportion on low income between 2004/05 and 2006/07.  This averaging over three-year bands has been done to improve the statistical reliability of the results.

The second graph shows how the proportion of the population in low income varies by the degree of rurality of the local authority district in which they live, as classified by the DEFRA 2009 classification system.  To improve its statistical reliability, the data is the average for the latest three years.  The data relates to England only (the DEFRA classification system only covers England).  Both the DEFRA classification rules and their results by local authority can be found on the page on rural/urban classification systems.  Over-simplifying somewhat:

  • ‘very rural’ districts are those where at least 80% of the population live in rural settlements or market towns;
  • ‘mostly rural” districts are those where 50% to 80% of their population live in rural settlements or market towns;
  • ‘major urban’ districts are those where at least 50% of their population live in major (750,000+) conurbations;
  • ‘large urban’ districts are those where at least 50% of their population live in large (100,000+) conurbations;
  • ‘part rural’ districts are those which do not fit in any of the categories above but where there is a substantial population living in rural settlements or market towns;
  • ‘other urban’ districts are those which do not fit in any of the categories above.

The data source for both the graphs is Households Below Average Income, based on the Family Resources Survey (FRS).  The data in the first graph relates to Great Britain.  Income is disposable household income after deducting housing costs and the low-income threshold is the same as that used elsewhere, namely 60% of contemporary median household income.  All the 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.

The first map shows how the proportion of working-age people claiming one or more ‘key out-of-work benefits’ varies by super output area, thus providing a indication of how the prevalence of low income among working-age people varies at a small area level.  ‘Key out-of-work benefits’ is a DWP term which covers the following benefits: Jobseeker’s Allowance, Income Support, Employment and Support Allowance, Incapacity Benefit, Severe Disablement Allowance and Carer’s Allowance.

The second map shows how the proportion of people in receipt of the guaranteed part of Pension Credit (previously called the Minimum Income Guarantee) as a proportion of the pensionable-age population varies by super output area, thus providing an indication of how the prevalence of low income among older people varies at a small area level.

The data source for both maps is the DWP Work and Pensions Longitudinal Study.  The data relates to Great Britain and is for February 2009.  The data has been analysed to avoid double-counting of those receiving multiple benefits by matching data from individual samples.

Overall adequacy of the indicator: high.  The FRS is a well-established annual government survey, designed to be representative of the population as a whole.  The averaging over three-year bands means that the sample size is sufficient to provide accurate results.  Note, however, that they only cover people living in private households and do not cover people in residential institutions (such as nursing homes), sleeping rough, or in bed and breakfast accommodation.

External links

See the Mayor of London’s report entitled London divided: income inequality and poverty in the capital.

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.

The numbers

Graph 1

Region

Average of 1996/97 to 1998/99 Average of 2006/07 to 2008/09
East 21% 20%
East Midlands 23% 23%
London 30% 28%
North East 30% 25%
North West 27% 24%
Scotland 23% 19%
South East 19% 19%
South West 24% 20%
Wales 27% 23%
West Midlands 24% 25%
Yorkshire and The Humber 27% 23%

Graph 2

Type of local authority districtProportion of people who are in low-income households
'Very rural' districts19%
'Mostly rural' districts19%
'Part rural' districts18%
'Other urban' districts22%
'Large urban' districts24%
'Major urban' districts26%
1. In an attempt to cater for these two problems, some researchers use the “number of income deprived people” statistics from the English, Scottish, Welsh and Northern Irish Indices of Deprivation.  In these indices (at least in England), the first problem is dealt with by adding in the number of people in receipt of tax credits but still with a low income and the second problem is dealt with by simply excluding all those in receipt of Incapacity Benefit.  The tax credit inclusion clearly improves the reliability of the statistics as a proxy for low income but this cannot be done by external researchers such as ourselves because the Government has deemed the data to be ‘disclosive’.  On the other hand, the Incapacity Benefit exclusion is not an obvious improvement (it is simply excluding them all rather than including them all) and has the disadvantage of making the statistic less obviously meaningful (i.e. moving it from “recipients of out-of-work benefits” to “recipients of selected out-of-work benefits”).
2. The only available option here is to use the Government’s ‘IDACI index’, which can be found (for England only) on the Department of Communities and Local Government Index of Deprivation website.  This data still excludes children of disabled parents, is based on old data (e.g. the 2007 index uses 2005 data) and is misleadingly entitled an index of low income when it is actually an index of receipt of particular benefits.  But it does include children whose families are in receipt of tax credits but are still poor (i.e. in principle, it includes children in working, but still low-income, families).  Note that, to translate this data from small (‘super output) area to local authority level requires the use of overall child population data which can be found at the website of the Office for National Statistics.