Key points

  • 1998 is the year at which the trends in benefit levels for those with and without children starting following very different paths.
  • Between 1998 and 2004, the level of means-tested benefits for a couple with two children rose by around 35% after allowing for inflation, while that for a couple with one child rose by 25%.  Means-tested benefits for pensioners followed similar trends.  By contrast, benefit levels for a working-age couple with no children did not change (apart from inflation).  Benefit levels for a single working-age adult without dependent children likewise did not change.
  • Between 2004 and 2009, these trends (rising in real terms for couples with children and pensioners but static for working-age adults without children) continued, albeit at a slower pace.
  • Between 2009 and 2011, however, the level of means-tested benefits fell in real terms for all family types.  The net result is that, broadly speaking, benefit levels in real terms in 2011 were back to their levels of 2004.
  • In proportional terms, the increases in the level of means-tested benefits for both pensioners and couples with two children since 1998 have actually been higher than the increase in average earnings: in 2011, their benefit levels were about 20% higher relative to average earnings that they were in 1998.  By contrast,  benefit levels for working-age adults with no dependent children were about 15% lower relative to earnings in 2011 than they were in 1998.  This is despite an increase since 2008 (a period during which the rate of increase in average earnings has been less than the rate of inflation).
  • As at April 2011, benefit levels for working-age adults were £105.95 per week for a couple without children, £67.50 per week for a single adult aged 25 or over, and £53.45 for a single adult aged under 25.
  • 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 proportional increase in the benefit level.
  • Means-tested benefits for working-age adults with no children are only around half the low-income threshold.  By contrast, for pensioners, means-tested benefits are similar to the low-income threshold.  In between these two extremes are couples with children (benefit around 70% of the low-income threshold) and lone parents (80-90% of the low-income threshold).

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 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.

External links

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.

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
2007£181.70 £204.13 £156.68 £92.80 131.3 182.7
2008£189.35 £216.88 £164.29 £94.95 137.6 189.6
2009£198.45 £230.47 £174.36 £100.95 139.7 194.4
2010£202.40 £235.29 £177.72 £102.75 140.4 205.9
2011£209.70 £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%