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Poverty and income inequality in Scotland: 2009/10

Chapter 2: Poverty

In this section

Low-Income Poverty Indicators

2.1 Individuals in poverty

2.2 Child poverty

2.3 Working age adult poverty

2.4 Pensioner poverty - including new pensioner material deprivation indicator

2.5 In-work poverty

Low-Income Poverty Indicators

The Scottish Government currently uses two main indicators of low-income poverty, both of which reveal slightly different information about changes in poverty over time. These indicators are relative and absolute poverty:

Relative poverty:
Individuals living in households whose equivalised income is below 60% of UK median income in the same year. This is a measure of whether those in the lowest income households are keeping pace with the growth of incomes in the population as a whole. In 2009/10 the relative poverty threshold for a couple with no children was an income of £248 per week (BHC) from all sources (see Annex 2 for further information on income definitions). For a couple with children the threshold would be higher and for a single person (without children) the threshold would be lower.

Absolute poverty:
Individuals living in households whose equivalised income is below 60% of the (inflation adjusted) median income in 1998/99. This is a measure of whether those in the lowest income households are seeing their incomes rise in real terms. In 2009/10 the absolute poverty threshold for a couple with no children was an income of £209 per week (BHC) from all sources (see Annex 2 for further information on income definitions).

2.1 Individuals in poverty

The Scottish Government's National Indicator 14 is to "decrease the proportion of individuals living in poverty". This is measured using relative poverty before housing costs. Charts 1a and 1b below show Scottish trends for absolute and relative poverty between 1998/99 and 2009/10.

individuals in relative poverty - 2009-10

Chart 2 - individuals in absolute poverty 2009-10

Source: HBAI dataset, DWP. See Annex 1a (Tables A1, A2 and A3 ) for the figures behind these charts.

Main points:

  • In 2009/10 there were 870 thousand people (17 percent of the population) in relative poverty (BHC) and 500 thousand people (10 percent of the population) in absolute poverty (BHC) in Scotland.
  • The percentage of people in relative poverty remained the same between 2008/09 and 2009/10. Over this same time period, the proportion of people in absolute poverty decreased by 1 percentage point, a reduction of 40 thousand individuals.
  • Between 2000/01 and 2004/05 relative and absolute poverty rates fell in Scotland, with absolute poverty falling more steeply. The absolute poverty rates have been broadly the same since 2004/05.
  • However, the difference between the absolute poverty rates before and after housing costs has widened from 1 percentage point in 2007/08 to 3 percentage points in 2009/10.
2.2 Child poverty

Child poverty is measured using the following indicators:

  • relative poverty,
  • absolute poverty,
  • material deprivation and low income combined.

These are three of the four poverty indicators which the UK parliament is required to report on by the 2010 Child Poverty Act. There is also a persistent poverty indicator in the Act but the precise target is yet to be defined.

Material Deprivation and Low-Income Combined Poverty Indicator:

Material deprivation is calculated from a suite of questions in the Family Resources Survey about whether people can afford to buy certain items and participate in leisure or social activities. This measure is applied to households with incomes below seventy percent of median income to create the 'material deprivation and low income combined' indicator. This indicator aims to provide a measure of children's living standards which, unlike relative and absolute poverty, is not solely based on income. For more detail about this indicator see Annex 2.

Chart 2 below presents recent Scottish poverty trends for these three child poverty indicators.

Chart 2 - child poverty 2009-10

Source: HBAI dataset, DWP. See Annex 1a (Tables A1, A2 and A3) for the figures behind these charts.

Main points:

  • Between 2008/09 and 2009/10, all three child poverty indicators reported a decrease in the child poverty rate.
  • The percentage of children in relative poverty (BHC) decreased by 1 percentage point to 20 percent.
  • The proportion of children in absolute poverty (BHC) fell by 1 percentage point to 10 percent.
  • The percentage of children in material deprivation and low income combined decreased by 1 percentage point to 15 percent.
  • Between 2004/05 and 2009/10 there has been a slight decrease in all three child poverty indicators. However, the rate of decrease for relative and absolute poverty (both BHC) has slowed compared to the rate of decrease in the period from 1998/99 to 2004/05.
2.3 Working age adult poverty

Charts 3a and 3b below present recent absolute and relative poverty trends for working age people in Scotland.

Chart 3a - working age adults in relative poverty 2009-10

Chart 3b - working age adults in absolute poverty 2009-10

Source: HBAI dataset, DWP. These figures are also presented in Annex 1a (Tables A1 and A2 ).

Main points:

  • In 2009/10 the proportion of working age adults in relative poverty (BHC) increased slightly but, after rounding, remained at 16 percent. This represented an increase of 20 thousand individuals.
  • The proportion of working age adults in relative poverty (AHC) remained stable between 2008/09 and 2009/10, while the proportion of working-age adults in absolute poverty (BHC) fell by 1 percentage point to 10 percent in the same time period.
  • The proportion in absolute poverty (AHC) remained unchanged in 2008/09.

2.4 Pensioner poverty

Pensioner Material Deprivation Indicator:

This publication presents for the first time estimates of pensioner material deprivation in Scotland - an additional way to measure the living standards of pensioners. This measure is based on a set of goods, services and experiences, judged using academic research to be the best discriminators of deprivation. Pensioners are asked if they have an item (or access to a service) and to give a reason if they do not have it. Their responses are then used to judge whether or not they are materially deprived. It is similar to the child material deprivation and low income combined indicator which is presented in Chart 2 but has some important differences:

  • Differences in the set of items asked about, e.g pensioners are not asked if they can afford school trips.
  • Pensioners are presented with a greater variety of reasons for not having a particular item, whereas families with children are simply asked whether they can afford an item they do not have. Pensioners are able to say if they are prevented from having it due to ill health, disability or lack of support from other people. These additions reflect that deprivation can occur because of ill health, disability or social isolation, and not just for financial reasons.
  • The pensioner "material deprivation" indicator is not combined with household income information to produce a combined indicator, as is done with the child deprivation indicator. This is because for pensioners, the concept of material deprivation is broad and very different from low income, so it is appropriate to present it as a separate measure.

For these reasons, pensioner material deprivation cannot be directly compared to the child material deprivation and low income measure.

More background on these figures is given in Annex 2, and the following technical note on the DWP website gives further information, including the list of questions which are asked to pensioners:http://research.dwp.gov.uk/asd/hbai/technical_note_20110307.pdf

Charts 4a and 4b below present recent trends for the three main pensioner poverty indicators: Relative poverty, absolute poverty and the new material deprivation indicator. Note that for relative and absolute poverty the figures are based on income after housing costs. This is a more commonly used measure for pensioner households as many of them have low housing costs. Further discussion on whether it is better to use before or after housing costs can be found in the introduction.

Chart 4a - pensioners in relative poverty 2009-10

Chart 4b - pensioners in absolute poverty 2009-10

Source: HBAI dataset, DWP. These figures are also presented in Annex 1a (Tables A1 and A2).

Note: The material deprivation figure is calculated as a percentage of all over 65s whereas the relative and absolute poverty rates are calculated as a percentage of all pensioners (including women aged 60 to 65).

Main points:

  • Pensioner relative poverty (BHC) decreased from 26 percent in 1998/99 to 17 percent in 2009/10. The pensioner relative poverty measure (AHC) decreased at a greater rate - from 27 percent in 1998/99 to 13 percent in 2009/10.
  • Between 1998/99 and 2009/10 the falls in poverty rates for pensioners have been greater than the comparable falls for children and working age adults.
  • There was a slight increase in the pensioner poverty rates for three of these four indicators between 2008/09 and 2009/10. However, this followed a fairly large fall the year before. Between 2007/08 and 2009/10 relative poverty (AHC) fell by 3 percentage points. Over this period there was little change in relative poverty among children and a slight increase in relative poverty among working age adults.
  • 10 percent of over 65s are materially deprived according to the new indicator.
2.5 In-work poverty

In-work poverty: Individuals living in households where at least one member of the household is working (either full or part time) but where the household income is below the poverty threshold. This group contains non-working household members such as children and non-working partners.

Chart 5 compares recent Scottish in-work poverty trends with the relative poverty trends.

Chart 5 - in work poverty

Source: HBAI dataset, DWP. These figures are also presented in Annex 1a (Table A4).

Note: All the in-work poverty figures (the dotted line) have been revised from the previous year's publication 'Poverty and income inequality in Scotland: 2008/09'. This is because the family economic status classification has been revised to be in line with the International Labour Organisation economic status classification.

Main points:

  • During 2009/10, 7 percent of people in Scotland were in in-work poverty. These people live in households in relative poverty (BHC) despite the fact that these households contain a working member.
  • Relative poverty (BHC) has reduced over the last ten years from around 20 to 21 percent in 1999/2000 to 17 percent in 2009/10. However, in-work poverty trends have been fairly flat over this period and remained at around 6 to 8 percent of the population.

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