Income Thresholds

Work and Pensions written question – answered on 20th July 2004.

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Photo of Mr Andy King Mr Andy King Labour, Rugby and Kenilworth

To ask the Secretary of State for Work and Pensions what the income thresholds used in paragraph 7 of the reply by the Government to the Second Report of the Work and Pensions Committee of Session 2003–04, Cm 6200 are in weekly cash amounts of income (a) before housing costs, (i) for the relative low income and (ii) for the absolute low income and (b) after housing costs (A) for the relative low income and (B) for the absolute low income.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

The information is in the tables.

Weekly cash values for the relative low income threshold by illustrative household type at 2002–03 prices
Household type Before housing costs After housing costs
Couple with no children (equivalised income

benchmark)

194 172
Couple with two children aged 5 and 11 283 253
Single with two children aged 5 and 11 207 175
Couple with one child aged 5 235 208
Single with one child aged 5 159 131
Weekly cash values for the absolute low income threshold by illustrative household type at 2002–03 prices
Household type Before housing costs After housing costs
Couple with no children (equivalised income

benchmark)

166 140
Couple with two children aged 5 and 11 242 206
Single with two children aged 5 and 11 178 143
Couple with one child aged 5 201 170
Single with one child aged 5 136 107

Notes:

1. Estimates relate to the household's status at the time they were interviewed for the FRS.

2. The threshold '60 per cent. of median' (equivalised weekly household income) is the most commonly used in reporting absolute and relative trends in low income.

3. The estimates are based on sample counts, which have been adjusted for non-response using multipurpose grossing factors that control for tenure, council tax band and a number of other variables. Estimates are subject to both sampling error, and to remaining variability in non-response which is not corrected by the grossing regime.

4. Equivalised incomes use the McClements equalisation scale.

5. When reporting numbers of individuals in 'relative low income', we apply 60 per cent. of the median income for the year in question; therefore, this threshold changes from one year to the next.

6. When reporting numbers of individuals in 'absolute low income', we take a single level of real equivalised income, which is set at 60 per cent. of the 1996–97 median income, which is £166 before housing costs and £140 after housing costs, at 2002–03 prices. Equivalised income adjusts household income for household size and composition. The corresponding cash values for this absolute threshold, for different family types are shown in the table.

7. All figures are in pounds per week, in 2002–03 prices, rounded to the nearest pound, and are consistent with current National Statistics conventions.

8. The figures relating to absolute and relative low income were derived from "Households Below Average Income—An analysis of the income distribution for 1994–95—2002–03" (HBAI). Copies are available in the Library.

Source:

Family Resources Survey (FRS).

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