Poverty

House of Lords written question – answered on 15th May 2008.

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Photo of Lord Roberts of Conwy Lord Roberts of Conwy Conservative

asked Her Majesty's Government:

How many (a) children and (b) households are below the poverty line of 40 per cent of average earnings; and what were the figures for 1997.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

Our policies are not designed only for those who fall "just below the poverty threshold". We have pledged to eradicate child poverty by 2020; this requires us to tackle child poverty, whatever its depth, in all countries of the UK.

Poverty is a complex and multidimensional issue and, as such, there are many possible measures of poverty. While income alone does not provide a wide enough measure of poverty, it is generally accepted that low income is central to any poverty measurement.

The most common and internationally recognised threshold to measure poverty is income below 60 per cent of median. We do not present information covering 40 per cent of median income in our Households Below Average Income series as it is not a sound measure of poverty. This is because households stating the lowest incomes to the Family Resources Survey may not actually have the lowest living standards. Many people who report very low incomes appear to have high spending; hence any statistics on numbers in this group may be misleading.

Specific information regarding low income for the UK is available in Households Below Average Income 1994-95 to 2005-06. This annual report, which is a National Statistics publication, includes the numbers and proportions of individuals, children, working-age adults and pensioners with incomes below 50 per cent, 60 per cent and 70 per cent of median income, and the proportions in persistent poverty.

Information on the number of children and households below 40 per cent of median income is in the tables.

Number (millions) of children in households below 40 per cent of median income, 1997-98 and 2005-06
Year Before Housing Costs After Housing Costs
1997-98 (GB) 0.7 1.4
2005-06 (UK) 0.7 1.3
Source: Family Resources Survey 1997-98, 2005-06
Number (millions) of households below 1997-98 and 2005-06 40 per cent of median income
Year Before Housing Costs After Housing Costs
1997-98 (GB) 1.3 2.1
2005-06 (UK) 1.5 2.3
Source: Family Resources Survey 1997-98, 2005-06

Notes:

1. Figures in the tables correspond to Great Britain for 1997-98 and to the United Kingdom for 2005-06.

2. The reference period for Family Resources Survey (FRS) figures is single financial years.

3. The income measures used to derive the estimates shown employ the same methodology as the Department for Work and Pensions publication Households Below Average Income series, which uses disposable household income, equivalised for household size and composition, as a proxy for standard of living. This uses the OECD equivalence scale for all years in the series.

4. The Government's preferred measure of relative low-income poverty is defined as being in a household with a household income of less than 60 per cent of the contemporary median income. This is an internationally recognised measure.

5. This response includes a lower income threshold of 40 per cent of the contemporary median income. The data for households with an income lower than 50 per cent of median are not considered accurate as an indicator of living standards. Many of these households having very low incomes would not be considered poor, but genuinely have few sources of income in the short-run. These figures are not National Statistics and caution must be applied because those people stating the lowest incomes in the FRS may not actually have the lowest living standards.

6. Figures have been presented on both a "before housing cost" and "after housing cost" basis. For "before housing cost", housing costs (such as rent, water rates, mortgage-interest payments, structural insurance payments and ground rent and service charges) are not deducted from income, while for "after housing cost" they are. This means that "after housing cost" incomes will generally be lower than "before housing cost".

7. Numbers in the tables have been presented in millions, rounded to the nearest 100,000 children or households as appropriate.

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