Relative Poverty after Housing Costs
Description:
The proportion of individuals living in private households with an equivalised income of less than 60% of the UK median after housing costs.
Source of Data:
This indicator is published as part of the annual publication: Poverty and Income Inequality in Scotland. The unit of measurement is the individual.
The data source is the Family Resources Survey (Households Below Average Income dataset), an Official Statistics dataset owned by the Department for Work and Pensions. Around 2,000 Scottish households respond to this survey. The responses are weighted and grossed up to be representative of all private households in Scotland. Incomes are equivalised (to take into account household composition) using the modified OECD equivalence scale.
To derive information for this indicator the equivalised household income of each individual is compared to 60% of the UK median income. A person is considered in relative poverty if their income is below that threshold. The number of people below the threshold is then divided by the estimated number of individuals in private households in Scotland.
Definitions:
The income measure used is equivalised net disposable household income after housing costs. This is income from all sources (including earnings, benefits, tax credits, pensions, and investments) after deductions for income tax, national insurance contributions, council tax, pension contributions and maintenance payments and also after deductions for housing costs such as rent and/or mortgage interest payments.
Equivalisation sums the income of all householders, adjusts it to reflect the composition of the household, and applies the resulting income to all householders. More information is available here.
Private Scottish households refers to all households that are not communal establishments such as hostels, prisons or hospitals, for example.
The median is the middle value when the household income of all individuals in the UK are ranked in order. Sixty percent of the median is an internationally recognised poverty threshold.
Criteria for Change:
- CRITERIA FOR RECENT CHANGE ARROW:
- Performance is improving if the indicator decreases for three periods in a row by at least 1 percentage point each period.
- Performance is worsening if the indicator increases for three periods in a row by at least 1 percentage point each period.
- Otherwise, performance is maintaining.
Future issues and reviews:
The coronavirus - COVID 19 pandemic severely disrupted the data collection in 2020/21. As a result, we were unable to obtain a representative sample for Scotland in that year.
This means that the periods 2018-21, 2019-22 and 2020-23 only contain data from two financial years each. Therefore, some real changes that happened to incomes, such as the furlough scheme or the temporary increase of Universal Credit are only partially captured in the time series. More information about the impact of the pandemic on data collection is available in DWP’s Technical report.
Due to the missing year of data and because survey response rates have declined since the pandemic, the results need interpreted with caution. Confidence intervals are included in the full poverty report.
The grossing of the FRS datasets will be adjusted to account for the new census population figures. Revisions will be made to poverty results going back to 2013 and will be published in March 2025.
Associated targets:
One of the statutory child poverty targets is “relative poverty”. Only the households interviewed with children are used to track progress against this target.