Numbers in low income
- The most commonly used threshold of low income is a household income that
is 60% or less of the average (median) British household income in that year. For a discussion of why
this is the most commonly used threshold, see the
page on choices of
low-income thresholds. Key features of this measure are:
- It uses household income rather than individual income, otherwise (for example) all children would be considered to be in low income,
- It uses disposable income rather than pre-tax income, as this is the money that the household has to live on.
- Incomes are adjusted for household size and composition to put them on a comparable basis. Clearly, a lone adult does not require the same income as a family of four in order to have the same standard of living. However, importantly but less obviously, economies of scale mean that the family of four does not require four times the level of income: many costs can be shared. This means that achieving comparability is not simply a case of dividing household income by the number of people in the household. Rather, an agreed set of scales are used to adjust the incomes to reflect the household composition and size and thus put them on a like-for-like basis. This process is known as 'equivalisation'.
- The threshold is defined in terms of median, rather than mean, income. As such, it is comparing low-income households with those in the middle, not with the richest, and is therefore a comparison with what can be considered 'normal' in contemporary UK society. Note that there is no mathematical reason why any household should have an income below 60% of the median.
- The threshold rises or falls as median incomes rise or fall. As such, it is clearly a measure of relative low income. This reflects the view that the level of income that should be considered 'low' depends on overall levels of income in the society in which the people live.
- In this indicator and most (but not all) of the other indicators on this website, incomes are measured after, rather than before, deducting housing costs. Whilst the government has recently given preference to using measures before deducting housing costs, most commentators continue to use the after deducting housing costs measure. This is partly because housing costs can vary considerably for people in otherwise identical circumstances without the people having any realistic ability to change these costs and partly because it is not affected by such matters as whether Housing Benefit - which provides for the housing costs of many of the poorest - is considered to be income or not.
- The latest year for which household income data is available is 2008/09. In that year, the 60% threshold was worth: £119 per week for single adult with no dependent children; £206 per week for a couple with no dependent children; £202 per week for a single adult with two dependent children under 14; and £288 per week for a couple with two dependent children under 14. These sums of money are measured after income tax, council tax and housing costs have been deducted, where housing costs include rents, mortgage interest (but not the repayment of principal), buildings insurance and water charges. They therefore represent what the household has available to spend on everything else it needs, from food and heating to travel and entertainment.
- Using the 60% low-income threshold after deducting housing costs, one in six people in rural districts live in low-income households. This compares with one in four in urban districts.
- This pattern, whereby people in rural districts are somewhat less likely to live in low-income households than their urban counterparts, is the case whatever low-income threshold (after deducting housing costs) is used.
- 3.5 million people in rural districts live in low-income households. This is around a third of all those living in low-income households.
- In rural districts, like in urban districts, the proportion of people who are in low income is slightly - but only slightly - lower than a decade ago.
- See the UK indicator on trends in low income.
On most poverty and social exclusion indicators, rural areas have 'better scores' than urban areas. The purpose of the table below is to differentiate between those subjects where rural areas are 'a bit better' and those where rural areas are 'a lot better'. It does so by presenting the rural statistics for the indicator as a proportion of the urban statistics. So, for example, a rural 'score' of 6 in the table below means that the rural statistic is around 60% of its urban equivalent.
|Type of district||2006/07 to 2008/09||1996/97 to 1998/99|
|Below 60% median||Below 50% median||Below 40% median||Below 60% median|
|'Very rural' districts||7||7||7||8|
|'Mostly rural' districts||7||7||7||7|
|'Part rural' districts||7||7||7||7|
For each type of local authority district, the first graph shows the proportion of people who are in households with low incomes. Three low-income thresholds are presented to show the extent and intensity of low income. These are 60% of UK median household income, 50% of UK median income and 40% of UK median income. For a discussion on why these thresholds has been used, and possible alternative thresholds, see the page on choices of thresholds. Income is net disposable household income, after deducting housing costs. All the data is equivalised (adjusted) to account for differences in household size and composition.
The second graph shows the distribution of people in households with incomes below 60% of UK median household income by type of district.
For each type of local authority district, the third graph shows how the proportion of people who are in households with low incomes compares with the equivalent proportion a decade ago. For the latest three years, the low-income threshold used is the same as that in the first graph, namely 60% of contemporary UK median household income. For the earliest three years, the threshold is 60% of contemporary Great Britain median household income, as data was not available for Northern Ireland. Note that the rural/urban allocations of districts for the earliest three years is slightly different than that for the latest three years as a) some districts were merged in and b) the Government made adjustments to the allocations of a few districts.
Level of the data
Lower tier local authorities (districts), as classified by the DEFRA 2009 classification system. Both the DEFRA classification rules and their results by local authority can be found on the page on rural/urban classification systems.
Households Below Average Income, DWP. To improve its statistical reliability, the data is the average for the last three years.
Graphs 1 and 2
|Type of district||Below 60% median||Below 50% median||Below 40% median|
|'Very rural' districts||19%||1.0 million||12%||0.6 million||8%||0.4 million|
|'Mostly rural' districts||19%||1.3 million||13%||0.9 million||8%||0.5 million|
|'Part rural' districts||18%||1.3 million||12%||0.9 million||8%||0.5 million|
|Urban districts||25%||7.9 million||18%||5.6 million||11%||3.5 million|
|Type of district||1996/97 to 1998/99||2006/07 to 2008/09|
|'Very rural' districts||21%||19%|
|'Mostly rural' districts||20%||19%|
|'Part rural' districts||20%||18%|