Section 1: Relative and Absolute Poverty

Relative Poverty – number of people affected in the UK

Relative low income measures the number and proportion of individuals who have household incomes below 60% of the median average in that year – and is used to look at how changes in income for the lowest income households compare to changes in incomes near the average.

Table 1.1

People in poverty in the UK 2018/19 2017/18 2008/09 2010/11 1 year change 10 year change
No of People in Relative Poverty BHC(m) 11.0m 11.1m 10.9m 9.8m  

-0.1m

 

+0.1m

People in Relative Poverty BHC % 17% 17% 18% 16%
No of People in Relative Poverty AHC(m) 14.5m 14.0m 13.4m 13.0m  

+0.5m

 

+1.1m

People in Relative Poverty AHC % 22% 22% 22% 21%
Source: DWP, Households below average income (HBAI), March 2020

In 2018/19, 11 million people (17% of the UK) were living in relative poverty Before Housing Costs were deducted (BHC). The number of individuals in relative low income has decreased by 100,000 people since 2017/18 but increased by 100,000 in the 10 years since 2008/09. 14.5 million people (22% of the UK) were living in relative poverty After Housing Costs were deducted (AHC). The number of individuals in relative low income AHC has increased by 500,000 people since 2017/18 and by 1.1 million people in the 10 years since 2008/09.

Absolute Poverty – number of people affected in the UK

Absolute low income measures the proportion of individuals who have household incomes 60% below the average in 2010/11, adjusted for inflation. It is used to look at how changes in income for the lowest income households compare to changes in the cost of living.

Table 1.2

People in poverty in the UK 2018/19 2017/18 2008/09 2010/11 1 year change 10 year change
No of People in Absolute Poverty BHC(m) 9.7m 9.5m 10.6m 9.8m  

+0.2m

 

-0.9m

People in Absolute Poverty BHC % 15% 15% 17% 16%
No of People in Absolute Poverty AHC(m) 12.9m 12.5m 13.3m 13m  

+0.4m

 

-0.4m

People in Absolute Poverty AHC % 20% 19% 22% 21%
Source: DWP, Households below average income (HBAI), March 2020

In 2018/19, 9.7 million people (15% of the UK) were living in absolute poverty Before Housing Costs were deducted (BHC). The number of individuals in absolute poverty has fallen by 0.9m people in the 10 years since 2008/09, but risen by 200,000 people in the last year. 12.9 million People (20% of the UK) were living in absolute poverty After Housing Costs were deducted (AHC). The number of individuals in absolute poverty AHC has fallen by 400,000 people in the 10 years since 2007/08, and risen by 400,000 people in the last year.

Poverty Estimates for Leeds

Table 1.3

Poverty Measure National Proportion Leeds Estimate
People in Relative Poverty BHC 17% 134,163
People in Relative Poverty AHC 22% 173,623
People in Absolute Poverty BHC 15% 118,379
People in Absolute Poverty AHC 20% 157,839
Source: DWP, Households below average income (HBAI), March 2020

The DWP’s estimates for Absolute and Relative Poverty are only available at a national level. Therefore; an estimate for Leeds can be calculated using nationally informed assumptions against the Leeds population figure for the same year. As the latest DWP data refers to 2018/19; the ONS Mid-year Population estimates for Leeds at 2018 of 789,194 have been used in the estimates above. For example it is reported by the DWP that there are 14.5 million people living in relative poverty in the UK, after housing costs. This was 22% of the UK population in 2018. Therefore, because Leeds is statistically considered to mirror the UK trend in terms of demographic profile, it can be assumed that 22% of the Leeds population in 2018 was living in relative poverty. This equates to 173,623 people in Leeds.

Poverty Thresholds, Income Before Housing Costs 

Income trends over time before deducting housing costs are useful where there has been an increase in housing costs because of better quality housing, and so living standards have improved.

Table 1.4

60% of UK Median Weekly Income 2018/19

£, per week

2017/18

£, per week

2008/09

£, per week

2010/11

£, per week

1 year

change £

10 year

change £

Couple with no children 308 312 298 288 -4 +10
Single with no children 206 209 199 193 -3 +7
Couple with two children aged 5 and 14 472 477 456 440 0 +16
Single with two children aged 5 and 14 370 374 357 345 0 +13
Source: DWP, Households below average income (HBAI), March 2020

The relative poverty threshold for a couple with no children was £308/week in 2018/19 BHC. This is the threshold used when estimating the number of people in relative poverty BHC in 2018/19. A single person with no children is in poverty if they earn £206/week or less BHC. The trend in relative poverty BHC over one year shows reductions for single persons with no children and couples with no children, but over 10 years shows an increase in median incomes over time. The absolute poverty threshold for a couple with no children is £295/week. This figure is based on the 2010/11 figure and was used to estimate the numbers in absolute poverty BHC in 2018/19.

Poverty Thresholds, Income After Housing Costs

Income trends over time after deducting housing costs are useful where rents have increased for a given quality of accommodation, otherwise, for example a rise in housing benefit to offset higher rents would be counted as an income rise.

Table 1.5

60% of UK Median Weekly Income 2018/19

£, per week

2017/18

£, per week

2008/09

£, per week

2010/11

£, per week

1 year

change £

10 year

change £

Couple with no children 268 268 256 253 0 +12
Single with no children 156 156 148 147 0 +8
Couple, two children aged 5 and 14 435 435 414 410 0 +21
Single, two children aged 5 and 14 322 322 307 303 0 +15
Source: DWP, Households below average income (HBAI), March 2020

The relative poverty threshold for a couple with no children was £268/week in 2018/19 AHC. This is the threshold used when estimating the number of people in relative poverty AHC in 2018/19. A single person with no children is in poverty if they earn £156/week or less AHC. The trend in relative poverty AHC over 1 year shows no change to incomes, but over 10 years there has been a rise in incomes over time. The absolute poverty threshold for a couple with no children is £253/week. This figure is based on the 2010/11 figure and was used to estimate the numbers in absolute poverty AHC in 2018/19.

Further information on Relative and Absolute Poverty

Relative Poverty measures individuals who have income below 60% of median incomes. Relative poverty will fall if:

  • individuals with low incomes see their incomes rise more than the Median average; or
  • individuals with low incomes see their incomes fall less than the Median average.

Absolute Poverty also measures individuals who have income below 60% of median incomes, but uses the median income from 2010/11 and adjusts this in line with inflation. This is designed to assess how low incomes are faring with reference to inflation/living standards.  Absolute Poverty will fall if:

  • individuals with low incomes see their incomes rise by more than inflation.

Both measures are available before and after housing costs are deducted from income.  The after housing cost measure is useful in the current economic climate as rising rents and property prices are a growing contributor to poverty.

The Leeds Poverty Fact Book includes all four measures for reference purposes, but often quotes Relative Poverty, after housing costs are deducted when discussing poverty estimates for Leeds in official reports and documents produced by the Council.

Median Income used for the relative poverty calculation in 2018/19 BHC was £514 per week and AHC was £447 per week.

 Median income used for the absolute poverty calculation in 2010/11 BHC £491 was and AHC was £422