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	2019/20	2018/19	2017/18	2009/10	2010/11	1 year change	10 year change
No of People in Relative Poverty BHC(m)	11.7m	11.0m	11.1m	10.4m	9.8m	+0.7m	+1.4m
People in Relative Poverty BHC %	18%	17%	17%	17%	16%
No of People in Relative Poverty AHC(m)	14.5m	14.4m	14.0m	13.5m	13m	+0.1m	+0.9m
People in Relative Poverty AHC %	22%	22%	22%	22%	21%
Source: DWP, Households below average income (HBAI), March 2021

In 2019/20, 11.7 million people (18% of the UK) were living in relative poverty Before Housing Costs were deducted (BHC). The number of individuals in relative low income has increased by 700,000 people since 2018/19 and increased by 1.4 million people in the 10 years since 2009/10. 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 100,000 people since 2018/19 and by 900,000 people in the 10 years since 2009/10.

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	2019/20	2018/19	2017/18	2009/10	2010/11	1 year change	10 year change
No of People in Absolute Poverty BHC(m)	9.2m	9.7m	9.5m	9.9m	9.8m	-0.5m	-0.7m
People in Absolute Poverty BHC %	14%	15%	15%	16%	16%
No of People in Absolute Poverty AHC(m)	11.7m	12.8m	12.5m	13.1m	13m	-1.1m	-1.3m
People in Absolute Poverty AHC %	18%	20%	19%	21%	21%
Source: DWP, Households below average income (HBAI), March 2021

In 2019/20, 9.2 million people (14% of the UK) were living in absolute poverty Before Housing Costs were deducted (BHC). The number of individuals in absolute poverty has fallen by 0.7m people in the 10 years since 2009/10, and fallen by 500,000 people in the last year. 11.7 million People (18% 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 1.3 million people in the 10 years since 2009/10, and fallen by 1.1 million people in the last year.

Poverty Estimates for Leeds

Table 1.3

Poverty Measure	National Proportion	Leeds Estimate
People in Relative Poverty BHC	18%	142,765
People in Relative Poverty AHC	22%	174,491
People in Absolute Poverty BHC	14%	111,039
People in Absolute Poverty AHC	18%	142,765
Source: DWP, Households below average income (HBAI), March 2021

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 2019/20; the ONS Mid-year Population estimates for Leeds at 2019 of 793,139 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 2019. 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 2019 was living in relative poverty. This equates to 142,765 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	2019/20 £, per week	2018/19 £, per week	2017/18 £, per week	2009/10 £, per week	2010/11 £, per week	1 year change £	10 year change £
Couple with no children	314	317	317	303	300	-3	+11
Single with no children	210	213	213	203	201	-2	+7
Couple with two children aged 5 and 14	480	486	486	464	459	0	+16
Single with two children aged 5 and 14	377	381	381	364	360	0	+13
Source: DWP, Households below average income (HBAI), March 2021

The relative poverty threshold for a couple with no children was £314/week in 2019/20 BHC. This is the threshold used when estimating the number of people in relative poverty BHC in 2019/20. A single person with no children is in poverty if they earn £210/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 £300/week. This figure is based on the 2010/11 figure and was used to estimate the numbers in absolute poverty BHC in 2019/20.

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	2019/20 £, per week	2018/19 £, per week	2017/18 £, per week	2009/10 £, per week	2010/11 £, per week	1 year change £	10 year change £
Couple with no children	273	273	274	261	258	0	+13
Single with no children	158	159	159	151	149	0	+7
Couple, two children aged 5 and 14	443	443	444	422	417	0	+20
Single, two children aged 5 and 14	328	328	329	313	309	0	+15
Source: DWP, Households below average income (HBAI), March 2021

The relative poverty threshold for a couple with no children was £273/week in 2019/20 AHC. This is the threshold used when estimating the number of people in relative poverty AHC in 2019/20. A single person with no children is in poverty if they earn £158/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 £258/week. This figure is based on the 2010/11 figure and was used to estimate the numbers in absolute poverty AHC in 2019/20.

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 2019/20 BHC was £547 per week and AHC was £476 per week.

 Median income used for the absolute poverty calculation in 2010/11 BHC £500 was and AHC was £429