Section 1: Relative and Absolute Poverty

Important Information for HBAI Poverty Statistics

The latest Households Below Average Income (HBAI) report presents information from an annual survey on UK living standards based on household income measures for financial year ending (FYE) 2023 and was published on 21 March 2024.

Estimates are provided for average incomes, and for the number and percentage of people living in low-income households. The statistics are the UK’s primary source of poverty estimates and, with a large sample size, are also the main source on household incomes.

The HBAI statistics are commonly referred to as ‘poverty statistics’ which show the number or percentage of people living in relative and absolute poverty.

Family Resources Survey (FRS) fieldwork during 2022/23

During the survey years spanning the coronavirus (COVID-19) pandemic, FRS interviewing was conducted by telephone rather than using the established face-to-face method. Fieldwork operations during FYE 2023 gradually returned to the arrangements in place prior to the pandemic.

Across the UK, 72% of FRS households were interviewed face-to-face during 2022/23. This year, the DWP have enhanced confidence in data quality due to the return of traditional fieldwork methods and the larger achieved sample size of 25 thousand households, some 30% larger than was achieved in 2019/20(pre-pandemic), and 50% higher than 2021/22.

DWP have completed extensive quality assurance of all published estimates, including comparing changes with external data sources, and analysing subgroups in detail. The achieved sample compares well with FYE 2020, and representativeness has improved on what was observed during the pandemic.

DWP continue to advise users that changes in estimates over recent years should be interpreted being mindful of the differences in data collection approaches across the period and the effect this had on sample composition.

Please be advised: due to the impact of the COVID-19 pandemic, the Households Below Average Income (HBAI) data release for 2020/21 and 2021/22 is less reliable than seen in previous years (full explanation available here).

Implications for the Fact Book

Due to the confidence in the data, latest annual data for 2021/22 and 2022/23 has been provided for side by side comparisons in this Poverty Fact Book update, however, it is important to recognise that the methodology was impacted between these two years and the face to face survey sample size was 50% smaller in  2021/2022. The DWP have advised caution when making year on year comparisons with data from 2020/21 and 2021/2022. Leeds City Council plan to provide options for longer term analysis into the Leeds Poverty Fact Book later in the year when the Fact Book is moved to a dashboard platform.

Relative Poverty – number of people affected in the UK

REMINDER: The Leeds Poverty Fact Book will soon be moving to a dashboard platform to allow longer term trend analysis. Due to the impact of the Covid-19 pandemic on this survey, 2021/22 data is being displayed for reference purposes. Caution is advised in making year-on-year comparisons to 2020/21 and to 2021/22.  This is due to the smaller sample sizes and differing collection methods carried out for surveys during the lockdown period. 

Absolute Poverty – number of people affected in the UK

Absolute poverty measures the number and proportion of individuals who have household incomes 60% below the median 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.

The median income threshold is the mid-point income in the UK population, and means that half the population in the UK are earning the median income or less, and the other half earn that income or more. In 2010/11, the median household income in the UK was £578 per week, before housing costs were deducted from that income (BHC), and £498 per week, after housing costs were deducted (AHC).

60% of that median income is £347/week BHC and £299/week AHC.  Therefore, when discussing Absolute Poverty BHC, the analysis represents the number and proportion of people from households earning £347 per week or less. When discussing Absolute Poverty AHC, the analysis represents people from households earning £299 per week or less.

The number and proportion of people impacted by absolute poverty are broken down below.

Table 1.2

REMINDER: The Leeds Poverty Fact Book will soon be moving to a dashboard platform to allow longer term trend analysis. Due to the impact of the Covid-19 pandemic on this survey, 2021/22 data is being displayed for reference purposes. Caution is advised in making year-on-year comparisons to 2020/21 and to 2021/22.  This is due to the smaller sample sizes and differing collection methods carried out for surveys during the lockdown period. 

Poverty Estimates for Leeds

Table 1.3

The DWP’s estimates for Absolute and Relative Poverty are only available at a national level, however 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 2022/23; the ONS Mid-year Population estimates for Leeds in 2022 of 822,483 have been used in the estimates above.

For example it is reported by the DWP that there are 14.3 million people living in relative poverty in the UK, after housing costs. This was 21% of the UK population in 2022/23. Therefore, because Leeds is statistically considered to mirror the UK trend in terms of demographic profile, it can be assumed that 21% of the Leeds population in 2022/23 was living in relative poverty. This equates to 176,376 people in Leeds.

Poverty Thresholds, Income Before Housing Costs 

Table 1.4

The relative poverty threshold for a couple with no children was £373/week in 2022/23 BHC. This is the threshold used when estimating the number of people in relative poverty BHC in 2022/23. A single person with no children is in poverty if they earn £250/week or less BHC.

The absolute poverty threshold for a couple with no children was £347/week. This figure is based on the 2010/11 median income figure, uprated for inflation, and was used to estimate the numbers in absolute poverty BHC in 2022/23.

Poverty Thresholds, Income After Housing Costs

Table 1.5

The relative poverty threshold for a couple with no children was £327/week in 2022/23 AHC. This is the threshold used when estimating the number of people in relative poverty AHC in 2022/23. A single person with no children is in poverty if they earn £190/week or less AHC.

The absolute poverty threshold for a couple with no children is £299/week AHC. This figure is based on the 2010/11 median income figure, uprated by inflation and was used to estimate the numbers in absolute poverty AHC in 2022/23.

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.