Section 5: In-work Poverty and Out of Work Benefits

Understanding In-work Poverty

In-work Poverty data can provide an indication that a significant proportion of people in work are needing to claim benefits or tax credits because they are not earning enough to pay their bills. In-work poverty can occur due to problems with the nature of work at the bottom end of the labour market. Jobs that are low paid, low skilled and offer zero-hour contracts contribute to in-work poverty.

In-Work and Workless Households in Relative Poverty UK Snapshot 

Table 5.1

Economic status of household BHC AHC
No % No %
All adults in work 1.7m 7% 2.4m 10%
At least one adult in work, but not all 2.1m 20% 2.9m 28%
Workless households 2.1m 47% 2.6m 58%
Source: DWP, Households below average income (HBAI), March 2019

Before Housing Cost (BHC), 7% of working age adults in the UK live in households where everyone is in work yet they are still in relative poverty. This affects an estimated 1.7m adults in the UK.  After Housing Cost (AHC) this figure moves up to 2.4m adults being affected. BHC, 20% of working age adults in the UK live in households where at least one adult is in work and live in relative poverty. This affects an estimated 2.1m adults in the UK.  AHC this figure moves up to 2.9m adults being affected. BHC, 47% of working age adults in the UK live in households where no adults are in work and live in relative poverty. This affects an estimated 2.1m adults in the UK.  AHC this figure moves up to 2.6m adults being affected.

In-Work and Workless Households in Relative Poverty Leeds Estimate

Table 5.2

At least one adult in work BHC AHC
No % No %
UK 3.8m 9.7% 5.4m 13.7%
Leeds 49,723 9.7% 70,248 13.7%
Source: DWP, Households below average income (HBAI), March 2019 and ONS APS Mid-year Population Estimates 2017

Nationally it is estimated that 3.8 million adults that are in poverty are from households where at least 1 person is in work (BHC). This affected almost 9.7% of all working age adults in the UK in 2017/18. If 9.7% is applied to the working age population of Leeds, 49,723 Leeds adults could be affected by in-work poverty.

5.4 million adults that are in poverty are from households where at least 1 person is in work (AHC). This affected 13.7% of all working age adults in the UK in 2017/18. If 13.7% is applied to the working age population of Leeds, 70,248 Leeds adults could be affected by in-work poverty. (The working age population of Leeds in 2017 was 512,798.)

In-Work and Not Working Households, claiming Welfare Benefits, Leeds Snapshot

The DWP HBAI In-work and Workless Relative Poverty data is not available at a Leeds level.  As a proxy indicator for in-work poverty, the table below provides a snapshot of LCC’s Welfare Benefits data, broken down into households which are in-work and claiming Housing Benefits and or Council Tax Support.

Table 5.3

Household Type In Work Not working
Households % Households %
Working age households 12,202 17.4 30,721 43.7
Pensioner Households 662 0.9 26,667 38.0
Source: LCC Welfare Benefits Snapshot Mar 2019

70,252 households in Leeds were claiming one or more local authority welfare benefit as of Mar 2019.  Of this figure, 12,202 householders were of a working age and in work.  This is 17.4% of all Leeds households in receipt of a welfare benefit and in-work.

Leeds DWP Benefit Claimants

The DWP HBAI In-work and Workless Relative Poverty data is not available at a Leeds level.  As a proxy indicator for in-work poverty, the table below provides DWP’s Benefits data, broken down into individual claimants which are in-work and claiming a DWP Benefit.

Table 5.4 

A new table on DWP benefit claimants will be added to this section in September 2019.

Leeds DWP Out of Work Benefits – Local Proxy for Worklessness

Table 5.5 

A new table on DWP out of work benefit claimants will be added to this section in September 2019.

Leeds DWP In-Work Benefits – Local proxy for in-work poverty

Key in-work benefits: consists of: Carers Allowance (Carers), Disability Living Allowance, Attendance Allowance or Industrial Injuries benefits (Disabled) and Widow’s Benefit, Bereavement Benefit or Industrial Death Benefit (Bereaved)

Table 5.6 

A new table on DWP in-work benefit claimants will be added to this section in September 2019.

Families in receipt of tax credits

Table 5.7

Families in receipt of Tax Credits UK Leeds Leeds Change
2018 2018 2017 2017-18
Total out-of-work families 1.12 15,900 16,400 -500
In work, with children, receiving WTC and CTC 1.56 21,800 22,300 -500
In work, with children, receiving CTC only 764,400 9,300 9,400 -100
In work, childcare element (lone parent) 1.1 15,400 15,400 0
In work, no children, receiving WTC only 341,900 4,400 5,100 -700
Total in receipt of WTC and/or CTC 3.78 51,400 53,200 -1,800
Source: HMRC Child and Working Tax Credits, Finalised Annual Awards, June 2019
  • A total of 3.78 million (in-work and out-of-work) families in the UK are in receipt of a form of tax credits, 51,400 of which are in Leeds.  This figure has fallen by 1,800 Leeds families in the year from 2017-18.  Leeds families in receipt of tax credits are broken down as described below:
  • 15,900 Leeds families are out-of-work and in receipt of HMRC administered CTC or child benefit through the DWP (the DWP child support cases will soon be migrating to HMRC CTC).
  • 21,800 Leeds families with children are in-work and in receipt of WTC and CTC.
  • 9,300 Leeds families are in work, with children and in receipt of CTC only.
  • Amongst the 31,100 families in work with children and in receipt of tax credits, 15,400 (almost 50%) are in-work lone parents.
  • 35,500 out of 51,400 (69%) families claiming tax credits are in work in Leeds.

Number of Children from families in receipt of tax credits

Table 5.8

Families in receipt of Tax Credits UK Leeds Leeds Change
2018 2018 2017 2017-18
No of Children in out of work families in receipt of WTC and/or CTC 2.18 31,500 32,600 -1,100
No of Children in working families receiving WTC and CTC 2.93 42,100 42,500 -400
No of Children in working families receiving CTC only 1.61 19,200 19,400 -200
Total number of children in recipient families 6.72 92,800 94,500 -1,700
Source: HMRC Child and Working Tax Credits, Finalised Annual Awards, June 2019

A total of 6.72 million children in the UK are from families in receipt of a form of tax credits, 92,800 of which are in Leeds.  This figure has fallen by 1,700 in the last year from 2017-18.  Children from families in receipt of tax credits are broken down as described below:

  • 31,500 Leeds children are from families that are out-of-work and in receipt of HMRC administered CTC or child benefit through the DWP (the DWP child support cases will soon be migrating to HMRC CTC).
  • 42,100 Leeds children are from families in-work and in receipt of WTC and CTC.
  • 19,200 children are from families receiving CTC only.

Changes to Tax Credits

Table 5.9

Families in receipt of Tax Credits Leeds Change
2012 2013 2014 2015 2016 2017 2018 2012-18
Total out-of-work families 17,900 18,700 18,000 17,200 16,500 16,400 15,900 -2,000
In work, with children, receiving WTC and CTC 24,200 22,700 22,700 23,000 23,100 22,300 21,800 -2,400
In work, with children, receiving CTC only 20,200 9,700 9,600 9,500 9,300 9,400 9,300 -10,900
In work, lone parent 15,800 14,700 14,900 15,200 15,300 15,400 15,400 -400
In work, no children, receiving WTC only 6,900 6,600 6,600 6,400 6,200 5,100 4,400 -2,500
Total in receipt of WTC and/or CTC 69,300 57,700 56,900 56,100 55,100 53,200 51,400 -17,900
Children in out of work families rec WTC &/ CTC 34,100 36,000 34,800 33,500 32,500 32,600 31,500 -2,600
Children in working families rec WTC & CTC 43,300 40,500 41,300 42,700 43,500 42,500 42,100 -1,200
Children in working families rec CTC only 33,400 19,100 19,100 19,100 19,000 19,400 19,200 -14,200
Total children in recipient families 110,800 95,600 95,200 95,300 95,000 94,500 92,800 -18,000
Source: HMRC Child and Working Tax Credits, Finalised Annual Awards, June 2019

A number of policy changes that affect Tax Credits were introduced in April 2012 as part of Government announcements in the 2010 Budget and Spending Review. The changes have meant that families that used to receive working tax credit or child tax credits are no longer entitled to receive anything.  This table reviews annual data on tax credits to understand how many Leeds families have been impacted since the policy changes in 2012.

Since 2013, figures have remained relatively stable or show a gradual declining in families receiving tax credits. However the change since 2012 does reveal the extent of the cuts. Overall, the number of families in receipt of WTC and CTC has reduced in Leeds since 2012.  10,900 families that were in work, with children stopped receiving CTC from April 2012. This has affected 14,200 children in working families across Leeds.

Further Information

Tax Credits

Tax credits are a flexible system of financial support designed to deliver support as and when a family needs it, tailored to their specific circumstances. They are part of wider government policy to provide support to parents returning to work, reduce child poverty and increase financial support for all families. Tax credits are based on household circumstances and can be claimed jointly by members of a couple, or by singles. Entitlement is based on age, income, hours worked, number and age of children, childcare costs and disabilities.

From October 2018, in Leeds all new claims for tax credits would need to be claimed as an element under Universal Credit.

DWP Benefits

DWP Benefits a DWP benefit claimant is defined as the individual who is claiming benefit on their own behalf, or in the case of Universal Credit, Pension Credit and Housing Benefit, an individual who is part of a single or couple claim for benefit. An individual is not counted as a benefit claimant if they are a beneficiary of another person’s benefit claim but are not claiming any benefit in their own right. The DWP benefit combination dataset contains the following breakdowns:

  • AA=Attendance Allowance
  • BB=Bereavement Benefit
  • CA=Carer’s Allowance
  • DLA=Disability Living Allowance
  • ESA=Employment and Support Allowance
  • HB=Housing Benefit
  • IB=Incapacity Benefit
  • IS=Income Support
  • JSA=Jobseeker’s Allowance
  • PC=Pension Credit
  • PIP=Personal Independence Payment
  • SDA=Severe Disablement Allowance
  • SP=State Pension
  • UC=Universal Credit
  • WB=Widow’s Benefit

PIP/DLA/AA Disability Living Allowance (DLA) is a benefit for people who became disabled before the age of 65 and who need assistance with personal care or mobility. From 8th April 2013 DWP started to replace DLA for working age people with Personal Independence Payment (PIP). However, people can continue to receive PIP or DLA after reaching age 65 if they continue to satisfy the entitlement conditions. Attendance Allowance (AA) is a benefit for people over the age of 65 who are so severely disabled that they need a great deal of help with personal care or supervision. Essentially these three benefits each offer help for similar sets of circumstances, although under slightly different qualifying conditions. As such they have been banded together and the benefit combinations statistics simply show PIP/DLA for Working Age individuals, or PIP/DLA/AA for State Pension Age individuals, where the individual could be on any of the benefits shown at the reference date.

INCAP The benefit combination statistics refer to INCAP which is short hand for ESA/IB/SDA/IS(IB). Incapacity Benefit (IB), Severe Disablement Allowance (SDA) (for those under SPA), and Income Support for those claiming on the basis of incapacity (IS(IB)) closed to new claimants from 2008, with existing claimants migrated to Employment and Support Allowance (ESA) on a rolling program since that date. Migration is not yet fully completed. Essentially these four benefits each offer help for similar sets of circumstances, although under slightly different qualifying conditions. As such they have been banded together and the benefit combinations statistics simply show INCAP, where at the reference date the individual could be on any of ESA; IB and/or SDA (separately or in combination); and IS where IB and/or SDA is also in payment.

IS Income Support for those claiming on the basis of incapacity (IS(IB)) closed to new claimants from 2008, with existing claimants migrated to Employment and Support Allowance (ESA) on a rolling program since that date. Migration is not yet fully completed. Benefit Combination statistics include IS(IB) cases in the INCAP category defined above. Those claiming Income Support on the basis of something other than incapacity (e.g. carers, lone parents etc.) are shown as IS within these statistics.

UC Universal Credit was introduced in April 2013 in certain pathfinder areas of North West England. Since October 2013, it has progressively been rolled out to other areas. It is now available in all Jobcentre Plus areas to single claimants, and is being expanded across the country to include all claimant types. The following benefits will be replaced as Universal Credit rolls out: Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit. An individual claiming Universal Credit may have to do work-related activity in order to get full entitlement to Universal Credit. Each eligible adult will fall into one of six conditionality regimes based on their capability and circumstances. The benefit combination statistics band together certain conditionality regimes and present UC claims as belonging to one of four categories:

Further information relating to DWP benefit combinations can be found here: https://www.gov.uk/government/collections/dwp-statistical-summaries.