Annex A
OFFICIAL STATISTICS ON POVERTY (LOW INCOME)
IN SCOTLAND 2004-05
CHILDREN
The number of individuals in relative low income
households before housing costs fell by 21%, from 1,010,000 in
1996-97 to 800,000 in 2004-05, a fall of 210,000.
After housing costs numbers fell by 26%, from
1,230,000 in 1996-97 to 910,000 in 2004-05, a fall of 320,000.
The number of children in relative low income
households before housing costs has fallen by 41%, from 320,000
in 1996-97 to 190,000 in 2004-05 (19% of all children), a fall
of 130,000.
HM Treasury (HMT)/Department for Work and Pensions'
(DWP) target to reduce the number of children in low-income households
in Great Britain by at least a quarter between 1998-99 and 2004-05
is measured using relative low income households before housing
costs. In Scotland, since 1998-99, there has been a 34% decrease.
After housing costs the number has fallen by
35% from 370,000 in 1996-97 to 240,000 in 2004-05 (23% of all
children), a fall of 130,000.
240,000 children have been lifted from absolute
poverty since 1997, reducing absolute child poverty from 33% to
13%—a reduction of 65% (after housing costs).
WORKING AGE
ADULTS
The number of working age adults in relative
low income households before housing costs has remained steady,
from 470,000 in 1996-97 to 440,000 in 2004-05 (15% of all working
age adults).
After housing costs the number again has remained
fairly steady, from 600,000 in 1996-97 to 540,000 in 2004-05 (18%
of all working age adults).
240,000 working age adults have been lifted
from absolute poverty since 1997 (after housing costs), reducing
absolute working age poverty from 20% to 12%—a reduction
of 39%.
PENSIONERS
The number of pensioners in relative low income
households before housing costs has fallen by 23%, from 220,000
in 1996-97 to 170,000 in 2004-05 (18% of all pensioners), a fall
of 50,000.
After housing costs the number has fallen by
46% from 260,000 in 1996-97 to 140,000 in 2004-05 (16% of all
pensioners), a fall of 120,000.
200,000 pensioners have been lifted from absolute
poverty since 1997 (after housing costs), reducing absolute pensioner
poverty from 30% to 6%—a reduction of 77%.
WHAT IS
THE MEASURE
OF LOW
INCOME?
Individuals are defined as living in low income
if their adjusted net disposable household income is below 60%
of the GB median. We publish low income estimates on a "before
housing costs" (BHC) and "after housing costs"
(AHC) basis.
The median is the income value which divides
a population, when ranked by income, into two equal-sized groups.
This measure is most commonly used because the mean (average)
can be skewed by households with very high incomes. We use household
income rather than individual income as the living standard of
an individual may depend on the income of other members of the
household. For example, a non-working person may live with a high
earning partner; so both will have a high standard of living.
This assumes that all individuals in the household benefit equally
from the combined income of the household.
WHAT IS
THE DIFFERENCE
BETWEEN RELATIVE
AND ABSOLUTE
LOW INCOME?
We use two headline measures—relative
and absolute low income households—to define and measure
those living in low income over time
The relative low income measure compares
household income against the GB median in the same year. Changes
in relative low-income indicators depend on how changing incomes
at the lower end of the distribution compare with income growth
for the rest of the population.
The absolute measure compares against
the median in the baseline year, 1996-97, adjusted to remove the
effects of inflation. The new child poverty measure uses a 1998-99
baseline.
Relative low-income counts fall if income growth
at the lower end outstrips overall income growth. Where reductions
are reported for relative low-income indicators, these are on
a smaller scale to those seen for the absolute indicators, as
a large part of the income growth at the lower end of the distribution
is absorbed in keeping up with the population as a whole.
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