Measuring poverty based on income
Each year, the Government publishes a survey of income poverty in the UK called Households Below Average income (HBAI). This survey sets the poverty line in the UK at 60 per cent of the median UK household income. In other words, if a household’s income is less than 60 per cent of this average, HBAI considers them to be living in poverty. This is the definition of relative poverty, whereas absolute poverty is where a household’s income is less than 60 per cent of the median as it stood in 2011.
One in five households in the UK have an income below the poverty line, after their housing costs are taken into account. 30 per cent of children live in households below the poverty line (after housing costs). This is almost double the poverty rate (16 per cent) for pensioners.
Calculating poverty after housing costs give a more accurate measure of how much families have to live on.
In the 1970s and 1980s, income inequality in the UK widened rapidly and the gap has remained wide since. Nearly all the increases in our national income have gone to people in the upper half of our income distribution, leaving the top fifth between five and six times better off than the bottom fifth.
Measuring poverty based on hardship
The Policy and Social Exclusion surveys (1983-2011) established the public view of socially-perceived necessities and how many households are going without these essentials.
Modest increases in income reduce hardship swiftly and effectively. In 2001, child poverty was 400,000 lower than in 1999 and severe hardship among out-of-work families almost halved – from four in 10 to less than one-quarter in just two years.
Eighty-five per cent of families in severe hardship have incomes below the poverty line.