Poverty and Income Inequality in Scotland: 2012/13

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First published by The Scottish Government, July 2014
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The Scottish Government
St Andrew’s House
Edinburgh
EH1 3DG

Produced for The Scottish Government by APS Group Scotland, 21 Tennant Street, Edinburgh EH6 5NA
DPPAS32713 (07/14)

Published by The Scottish Government, July 2014

Contents

A National Statistics Publication for Scotland

Poverty and Income Inequality in Scotland: 2012/13

Key points

Changes to statistics 2012/13

Chapter 1: Poverty
1.1 Individuals in poverty
1.2 Child poverty
1.3 Working age adult poverty
1.4 Pensioner poverty
1.5 In-work poverty

Chapter 2: Income Inequality and the distribution of income
2.1 Income distribution
2.2 Income thresholds
2.3 Trends in income distributions

Chapter 3: Household characteristics and income distribution
3.1 Household composition
3.2 Household economic status

Annex 1: Tables

Table A1: Relative poverty (below 60% of UK median income in the same year) in Scottish households: 1994/95 to 2012/13
Table A2: Absolute poverty (below 60 per cent of inflation adjusted 2010/11 UK median income) in Scottish households: 1994/95 to 2012/13
Table A3: Children in combined material deprivation and low income (below 70 per cent of UK median income in the same year) in Scottish households: 2004/05 to 2012/13
Table A4: Pensioners over 65 in material deprivation: 2009/10 to 2012/13
Table A5: In-work poverty (relative poverty BHC) in Scotland: 1998/99 to 2012/13 Percentage of individuals in poverty in households with at least one adult in employment
Table A6: Median equivalised weekly household income in Scotland: 1994/95 to 2012/13 (2012/13 prices)
Table A7: Median equivalised weekly household income in Scotland: 1994/95 to 2012/13 (2012/13 prices) Children, working age adults and pensioners
Table A8: Equivalised weekly household income (BHC) in Scotland: 1994/95 to 2012/13 (2012/13 prices)
Table A9: Household type by equivalised income decile in Scotland: 2012/13
Table A10: Economic status of households by equivalised income decile: Scotland 2012/13
Table A11: Full time, part time and not in employment by equivalised income decile: Scotland 2012/13

Annex 2: Data Sources and Definitions

Annex 3: Revisions to income and poverty statistics

Annex 4: Welfare Reform in 2012/13

Annex 5: Where to find more information

A National Statistics Publication for Scotland

Poverty and Income Inequality in Scotland: 2012/13

This publication presents annual estimates of the percentage and number of people, children, working age adults and pensioners living in low income households in Scotland. The estimates are used to monitor progress towards UK and Scottish Government targets to reduce poverty and income inequality. The data published for the first time here are for the financial year April 2012 to March 2013. The latest figures cover a period where the Scottish economy and wider UK economy were both showing little GDP growth and below inflation growth in earnings. These figures also take into account the impact of welfare reforms introduced in April 2012. Median income fell in Scotland in 2012/13.

Key points

- 16 per cent of individuals in Scotland were living in relative poverty in 2012/13, an increase from 14 per cent the previous year. In 2012/13, there were 820 thousand individuals in Scotland living in relative poverty, 110 thousand more than in 2011/12.

- 19 per cent of children in Scotland were living in relative poverty in 2012/13, an increase from 15 per cent the previous year. In 2012/13, there were 180 thousand children in Scotland living in relative poverty, 30 thousand more than in 2011/12.

- 15 per cent of working age adults in Scotland were living in relative poverty in 2012/13, an increase from 13 per cent the previous year. In 2012/13, there were 480 thousand working age adults in Scotland living in relative poverty, 70 thousand more than in 2011/12.

- 15 per cent of pensioners in Scotland were living in relative poverty in 2012/13, an increase from 14 per cent the previous year. In 2012/13, there were 150 thousand pensioners in Scotland living in relative poverty, 10 thousand more than in 2011/12.

- In terms of income inequality, the percentage of income received by the lowest 3 income deciles in 2012/13 was 14 per cent, unchanged from 2011/12.

- Median income in Scotland in 2012/13 was £23,000, equivalent to £440 per week. This is the third consecutive annual fall in median income in Scotland.

- The proportion of people in poverty who live in working households increased in 2012/13. In 2012/13, 52 per cent of working age adults in poverty were living in households where at least one adult was in employment, as were 59 per cent of children in poverty.

Please Note:

In this publication, all statistics are based on net income. That is, income after taxes and including benefits. Income is calculated at the household level, and reflects the income available to the household after taxes are paid and all benefits and tax credits have been received. Unless otherwise stated, incomes for previous years are in 2012/13 prices (real prices).

All figures in this publication are rounded to the nearest 10 thousand individuals or whole percentage point. In some cases calculations based on the unrounded figures do not match those based on the rounded ones.

The estimates presented in this publication are based on a sample survey and are therefore subject to sampling error. Confidence intervals are a measure of sampling error. A 95 per cent confidence interval for an estimate is the range that contains the ‘true’ figure on average 19 times out of 20 if sampling error were the only source of errors. Many of the changes referred to in this publication are within the width of the confidence limits and caution should be exercised when looking at year on year comparisons, with longer term trends often giving a clearer picture. More information can be found here:

Scottish Government – Income and Poverty Statistics – Methodology

Presentation of key points and definitions

Each section starts with a blue box providing the key facts for that section. Where relevant, important definitions are provided in a green box at the end of each section.

Changes to statistics 2012/13

This publication includes changes to the statistics compared with previous publications:

1. Following publication of the 2011 census results, population totals for Scotland and the UK have been updated for years following the previous census in 2001. As such, the previously published statistics for 2002/03 to 2011/12 have been revised to better reflect the make-up of the population over this period. The effect of this revision is small and does not affect the overall trends seen in poverty and income inequality over this period. Please see Annex 3 for more details.

2. Pensioners are defined as all those adults above State Pension age. Working age adults are defined as all adults up to the state pension age. Prior to April 2010, women reached the state pension age at 60. Between April 2010 and March 2016 the state pension age for women is increasing to 63 and will then increase to 65 between April 2016 to November 2018. The changes do not affect the state pension age for men, which remains at 65. Therefore, as with the previous two reports, the age groups covered by the analysis of working-age adults and pensioners will change for the 2012/13 report. The material deprivation statistics will continue to be based on pensioners aged 65 and over.

3. Small improvements made to the calculation of bonus and property tax in the 2012/13 HBAI data, largely affecting those on higher incomes, will have had an effect on top incomes and measures of income inequality.

Full details of all methodological changes can be found on the DWP website.

Chapter 1: Poverty

1.1 Individuals in poverty

Key points:

- In 2012/13, 16 per cent of Scotland's people were living in relative poverty (BHC), an increase from 14 per cent in 2011/12.

- 820 thousand people were living in relative poverty (BHC) in Scotland in 2012/13, 110 thousand more than in the previous year.

- Several key factors have affected household incomes in 2012/13. These are discussed within the relevant sections below.

The figures above are based on income ‘Before Housing Costs’ (BHC); changes in income ‘After Housing Costs’ (AHC) are given later in the text.

The Scottish Government’s National Indicator 35 is to “decrease the proportion of individuals living in poverty”:

http://www.scotland.gov.uk/About/Performance/scotPerforms/indicator/poverty

This is measured using relative poverty before housing costs (BHC).

Charts 1A and 1B below show Scottish trends for relative and absolute poverty for all individuals between 1998/99 and 2012/13.

Chart 1A – Relative Poverty – All Individuals

Chart 1B – Absolute Poverty – All Individuals

Source: HBAI dataset, DWP. See Annex 1 (Tables A1 and A2) for the figures behind these charts.

Charts with confidence intervals for relative and absolute poverty can be found in Confidence Intervals Surrounding Key Poverty Estimates

Note: The grossing factors have been updated to incorporate the 2011 census results. The previously published statistics have been revised to reflect the population since the 2001 census. Further information is available in Annex 3

In 2012/13, relative poverty (BHC) for all individuals increased to 16 per cent, a 2 percentage point increase compared with 2011/12. In 2012/13, there were 820 thousand people living in relative poverty (BHC) in Scotland, 110 thousand more than the previous year.

The change in the number and percentage of people in relative poverty (BHC) between 2011/12 and 2012/13 is statistically significant. Longer term trends often offer a better indication of significant changes, and prior to 2012/13 there had been periods of declining poverty rates for all groups in the population. Although there has been an increase in poverty this year, it is not yet clear if this is the start of a significant upward trend.

After Housing Costs have been taken into account, 19 per cent of people in Scotland were in relative poverty, a 3 percentage point increase compared with 2011/12. In 2012/13, there were 1 million people living in relative poverty (AHC), 140 thousand more than the previous year. Relative poverty AHC had remained unchanged since 2006/07 at 19 per cent before decreasing to 16 per cent between 2009/10 and 2011/12. This decrease has now been reversed.

Absolute poverty, a measure of whether the lowest income households are keeping pace with inflation, has increased in 2012/13 (both BHC and AHC). Absolute poverty (BHC) increased from 15 per cent in 2011/12 to 17 per cent in 2012/13, an increase of 100 thousand people. This represents 880 thousand people living in absolute poverty (BHC) in 2012/13. As absolute poverty is based on the poverty threshold in 2010/11, and incomes have decreased in real terms since then, absolute poverty rates are now higher than relative poverty rates.

Commentary:

Relative poverty increased in 2012/13. This reflects a number of changes such as: changes in the labour market and employment patterns, continued welfare reform (such as tightening of eligibility for tax credits for couples in employment and freezing of some elements of benefits and tax credits), increases in the personal tax allowance, and decreases in average earned income in the latest year. These factors have varying impact on the rate of poverty with some, such as increasing the personal tax allowance, mitigating the impact of others. The net effect however is an increase in relative poverty.

There was a fall in median income in Scotland in 2012/13 compared with the previous year. While income decreased for most households, the poorest households had the largest percentage decreases in household income in 2012/13. There were small increases in the top two income deciles, the only income deciles to show an increase 2012/13. Income for working age people, and for households with children, fell in 2012/13, while those for pensioner households increased. There were also differences dependent on whether households were in employment or not, and for those in employment, whether they had the opportunity to increase hours worked.

Income from earnings for those at the median income in Scotland increased overall in 2012/13, but fell for those on the lowest incomes. Increases in hourly pay in Scotland varied significantly depending on the sector and skill level of employment. There was little or no growth in hourly earnings for those in lower paid employment.

Over the last decade, relative poverty (BHC) in Scotland decreased steadily from 20 per cent in 2002/03 to 14 per cent in 2011/12, followed by an increase in the latest year. There was little progress in reducing relative poverty between 2004/05 and 2009/10, with rates remaining flat. The decreases in relative poverty in 2010/11 and 2011/12 were largely due to falling median incomes, rather than any material improvement in people’s lives.

Low-Income Poverty Indicators

The Scottish Government currently uses two main indicators of low-income poverty, both of which reveal slightly different information about changes in poverty over time. These indicators are relative and absolute poverty.

Relative poverty:

Relative poverty is a measure of how many people are living below a defined income threshold in the most recent year. In this report, individuals are said to be in relative poverty if they are living in households whose equivalised income is below 60 per cent of UK median income in that year. Relative low income rates fall if household income for the poorest households increases faster than median income. In 2012/13, the relative poverty threshold for a couple with no children was an income of £264 per week (BHC) from all sources (see Annex 2 for further information on income definitions). For a couple with children the threshold would be higher and for a single person (without children) the threshold would be lower.

Absolute poverty:

Absolute poverty is a measure of whether income for the lowest income households are keeping pace with inflation. Individuals are said to be living in absolute poverty if they are living in households whose equivalised income is below 60 per cent of the (inflation adjusted) median income in 2010/11. In 2012/13 the absolute poverty threshold for a couple with no children was an income of £272 per week (BHC) from all sources (see Annex 2 for further information on income definitions).

1.2 Child poverty

Key points:

- In 2012/13, 19 per cent of Scotland‟s children were living in relative poverty (BHC), an increase from 15 per cent in 2011/12.

- 180 thousand children were living in relative poverty (BHC) in Scotland in 2012/13, 30 thousand more than in the previous year.

- The percentage of children in combined material deprivation and low income increased from 9 per cent to 11 per cent. In 2012/13, there were 110 thousand children living in combined low income and material deprivation, 20 thousand more than the previous year. For this measure, the low income threshold is defined as 70 per cent of UK median income.

- Incomes for households with children fell in 2012/13 reflecting low wage growth, tightening of eligibility and conditionality for benefits and tax credits under welfare reform, and individual households ability to increase their hours worked.

Child poverty is commonly measured using the following indicators:

- relative poverty (BHC),

- absolute poverty (BHC),

- material deprivation and low income (BHC) combined.

These are three of the four poverty indicators which the UK parliament is required to report on by the 2010 Child Poverty Act. There is also a persistent poverty indicator in the Act but the precise target is yet to be defined. Information on the targets for the Child Poverty Act can be found in Annex 1.

The Scottish Government’s National Indicator 36 is to “reduce children’s deprivation”:

http://www.scotland.gov.uk/About/Performance/scotPerforms/indicator/childdeprivation

This is measured using the material deprivation and low-income combined poverty indicator.

Chart 2 below presents recent Scottish poverty trends for these three child poverty indicators.

Chart 2 – Child Poverty in Scotland: 1998/99 – 2012/13

Source: HBAI dataset, DWP. See Annex 1 (Tables A1, A2 and A3) for the figures behind these charts.

Notes:

1. A version of this chart showing the Child Poverty Act targets can be found in Annex 1, Chart A14.

2. Charts with confidence intervals for relative and absolute child poverty can be found in Confidence Intervals Surrounding Key Poverty Estimates.

3. Changes in the material deprivation questions in 2010/11 created a break in the series. Data for 2010/11 onwards is not directly comparable with that prior to 2010/11. Further information is available in Annex 2

4. The grossing factors have been updated to incorporate the 2011 census results. The previously published statistics have been revised to reflect the population since the 2001 census. Further information is available in Annex 3

In 2012/13, relative child poverty (BHC) increased to 19 per cent, a 4 percentage point increase compared with 2011/12. This reverses the downward trend in child poverty over recent years. In 2012/13, there were 180 thousand children living in relative poverty (BHC), 30 thousand more than the previous year.

The change in the number and percentage of children in relative poverty (BHC) between 2011/12 and 2012/13 is not statistically significant. As this is the first increase in child poverty after 3 years of a decreasing trend, it is not yet clear if this is the start of a significant trend.

After Housing Costs, relative child poverty increased to 22 per cent, a 3 percentage point change compared to the previous year. In 2012/13, there were 220 thousand children living in relative poverty (AHC), 30 thousand more than in 2011/12.

The percentage of children in absolute poverty (BHC) in 2012/13 was 20 per cent, an increase from 17 per cent in 2011/12. This represents 200 thousand children living in absolute poverty (BHC) in 2012/13, 30 thousand more than in 2011/12.

In 2012/13, 11 per cent of children in Scotland were living in combined low income and material deprivation, a 2 percentage point increase compared with 2011/12. This equates to 110 thousand children living in combined low income and material deprivation in 2012/13, 20 thousand more than the previous year.

Commentary:

The increase in child poverty in the latest year is driven by a fall in household incomes for working households with children. For households in employment, the reduced entitlement to tax credits has contributed to a fall in household incomes for those with lower earnings who were unable to increase the number of hours worked. At April 2013, there was a 26 per cent decrease in the number of children in households in Scotland in receipt of in-work tax credits, compared with April 2012. There was little change in the number of children in households in receipt of out-of-work tax credits, or for households without children, in receipt of tax credits. Households with children may not have the opportunity to increase hours worked, or to work more flexibly, compared with households without children.

The introduction of other changes to benefits and tax credits in April 2012 have also affected household income. Changes to benefits and tax credits specifically affecting families with children included:

- freezing the basic element of working tax credits,

- increasing the minimum number of hours worked from 16 to 24 to qualify for tax credits for couple families,

- freezing the income threshold for child tax credits at 2011 levels,

- abolishing the second income threshold for child tax credits,

- the introduction of the income disregard for tax credit, affecting those whose income was falling.

For those in employment, increases in earned income were dependent on the employment adults were in: while median annual earnings for all employees in Scotland increased 2.8 per cent between 2012 and 2013 (a fall in real terms), increases in hourly pay varied from 0.5 per cent in less skilled employment, 1 per cent across the public sector, with larger increases for some sectors, and higher skilled employment.

Over the last decade, the proportion of children in Scotland living in relative poverty (BHC) has decreased by 10 percentage points from 24 per cent in 2002/03 to 15 per cent in 2011/12, before increasing again in the latest year. After decreasing to 2004/05, relative child poverty (BHC) remained largely unchanged before decreasing significantly between 2009/10 and 2011/12.

Much of the fall in child poverty up to 2011/12 in Scotland was due to a fall in the high poverty rate among lone-parent households. This was likely to be due to an increase in employment rates for lone parents in Scotland over the last decade, as well as policies that have sought to address poverty in this group. Employment rates for two parent households have also increased over the last decade, contributing to a fall in child poverty among working-couple parents, as more couple households move into ‘full’ working (where both adults are in work and at least one of them is working full time). Poverty for children in workless households in Scotland remains high.

Households not in employment are significantly more likely to be dependent on benefit income as the only source of income. Up to 2010/11, some benefits relating to households with children were uprated at a faster rate than other benefits, however these increases were still not as large as the increase in average earnings in real terms. In 2012/13, a number of benefit changes, although having different effects on different households, resulted in smaller growth in real benefit income than may have been expected from the level at which benefits were uprated. Again this year, low wage growth has meant benefits have increased faster than earned income. However in the latest year, eligibility and conditionality have been tightened under welfare reform, meaning fewer households with children were in receipt of tax credits.

Material Deprivation and Low-Income Combined Poverty Indicator:
Material deprivation is calculated from a suite of questions in the Family Resources Survey about whether people can afford to buy certain items and participate in leisure or social activities. This measure is applied to households with incomes below 70 per cent of UK median income (£308 per week) to create the ‘material deprivation and low income combined’ indicator. This indicator aims to provide a measure of children’s living standards which, unlike relative and absolute poverty, is not solely based on income.

For more detail about this indicator see Annex 2.

1.3 Working age adult poverty

Key points:

- In 2012/13, 15 per cent of working age adults were in relative poverty (BHC) in Scotland, an increase from 13 per cent in 2011/12.

- 480 thousand working age adults were living in relative poverty (BHC) in Scotland in 2012/13, 70 thousand more than in the previous year.

- Household incomes for working age families fell in 2012/13, but there were differences based on household type, employment status, and hours worked.

Charts 3A and 3B below present relative and absolute poverty trends for working age people in Scotland.

Chart 3A – Relative Poverty – Working Age Adults

Chart 3B – Absolute Poverty – Working Age Adults

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Tables A1 and A2).

Charts with confidence intervals for relative and absolute working age adult poverty can be found in Confidence Intervals Surrounding Key Poverty Estimates

The grossing factors have been updated to incorporate the 2011 census results. The previously published statistics have been revised to reflect the population since the 2001 census. Further information is available in Annex 3

In 2012/13, 15 per cent of working age adults in Scotland were living in relative poverty (BHC). This increase reverses the falling trend in relative poverty for working age people in Scotland seen in recent years. In 2012/13, there were 480 thousand working age adults in Scotland living in relative poverty (BHC), 70 thousand more than the previous year.

The change in the number and percentage of working age adults in relative poverty (BHC) between 2011/12 and 2012/13 is not statistically significant. As this is the first increase in child poverty after 2 years of a decreasing trend, it is not yet clear if this is the start of a significant trend.

After Housing Costs, relative poverty for working age adults increased to 21 per cent in 2012/13, an increase from 17 per cent in 2011/12. In 2012/13, 660 thousand working age adults were living in relative poverty (AHC), 110 thousand more than in 2011/12. The percentage of working age adults in relative poverty (AHC) had remained largely unchanged since 2002/03 but is now at the highest level in the last ten years.

The percentage of working age adults in absolute poverty (BHC) in 2012/13 was 16 per cent, an increase from 14 per cent in 2011/12. This represents 510 thousand working age adults living in absolute poverty (BHC) in 2012/13, an increase of 60 thousand from 2011/12. The percentage of working age adults in absolute poverty (BHC) has remained largely unchanged since 2004/05, following a significant decrease between 1998/99 and 2003/04. The increase in 2012/13 reverses this trend.

Commentary:

Over the last decade, the proportion of working age adults in Scotland living in relative poverty (BHC) has decreased by 5 percentage points from 18 per cent to 13 per cent. The percentage of working age adults in relative poverty increased slightly between 1998/99 and 2002/03, remaining largely unchanged until 2009/10. There had been a small decrease since 2009/10, but following the increase in 2012/13, relative poverty levels are similar to those throughout most of the last decade.

Incomes for households with children and at least one adult in employment fell. The number of households with children in employment and in receipt of in-work tax credits fell as a result of tightened eligibility and conditionality under welfare reform. Households with children may have more limited ability to increase work hours, or to work flexible hours, meaning households with children may not have been able to remain in receipt of tax credits. The number of working age adults with children in receipt of out-of-work tax credits is largely unchanged, as is the number of working age adults without children in receipt of tax credits.

In 2012/13, household income for working age households without children fell, although at a slower rate than for households with children. This group may be more likely to increase the number of hours worked and have greater flexibility in the labour market than households with children.

Over the year to March 2013, there was a small increase in the number of adults in employment compared with the previous year. However there have been changes within the labour market: the number of women in full time employment increased in the last year, as did the number of men in part time employment.

The number and proportion of low paid jobs in Scotland decreased between 2004 and 2013. Median earnings for all employees (part time and full time) in Scotland have mirrored the pattern for the UK, with the gap between median earnings in Scotland and the UK narrowing in more recent years. However, increases in hourly pay rates in 2012/13 in Scotland depended on the sector and skill level of employment. Those in lower paid employment (and with the lowest household incomes) saw no real increases in earned income.

Historically, earnings have tended to rise in real terms and hence outstrip price-indexed benefit rates. However, out-of-work benefit rates have grown substantially faster than earnings since 2007 essentially reflecting the fact that earnings have not kept pace with inflation, whereas rates of out-of-work benefits have risen broadly in line with prices (though there have been discretionary cuts to the rates of other benefits and tax credits). However, in 2012/13 tightening of eligibility and conditionality to tax credits, freezing some elements of benefits, such as child benefit and tax credits, changes to local housing allowance, along with low growth in earned income, have resulted in falling incomes for working age households.

Working age vs. State pension age:
Working age adults are defined as all adults up to the state pension age. Prior to April 2010, women reached the state pension age at 60. Between April 2010 and March 2016 the state pension age for women is increasing to 63 and will then increase to 65 between April 2016 to November 2018. The changes do not affect the state pension age for men, which remains at 65. Further increases are planned for both men and women’s state pension age (to 66 by 2020 and 67 by 2028). The impact is to retain women in the working age adult group, who prior to April 2010 would have been classified as pensioners.

1.4 Pensioner poverty

Key points:

- In 2012/13, 15 per cent of pensioners were living in relative poverty (BHC), an increase from 14 per cent in 2011/12. This has remained relatively unchanged since 2008/09.

- 150 thousand pensioners were living in relative poverty (BHC) in Scotland in 2012/13, 10 thousand more than in the previous year.

- The percentage of pensioners in material deprivation was 8 per cent in 2012/13, the same as the previous year. In 2012/13, there were 70 thousand pensioners living in material deprivation.

- In 2012/13, state pensions were increased in line with other benefits and tax credits. However there were reductions in the maximum award for savings credit.

Charts 4A and 4B present recent trends for the three main pensioner poverty indicators: relative poverty, absolute poverty and the material deprivation indicator. Note that poverty based on income After Housing Costs (AHC) is a more commonly used measure for pensioner households, as many have low housing costs. Further discussion on whether it is better to use before or after housing costs can be found in Annex 2.

Chart 4A – Relative Poverty and Material Deprivation – Pensioners

Chart 4B – Absolute Poverty and Material Deprivation – Pensioners

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Tables A1 and A2 and A4).

Charts with confidence intervals for relative and absolute pensioner poverty can be found in Confidence Intervals Surrounding Key Poverty Estimates.

Notes:

1. Pensioner material deprivation is not solely based on affordability and so should not be compared directly with measures of income-related poverty.

2. Pensioner material deprivation is included for those aged 65 and over only and therefore is not the same population as relative and absolute poverty measures.

3. The grossing factors have been updated to incorporate the 2011 census results. The previously published statistics have been revised to reflect the population since the 2001 census. Further information is available in Annex 3

In 2012/13, 15 per cent of pensioners in Scotland were living in relative poverty (BHC), a 1 percentage point increase compared with the previous year. In 2012/13, 150 thousand pensioners in Scotland were living in relative poverty (BHC), 10 thousand more than the previous year.

The change in the number and percentage of pensioners in relative poverty (BHC) between 2011/12 and 2012/13 is not statistically significant. Pensioner poverty saw the smallest increase since 2011/12 and so caution should be used when interpreting this as a change.

After housing costs have been taken into account, 11 per cent of pensioners were in relative poverty, a decrease from 12 per cent in 2011/12. In 2012/13, 120 thousand pensioners were living in relative poverty (AHC), unchanged from the previous year. This percentage has remained largely unchanged since 2008/09, following a significant decrease in pensioner poverty between 1998/99 and 2004/05. There was a decrease between 2004/05 and 2008/09, but at a slower rate.

Absolute poverty (BHC) for pensioners was 16 per cent in 2012/13, unchanged from the previous year. There were 170 thousand pensioners living in absolute poverty (BHC) in 2012/13. This percentage has remained unchanged over the last five years, following a decrease in 2008/09.

In 2012/13, 8 per cent of pensioners in Scotland were living in combined low income and material deprivation, unchanged from 2011/12. In 2012/13, there were 70 thousand pensioners living in combined low income and material deprivation.

Commentary:

Over the last decade, the proportion of pensioners in Scotland in relative poverty (BHC) has fallen 8 percentage points from 23 per cent in 2002/03 to 15 per cent in 2012/13. The fall in pensioner poverty over the last decade has been steeper than comparable falls for children and working age adults.

Households containing pensioners at the lower end of the income distribution generally received a larger proportion of their income from benefits and a smaller proportion from other sources. In the latest year, because benefit income grew more than earned income, households with pensioners saw their overall income increase in real terms while other households with more income from earnings saw incomes decrease. The Basic State Pension and Pension Credit Guarantee Credit increased by 5.2 per cent, in line with increases in other benefits and tax credits. However in 2012 the maximum award of Savings Credit was reduced (following freezes in 2011).

From the early 1980s until 2011/12, the Basic State Pension (BSP) was uprated in line with prices using the Retail Prices Index (RPI), and since then, in line with the Consumer Price Index (CPI). Although this protected it from inflation, the income that pensioners received from BSP fell behind that of working age people, as the earnings of working age people tended to increase faster than inflation. However, inflation in the UK has exceeded the growth in average earnings in recent years, and so pension increases have been greater than earnings and most other benefits and tax credits.

From 2009, BSP income has increased faster than earnings for working age households, and at a faster rate than for most other benefit and tax credit income. Pensioners’ median net income has grown faster than earnings over the last twelve years. Median income after housing costs for pensioners has grown by 18 per cent between 2002/03 and 2012/13 in real terms, whereas average weekly earnings for the whole economy rose by 5 per cent in real terms over the same period.

Pensioner Material Deprivation Indicator:
This is an additional way to measure the living standards of pensioners. This measure is based on a set of goods, services and experiences, judged using academic research to be the best discriminators of deprivation. Pensioners are asked if they have an item (or access to a service) and to give a reason if they do not have it. Their responses are then used to judge whether or not they are materially deprived. It is similar to the child material deprivation and low income combined indicator (which is presented in Chart 2) but has some important differences:

- Differences in the set of items asked about, e.g. pensioners are not asked if they can afford school trips.

- Pensioners are presented with a greater variety of reasons for not having a particular item, whereas households with children are simply asked whether they can afford an item they do not have. Pensioners are able to say if they are prevented from having it due to ill health, disability or lack of support from other people. These additions reflect that deprivation can occur because of ill health, disability or social isolation, and not just for financial reasons.

- The pensioner “material deprivation” indicator is not combined with household income information to produce a combined indicator, as is done with the child deprivation indicator. This is because for pensioners, the concept of material deprivation is broad and very different from low income, so it is appropriate to present it as a separate measure.

For these reasons, pensioner material deprivation cannot be directly compared to the child material deprivation and low income measure.

More background on pensioner material deprivation is given in Annex 2, and the following technical note on the DWP website gives further information, including the list of questions which are asked to pensioners:

https://www.gov.uk/government/publications/households-below-average-income-hbai-technical-note-on-pensioner-material-deprivation

State pension age:

Working age adults are defined as all adults up to the state pension age. Prior to April 2010, women reached the state pension age at 60. Between April 2010 and March 2016 the state pension age for women is increasing to 63 and will then increase to 65 between April 2016 to November 2018. The changes do not affect the state pension age for men, which remains at 65. Further increases are planned for both men and women’s state pension age (to 66 by 2020 and 67 by 2028). The impact is to retain women in the working age adult group, who prior to April 2010 would have been classified as pensioners.

As such material deprivation is presented here for pensioners aged 65 and over only.

1.5 In-work relative poverty (BHC)

Key points

- In 2012/13, 52 per cent of working age adults in poverty were in in-work poverty.

- In 2012/13, there were 250 thousand working age adults in in-work poverty.

- In 2012/13, 59 per cent of children in poverty in Scotland in 2012/13 were living in families where at least one adult was in employment.

- In 2012/13, there were 110 thousand children living in poverty who were in families in employment.

- 45 per cent of all people in poverty in Scotland were in in-work poverty.

- In 2012/13 the rate of in-work poverty increased compared with 2011/12.

Chart 5 compares Scottish in-work poverty trends for children and working age adults.

Chart 5 – Percentage of children and working age adults in poverty, living in a household with at least one adult in employment

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A5).

Note: The grossing factors have been updated to incorporate the 2011 census results. The previously published statistics have been revised to reflect the population since the 2001 census. Further information is available in Annex 3

Commentary:

In-work poverty in Scotland increased in 2012/13, with 250 thousand working age adults living in in-work poverty. Over half (52 per cent) of working age adults in poverty were living in in-work poverty in 2012/13. This is an increase of 50 thousand working age adults in in-work poverty, compared with the previous year, and continues the slow upward trend in working age in-work poverty in Scotland.

The number of children living in poverty who were in households in employment has also increased in the latest year, with 110 thousand children in Scotland living in in-work poverty in 2012/13. Six in ten children in poverty in Scotland in 2012/13 were living in households where at least one adult was in employment. There were 30 thousand more children in in-work poverty in 2012/13 compared with the previous year, continuing the upward trend in children in in-work poverty in Scotland.

In-work poverty:
‘In-work poverty’ refers to those individuals living in households where at least one member of the household is working (either full or part time) but where the household income is below the relative poverty (BHC) threshold. This group contains non-working household members such as children and non-working partners.

Chapter 2: Income Inequality and the distribution of income

2.1 Income distribution

Key points:

- In 2012/13, the percentage of income received by households in the bottom 3 deciles was 14 per cent, unchanged from previous years.

- There has been very little change in income inequality since 1998/99.

This section provides information that relates to the Scottish Government’s Solidarity Purpose Target which is “to increase overall income and the proportion of income earned by the three lowest income deciles as a group by 2017″. More information can be found at the following link:

http://www.scotland.gov.uk/About/Performance/scotPerforms/purpose/solidarity

Chart 6 shows the percentage of total income received by the three lowest income deciles (the thirty per cent of the population with the lowest incomes), from 1998/99 to 2012/13. It also shows the percentage of total income received by the three highest income deciles. This is a measure of how equally income is distributed across the population.

Chart 6 – Percentage of income going to the bottom and top three deciles

Source: HBAI dataset, DWP.

Commentary:

In 2012/13, the percentage of income received by households in the bottom 3 deciles was 14 per cent, unchanged from previous years.

Having dropped from 54 per cent to 51 per cent between 2009/10 and 2010/11, the percentage of income received by households in the top three income deciles has remained unchanged since then.

There has been no significant change in income inequality between 2011/12 and 2012/13 using this measure. Over the longer term it can be seen that there has been very little change in income inequality since 1998/99, with the percentage of income received by the bottom 3 deciles remaining at between 13 and 14 per cent.

Deciles / decile points:

Deciles (or decile points) are the income values which divide the Scotland population, when ranked by income, into ten equal-sized groups. Therefore nine decile points are needed in order to form the ten groups. Decile is also often used as a shorthand term for decile group; for example ‘the bottom decile’ is used to describe the bottom ten per cent of the income distribution.

Decile groups:

These are groups of the population defined by the decile points. The lowest decile group is the ten per cent of the population with the lowest incomes. The second decile group contains individuals with incomes above the lowest decile point but below the second decile point.

2.2 Income thresholds

Key points:

- In 2012/13, median household income in Scotland was £23,000, a decrease of £400 per year compared with 2011/12.

- The relative poverty (BHC) threshold in 2012/13 was £13,800, equivalent to £264 a week for a couple with no children. This is unchanged from 2011/12. Changes in relative poverty therefore reflect genuine changes in income and are not due to changes in median income.

- A couple with no children with a combined income of over £35,200 (after tax and benefits) would be in the highest income 20 per cent of the population.

Note: In this publication, all statistics are based on net income. That is, income after taxes and including benefits. Income is calculated at the household level, and reflects the income available to the household after taxes are paid and all benefits and tax credits have been received.

Most of the income figures in this publication are based on equivalised income. One consequence of the equivalisation process is that there are different poverty thresholds for households of different sizes and compositions. To help readers understand the figures in this publication, Table 1 below presents some commonly used income thresholds, before equivalisation, for households of different sizes. The incomes presented elsewhere in this report use the value for “Couple with no children” as the standard, and all other household types are adjusted to reflect their different household composition.

Table 1 – Income thresholds (£) for different household types (income after tax and BHC)

Single person with no children

Couple with no children

Single person with children aged
5 and 14

Couple with children aged 5 and 14

weekly

annual

weekly

annual

weekly

annual

weekly

annual

UK median income (before housing costs)

295

15,400

440

22,900

528

27,500

673

35,100

Scottish median income (before housing costs)

295

15,400

440

23,000

529

27,600

674

35,100

60% of UK median income (before housing costs) – relative poverty threshold

177

9,200

264

13,800

317

16,500

404

21,000

60% of inflation adjusted 2010/11 UK median income (before housing costs) – absolute poverty threshold

182

9,500

272

14,200

326

17,000

416

21,700

Scottish 1st income decile

148

7,700

221

11,500

265

13,800

338

17,600

Scottish 2nd income decile

191

9,900

285

14,800

342

17,800

436

22,700

Scottish 3rd income decile

224

11,700

334

17,400

401

20,900

511

26,600

Scottish 4th income decile

259

13,500

387

20,200

465

24,200

592

30,900

Scottish 5th income decile

295

15,400

440

23,000

529

27,600

674

35,100

Scottish 6th income decile

332

17,300

496

25,900

595

31,000

759

39,600

Scottish 7th income decile

382

19,900

570

29,700

684

35,700

873

45,500

Scottish 8th income decile

453

23,600

676

35,200

811

42,300

1034

53,900

Scottish 9th income decile

569

29,700

849

44,300

1019

53,100

1299

67,800

Source: HBAI dataset, DWP.

Note: to create ten decile groups only nine decile points are needed to split the population.

2.3 Trends in income distributions

Key points:

- In 2012/13, median income was £440 per week, a decrease of £9 on the previous year. This is the third consecutive year median income in Scotland has fallen.

- The bottom two deciles saw the largest income decreases compared with the previous year.

- Only the top two deciles saw an increase in income in 2012/13. Households at all other income deciles saw decreases in income in 2012/13.

Chart 7 shows how the median equivalised household income (BHC) in Scotland has changed from 1998/99 to 2011/12.

Chart 7 – Median weekly household income in Scotland (in 2012/13 prices)

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A6).

Charts 8A and 8B show median weekly household income, before housing costs and after housing costs, for households with children, working age adults, and pensioners.

Chart 8A – Median weekly household income (BHC) in Scotland (in 2012/13 prices)

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A7).

Chart 8B – Median weekly household income (AHC) in Scotland (in 2012/13 prices)

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A7).

In 2012/13, median household income was £440 per week, a decrease of £9 compared with 2011/12. This is the third consecutive year median income in Scotland has fallen, and median income in 2012/13 is at the lowest level since 2002/03. All incomes are quoted in 2012/13 prices.

Commentary:

There was a gradual increase in median equivalised weekly household income (BHC) in Scotland from £390 in 1998/99 to £475 in 2009/10 followed by a fall to £451 in 2010/11. Median income in 2011/12 fell slightly to £449 per week. Median income then fell to £440 in 2012/13, the third consecutive annual fall in median income in Scotland.

The pattern is similar for median equivalised weekly household income (AHC) in Scotland, which was £333 in 1998/99 increasing to £429 in 2009/10, followed by a fall to £405 in 2010/11 and £394 in 2011/12. Median income AHC continued to drop in 2012/13 to £390, again the lowest level since 2002/03.

Chart 9 shows how the weekly equivalised incomes have changed from 2008/09 to 2012/13 across the different income decile points. Decile points are the incomes that separate out the 10 deciles, so 10 per cent of the population have household income below the 1st decile point and 90 per cent of the population have income below the 9th decile point.

Chart 9 – Weekly household incomes for each decile point from 2008/09 to 20012/13

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A8).

Chart 10 shows the percentage change in each income decile point in 2012/13 compared to 2011/12.

Chart 10 – Percentage change in each decile point between 2011/12 and 2012/13 (In real prices)

Source: HBAI dataset, DWP.

Between 2008/09 and 2009/10, equivalised weekly household income in Scotland increased in real terms across all the income decile points except the 8th. In 2010/11, there was a drop in equivalised weekly household income at all but the bottom two income decile points. This is linked to the drop in average earnings. All deciles saw a decrease in 2011/12, in particular the top 4 deciles and deciles 3 and 4.

For households at the lowest two income decile points, income has fallen for the last two years. In 2012/13, the largest percentage decreases in household income was for those at the bottom income decile, with the second largest decrease for those at the second income decile.

For households at income deciles 3 to 7, 2012/13 is the third consecutive year of falls in household income. In 2012/13, while income fell for this group, the percentage decrease was less than for those on the lowest incomes.

Households at income deciles 8 and 9 (the top twenty per cent) saw small increases in income in 2012/13, following decreases in the previous two years.

Chart 11 below shows the distribution of weekly income across Scotland in 2012/13. The shaded area shows the shape of the 2012/13 income distribution and the black lines show the Scottish median income (£440) and the relative poverty threshold (BHC) (£264). The dark blue line superimposed shows the 2011/12 income distribution for comparison.

Chart 11 – Distribution of weekly household income with Scottish median and relative poverty threshold (BHC)

Source: HBAI dataset, DWP.

Chart 12 shows the same distribution with income deciles for Scotland marked with black lines.

Chart 12 – Distribution of weekly household income with income decile points

Source: HBAI dataset, DWP.

The relative poverty threshold is based on the UK median equivalised household income. As the UK median income fell in 2011/12, the poverty threshold also fell in 2011/12. In 2012/13, the UK median remained unchanged, as did the poverty threshold. Median income in Scotland was higher than the UK median in 2011/12 but in 2012/13, it had dropped to the same level (£440). In 2012/13 the poverty threshold was therefore £264 per week (for a couple with no children).

Chapter 3: Household characteristics and income distribution

3.1 Household composition

Key points:

- Single adult households are overrepresented in the bottom income deciles, particularly single parents and single working age adult households.

- 54 per cent of people in the bottom three income deciles are in households where no one is in employment, compared to 13 per cent in the top three deciles.

- 59 per cent of those in the bottom decile are in households with no adults in employment, a decrease of 6 percentages points on the previous year.

- However, families with someone in employment make up 46 per cent of those in the bottom three deciles, similar to 2011/12 (47 per cent).

Commentary:

There were a higher percentage of single adult households (both with and without children) towards the lower end of the income distribution. Single people without dependent children make up over 30 per cent of those in the lowest decile, and around 20 per cent in the other deciles, apart from the top decile where they represent only 10 per cent. Similarly, single parent households are concentrated in the lower income deciles, with more than half in the bottom three income deciles.

There were also more pensioners towards the lower end of the income distribution – the second, third and fourth income deciles contain the highest proportions.

Couple households without children were more likely to be the top end of the income distribution, while those with children are evenly spread across all deciles. Couple households may be more able to increase household income than single person households. Households without children may be more able to work more hours and have greater flexibility in the labour market.

3.2 Household economic status

Chart 13 below shows the employment characteristics of households in each decile. Each bar represents the percentage of people in that decile living in each of the households types: at least one adult in full time employment, part time employment only, no adults in employment (whether due to unemployment, not actively seeking employment, or retirement).

Chart 13 – Economic status of household, composition of each decile

Source: HBAI dataset, DWP.

Commentary:

Households where no-one is working either through unemployment, retirement or economic inactivity (those who are neither in work, nor looking for work) were more common towards the bottom of the income distribution. Over half (54 per cent) of people in the bottom three income deciles were in households where no-one is in employment, compared to 13 per cent in the top three deciles.

59 per cent of those in the bottom decile were in households with no adults in employment, a decrease of 6 percentage points on the previous year. This is the largest percentage point change of any decile. However, the percentage of households in the bottom 3 deciles combined with no adults in employment is largely unchanged due to decreases in the percentage of households in work in deciles two and three.

People in households where at least one adult is working full time (including those who are self-employed) made up 82 per cent of those in the top three deciles. However, households where at least one adult is working full time still made up 31 per cent of those in the bottom three deciles.

Households where adults are in part time employment only are spread across the income distribution, although they were more likely to be in the bottom four income deciles.

Table A1: Relative poverty (below 60% of UK median income in the same year) in Scottish households: 1994/95 to 2012/13

All individuals

Children

Working Age Adults

Pensioners

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

1994/95

21

1,040

23

1,140

28

310

30

330

17

510

18

560

26

220

29

250

1995/96

20

980

23

1,160

27

300

32

360

14

440

18

540

28

240

31

270

1996/97

22

1,090

25

1,230

31

340

33

360

16

490

19

580

30

260

33

290

1997/98

20

1,000

22

1,120

30

330

31

330

16

470

18

540

24

210

28

250

1998/99

20

980

23

1,130

28

300

31

330

15

450

19

570

26

230

27

230

1999/00

21

1,050

24

1,200

28

300

32

350

17

510

20

600

27

240

28

250

2000/01

21

1,040

24

1,220

27

280

32

340

18

540

22

650

24

210

25

220

2001/02

19

960

22

1,110

27

280

31

330

16

490

19

570

21

190

24

210

2002/03

20

1,000

22

1,120

24

250

27

280

18

530

20

610

23

210

25

230

2003/04

18

910

20

1,010

23

240

26

270

16

480

18

560

22

200

20

180

2004/05

17

860

19

960

21

210

25

250

15

460

18

560

20

180

16

150

2005/06

17

870

20

980

21

210

24

240

15

470

19

590

20

180

16

150

2006/07

17

840

19

940

22

210

25

250

14

440

18

550

19

180

15

140

2007/08

17

870

19

960

20

190

24

240

15

470

18

570

21

210

15

150

2008/09

17

860

19

960

21

210

26

250

16

490

19

600

16

160

11

110

2009/10

17

870

19

970

20

200

24

240

16

500

19

600

16

170

12

120

2010/11

15

770

17

900

17

170

21

210

14

440

18

570

16

160

12

120

2011/12

14

710

16

860

15

150

19

190

13

410

17

550

14

140

12

120

2012/13

16

820

19

1,000

19

180

22

220

15

480

21

660

15

150

11

120

Source: HBAI dataset, DWP.

Table A2: Absolute poverty (below 60 per cent of inflation adjusted 2010/11 UK median income) in Scottish households: 1994/95 to 2012/13

All individuals

Children

Working Age Adults

Pensioners

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

1994/95

32

1,580

34

1,720

38

420

42

460

24

740

28

840

48

420

48

420

1995/96

32

1,610

36

1,810

42

470

47

520

24

720

28

860

48

420

49

420

1996/97

31

1,550

35

1,740

40

440

46

500

23

700

27

820

47

410

48

420

1997/98

28

1,400

31

1,570

39

420

43

470

22

650

25

750

37

320

40

350

1998/99

28

1,390

30

1,520

36

390

39

420

22

660

25

750

39

340

39

340

1999/00

27

1,330

30

1,480

34

360

38

410

22

650

24

740

36

310

38

330

2000/01

25

1,220

27

1,360

31

330

35

380

20

620

24

730

31

270

29

260

2001/02

22

1,070

24

1,210

30

310

34

360

18

530

20

610

25

220

27

240

2002/03

20

1,010

23

1,120

25

250

27

280

18

540

20

620

24

220

25

230

2003/04

19

930

20

990

24

240

26

260

16

490

18

550

22

200

19

180

2004/05

17

860

18

920

21

210

24

240

15

460

18

540

20

180

14

130

2005/06

17

860

18

900

21

210

23

230

15

470

18

560

19

180

13

120

2006/07

16

800

17

840

21

210

22

220

14

430

16

500

17

170

12

120

2007/08

16

830

17

880

19

190

22

220

14

450

17

530

20

190

13

130

2008/09

16

820

18

900

20

200

24

240

15

470

18

570

15

150

10

100

2009/10

15

790

17

890

18

180

22

220

15

470

18

570

15

150

10

100

2010/11

15

770

17

900

17

170

21

210

14

440

18

570

16

160

12

120

2011/12

15

780

18

950

17

170

22

220

14

450

18

590

16

160

14

140

2012/13

17

880

21

1,100

20

200

25

250

16

510

22

710

16

170

13

140

Source: HBAI dataset, DWP.

Table A3: Children in combined material deprivation and low income (below 70 per cent of UK median income in the same year) in Scottish households: 2004/05 to 2012/13

Old Indicator

New Indicator

%

000s

%

000s

2004/05

17

170

2004/05

-

-

2005/06

13

130

2005/06

-

-

2006/07

16

160

2006/07

-

-

2007/08

16

160

2007/08

-

-

2008/09

16

160

2008/09

-

-

2009/10

15

150

2009/10

-

-

2010/11

13

130

2010/11

12

120

2011/12

-

-

2011/12

9

90

2012/13

-

-

2012/13

11

110

Source: HBAI dataset, DWP.

Table A4: Pensioners over 65 in material deprivation: 2009/10 to 2012/13

%

000s

2009/10

10

80

2010/11

7

60

2011/12

8

70

2012/13

8

70

Source: HBAI dataset, DWP.

Table A5: In-work poverty (relative poverty BHC) in Scotland: 1998/99 to 2012/13 Percentage of individuals in poverty in households with at least one adult in employment

All People

Children

Working Age Adults

In in-work poverty

In in-work poverty

In in-work poverty

000s

%

000s

%

000s

%

1998/99

360

36

130

44

210

47

1999/00

350

33

120

40

210

42

2000/01

390

37

130

45

250

46

2001/02

370

38

130

46

230

46

2002/03

410

41

120

48

270

51

2003/04

340

37

100

43

220

46

2004/05

310

36

90

43

210

45

2005/06

370

43

110

54

240

51

2006/07

320

38

100

48

210

48

2007/08

340

39

90

48

230

49

2008/09

340

40

90

45

240

49

2009/10

330

38

80

43

230

46

2010/11

320

41

90

52

220

50

2011/12

290

40

80

52

200

48

2012/13

370

45

110

59

250

52

Source: HBAI dataset, DWP.

Table A6: Median equivalised weekly household income in Scotland: 1994/95 to 2012/13 (2012/13 prices)

Before Housing Costs

After Housing Costs

1994/95

364

310

1995/96

361

303

1996/97

374

314

1997/98

388

329

1998/99

390

333

1999/00

402

342

2000/01

408

353

2001/02

427

371

2002/03

429

382

2003/04

449

407

2004/05

451

408

2005/06

451

411

2006/07

451

409

2007/08

460

424

2008/09

467

429

2009/10

475

429

2010/11

451

405

2011/12

449

394

2012/13

440

390

Source: HBAI dataset, DWP.

Table A7: Median equivalised weekly household income in Scotland: 1994/95 to 2012/13 (2012/13 prices) Children, working age adults and pensioners

Children

Working Age Adults

Pensioners

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

Before Housing Costs

After Housing Costs

1994/95

324

269

420

353

276

242

1995/96

310

250

409

340

280

241

1996/97

316

255

429

361

279

246

1997/98

327

263

437

368

308

278

1998/99

350

291

435

373

319

279

1999/00

338

283

446

381

323

290

2000/01

355

308

442

381

343

313

2001/02

365

317

476

418

352

331

2002/03

389

336

480

421

352

328

2003/04

419

366

490

441

364

343

2004/05

406

350

500

446

378

363

2005/06

415

363

500

448

377

370

2006/07

407

362

505

452

375

371

2007/08

424

378

505

461

383

387

2008/09

417

361

513

462

402

403

2009/10

439

386

519

467

412

397

2010/11

411

361

489

430

402

388

2011/12

401

349

480

419

397

378

2012/13

395

340

471

406

404

388

Source: HBAI dataset, DWP.

Table A8: Equivalised weekly household income (BHC) in Scotland: 1994/95 to 2012/13 (2012/13 prices)

Scottish 1st income decile

Scottish 2nd income decile

Scottish 3rd income decile

Scottish 4th income decile

Scottish 5th income decile

Scottish 6th income decile

Scottish 7th income decile

Scottish 8th income decile

Scottish 9th income decile

1994/95

181

218

262

314

364

425

482

579

703

1995/96

187

223

261

313

361

412

483

569

709

1996/97

186

224

268

315

374

431

494

587

719

1997/98

191

234

280

329

388

442

515

606

760

1998/99

195

239

286

339

390

446

526

613

776

1999/00

200

241

289

340

402

462

534

640

799

2000/01

207

250

299

349

408

461

534

637

799

2001/02

222

267

318

370

427

489

560

654

864

2002/03

213

268

319

373

429

490

564

656

824

2003/04

225

281

341

397

449

509

580

680

826

2004/05

230

289

339

390

451

513

588

692

838

2005/06

228

287

341

396

451

513

587

698

864

2006/07

237

292

342

399

451

518

595

702

875

2007/08

230

294

347

400

460

526

603

718

906

2008/09

232

297

350

404

467

539

616

725

916

2009/10

239

300

357

420

475

541

622

721

918

2010/11

242

300

351

401

451

515

589

687

856

2011/12

241

299

344

392

449

507

582

672

824

2012/13

221

285

334

387

440

496

570

676

849

Source: HBAI dataset, DWP.

Table A9: Household type by equivalised income decile in Scotland: 2012/13

Income decile

Pensioner couple

Single pensioner

Couple with dependent children

Single with dependent children

Couple without dependent children

Single without dependent children

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

1

40

8

50

10

140

27

60

11

70

13

160

31

2

60

12

70

12

160

31

80

15

40

8

110

21

3

70

13

80

15

180

35

80

15

40

7

80

15

4

90

18

60

11

160

31

60

12

50

10

90

18

5

80

15

50

9

190

36

40

8

90

16

80

15

6

70

14

30

5

160

31

40

8

90

18

130

24

7

80

15

40

8

170

32

30

5

120

23

90

17

8

60

12

30

6

170

32

10

2

170

31

90

17

9

60

11

20

4

150

29

0

1

190

37

100

19

10

80

15

10

3

160

31

0

1

210

41

50

10

Total

690

13

440

8

1,640

31

410

8

1,070

20

980

19

Source: HBAI dataset, DWP.

Table A10: Economic status of households by equivalised income decile: Scotland 2012/13

Income decile

One or more self employed

Single/couple all in full time work

Couple/one in full time, one part time

Couple, one full time one not working

No full time, one or more part time

No adult in employment, head or spouse aged 60 or over

No adult in employment, head or spouse unemployed

No adult in employment, other inactive

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

000s

%

1

60

12

20

3

20

5

20

4

90

18

100

18

90

16

130

24

2

40

8

30

5

20

5

70

13

70

14

130

24

60

11

110

21

3

20

5

40

8

60

12

80

15

70

13

140

27

30

5

80

16

4

30

6

70

13

90

17

60

12

60

12

140

27

10

2

60

11

5

30

5

120

23

100

19

60

12

40

8

120

23

0

1

40

8

6

20

4

170

32

80

15

60

11

60

12

90

16

0

0

50

10

7

30

7

190

36

100

19

30

5

50

10

100

18

0

0

30

5

8

40

7

240

46

100

20

30

6

20

4

80

15

0

0

10

2

9

40

7

260

50

80

16

50

10

40

7

40

8

0

0

10

2

10

80

15

260

50

60

11

40

8

30

5

50

10

0

0

0

1

Total

400

8

1,390

27

720

14

500

10

530

10

980

19

190

4

520

10

Source: HBAI dataset, DWP.

Table A11: Full time, part time and not in employment by equivalised income decile: Scotland 2012/13

At least one full time or self employed

No full time, one or more part time

No adult in employed, at least one adult unemployed

No adult in employed, other

000s

%

000s

%

000s

%

000s

%

1st

120

24

90

18

100

18

210

40

2nd

160

31

70

14

130

24

170

32

3rd

210

39

70

13

140

27

110

20

4th

250

48

60

12

140

27

70

13

5th

310

60

40

8

120

23

50

9

6th

330

62

60

12

90

16

50

10

7th

350

67

50

10

100

18

30

5

8th

420

79

20

4

80

15

10

3

9th

430

83

40

7

40

8

10

2

10th

440

84

30

5

50

10

10

1

Total

3,020

58

530

10

980

19

710

13

Source: HBAI dataset, DWP.

Chart A14 - Child Poverty Act Targets

Note: the 21 items in the suite of questions used to measure material deprivation are designed to reflect the items and activities people in the UK believe to be necessary. These items are reviewed periodically to ensure the measure remains a relative measure of poverty. In 2010/11 four new items were included in the FRS, and in 2011/12 four old items were removed. This creates a break in the child material deprivation series, with the measure for 2004/05 to 2010/11 on the old basis. The measure for 2011/12 is presented on the new basis. For further detail see Annex 2.

Annex 2: Data Sources and Definitions

Data sources

Family Resources Survey, Households Below Average Income (HBAI) dataset:

All the figures in this publication come from the Department for Work and Pensions’ (DWP) Households Below Average Income dataset which is produced from the Family Resources Survey. UK figures are published by DWP in ‘Households Below Average Income: 2012/13′ on the same day as ‘Poverty and Income Inequality in Scotland: 2012/13′. For the UK figures, as well as more detail about the way these figures are collected and calculated, see the DWP website:

https://www.gov.uk/government/collections/households-below-average-income-hbai–2

Further analysis of these figures will be published later in the year on the Scottish Government income and poverty statistics website. This will include figures on the interaction between income, poverty, disability and housing tenure.

http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty

Future plans for updating persistent poverty figures

Data on Persistent Poverty has been obtained from the British Household Panel Survey (BHPS) and figures are published here: http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/Publications.

The BHPS has been subsumed into the larger Understanding Society survey from the start of 2009. These figures will be updated when the new data becomes available in of 2015. For more detail see www.understandingsociety.org.uk.

What does the HBAI measure?

Households Below Average Income (HBAI) uses household disposable incomes, adjusted for the household size and composition, as a proxy for material living standards. More precisely, it is a proxy for the level of consumption of goods and services that people could attain given the disposable income of the household in which they live.

The unit of analysis is the individual, so the populations and percentages in the tables are numbers and percentages of individuals – both adults and children.

The living standards of an individual depend not only on his or her own income, but also on the income of others in the household. Consequently, the analyses are based on total household income: the equivalised income of a household is taken to represent the income level of every individual in the household. Equivalisation, a technique that allows comparison of incomes between households of different sizes and compositions, is explained section 1.2 below. Thus, all members of any one household will appear at the same point in the income distribution.

Housing Costs

It could be argued that the costs of housing faced by different households at a given time do not always match the true value of the housing that they actually enjoy, and that housing costs should therefore be deducted from any definition of disposable income. However, any measure of income defined in this way would understate the relative standard of living of those individuals who were actually benefiting from a better quality of housing by paying more for better accommodation. Income growth over time would also understate improvements in living standards where higher costs reflected improvements in the quality of housing.

Conversely, any income measure which does not deduct housing costs may overstate the living standards of individuals whose housing costs are high relative to the quality of their accommodation. Growth over time in income before housing costs could also overstate improvements in living standards for low income groups in receipt of Housing Benefit, and whose rents have risen in real terms. This is because Housing Benefit will also rise to offset the higher rents (for a given quality of accommodation) and would be counted as an income rise, although there would be no associated increase in the standard of living. A similar effect could work in the opposite direction for pensioners: if a shift from renting to owning their housing outright leads to a fall in Housing Benefit income, because fewer low income pensioners are paying rents, then changes in income before housing costs may understate any improvement in living standards.

Therefore, this publication presents analyses on two bases: Before Housing Costs (BHC) and After Housing Costs (AHC). This is principally to take into account variations in housing costs that themselves do not correspond to comparable variations in the quality of housing.

Definitions

Measures of income

The income measure used in HBAI is weekly net (disposable) equivalised household income. This comprises total income from all sources of all household members including dependants.

Income is adjusted for household size and composition by means of equivalence scales, which reflect the extent to which households of different size and composition require a different level of income to achieve the same standard of living. This adjusted income is referred to as equivalised income (see definition below for more information on equivalisation).

- Income Before Housing Costs (BHC) includes the following main components: net earnings; profit or loss from self-employment after income tax and NI; all social security benefits, including housing and council tax benefits; all tax credits, including Social Fund grants; occupational and private pension income; investment income; maintenance payments; top-up loans and parental contributions for students, educational grants and payments; the cash value of certain forms of income in kind such as free school meals, free welfare milk and free school milk and free TV licences for the over 75s (where data is available). Income is net of: income tax payments; National Insurance contributions; contributions to occupational, stakeholder and personal pension schemes; council tax; maintenance and child support payments made; and parental contributions to students living away from home.

- Income After Housing Costs (AHC) is derived by deducting a measure of housing costs from the above income measure.

- Housing Costs include the following: rent (gross of housing benefit); water rates; mortgage interest payments; structural insurance premiums; ground rent and service charges.

Real prices

Unless otherwise stated, all figures relating to income are in 2012/13 prices. Values from previous years are uprated to account for inflation using the Retail Price Index (RPI).

All BHC incomes in this publication have been adjusted for inflation using a bespoke index supplied by the Office for National Statistics (ONS), consisting of the Retail Prices Index excluding Council Tax, while all AHC incomes in this publication have been adjusted for inflation using the Retail Prices Index excluding housing.

RPI measures the average price change on the basis of the changed expenditure of maintaining the consumption pattern of households and the composition of the consumer population in the base or reference period.

Equivalisation is the process by which household income is adjusted to take into account variations in the size and composition of the households in which individuals live. This reflects the common sense notion that, in order to enjoy a comparable standard of living, a household of, for example, three adults will need a higher income than a single person living alone. The process of adjusting income in this way is known as equivalisation and is needed in order to make sensible income comparisons between households.

Equivalence scales conventionally take an adult couple without children as the reference point, with an equivalence value of one. The process then increases relatively the income of single person households (since their incomes are divided by a value of less than one) and reduces relatively the incomes of households with three or more persons, which have an equivalence value of greater than one.

Consider a single person, a couple with no children, and a couple with two children aged fourteen and ten, all having unadjusted weekly household incomes of £200 (Before Housing Costs). The process of equivalisation, as conducted in HBAI, gives an equivalised income of £299 to the single person, £200 to the couple with no children, but only £131 to the couple with children.

The equivalence scales used here are the modified OECD scales. Two separate scales are used, one for income Before Housing Costs (BHC) and one for income After Housing Costs (AHC). Modified OECD rescaled to couple without children, BHC is as follows:

First Adult

0.67

Spouse

0.33

Other Second Adult

0.33

Third Adult

0.33

Subsequent Adults

0.33

Children aged under 14 years

0.20

Children aged 14 years and over

0.33

The construction of household equivalence values from these scales is quite straightforward. For example, the BHC equivalence value for a household containing a couple with a fourteen year old and a ten year old child together with one other adult would be 1.86 from the sum of the scale values:

0.67 + 0.33 + 0.33 + 0.33 + 0.20 = 1.86

This is made up of 0.67 for the first adult, 0.33 for their spouse, the other adult and the fourteen year old child and 0.20 for the ten year old child. The total income for the household would then be divided by 1.86 in order to arrive at the measure of equivalised household income used in HBAI analysis.

Further information on equivalisation can be found in the following report on the Scottish Government website:

http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/equivalence-scales-paper

Poverty measurement from the Family Resources Survey

Individuals are defined as being in poverty if their equivalised net disposable household income is below 60 per cent of the UK median. The median is the income value which divides a population, when ranked by income, into two equal sized groups. Since the mean is influenced considerably by the highest incomes, median income thresholds are widely accepted as a better benchmark when considering a derived measure for low income. Sixty per cent of the median is the most commonly used low income measure.

For a couple with no children, the UK median income (BHC) in 2012/13 was £440 per week, which in real terms is unchanged from 2011/12. After housing costs the UK median decreased from £377 to £374.

Consequently, the 60 per cent low income threshold, which is used to derive the low income household figures, has remained the same (BHC) in real terms, AHC the 60 per cent low income threshold has decreased by £3 (1 per cent).

Relative and absolute poverty:

- Absolute poverty: individuals living in households whose equivalised income is below 60 per cent of inflation adjusted median income in 2010/11. This is a measure of whether those in the lowest income households are seeing their incomes rise in real terms.

- Relative poverty: individuals living in households whose equivalised income is below 60 per cent of median income in the same year. This is a measure of whether those in the lowest income households are keeping pace with the growth of incomes in the economy as a whole.

Material deprivation for Children

A suite of questions designed to capture the material deprivation experienced by households with children has been included in the Family Resources Survey since 2004/05. Respondents are asked whether they have 21 goods and services, including child, adult and household items. The list of items was identified by independent academic analysis. See McKay, S. and Collard, S. (2004). Together, these questions form the best discriminator between those households that are deprived and those that are not. If they do not have a good or service, they are asked whether this is because they do not want them or because they cannot afford them.

These questions are used as an additional way of measuring living standards for children and their households.

A prevalence weighted approach has been used, in combination with a relative low income threshold. The income threshold is 70 per cent of the median income. Prevalence weighting is a technique of scoring deprivation in which more weight in the deprivation measure is given to households lacking those items that most already have. This means a greater importance, when an item is lacked, is assigned to those items that are more commonly owned in the population.

Changes to measuring material deprivation in 2011/12

The 21 items in the suite of questions used to measure material deprivation are designed to reflect the items and activities people in the UK believe to be necessary. These items are reviewed periodically to ensure the measure remains a relative measure of poverty. In 2010/11 four new questions about additional items were included in the FRS to be used in the future calculation of material deprivation scores, replacing the four existing items that were identified by research as potentially out of date partly because the proportion of the population considering them necessary had fallen. As such, there is a break in the series for child low income/material deprivation and estimates from 2011/12 onwards cannot be compared to those from before 2010/11.

In the 2010/11 FRS, both the new and the old questions were asked. As such, estimates are presented based on both sets of questions for this year.

For further information about material deprivation see Appendix 2 of the DWP ‘Households below average income’ publication.

Material Deprivation for Pensioners

A suite of questions designed to capture the material deprivation experienced by pensioner households has been included in the Family Resources Survey since May 2008. Respondents are asked whether they have access to 15 goods and services. The list of items was identified by independent academic analysis. See:

- Legard, R., Gray, M. and Blake, M. (2008), Cognitive testing: older people and the FRS material deprivation questions, Department for Work and Pensions Working Paper Number 55. Available at: http://www.bristol.ac.uk/poverty/downloads/keyofficialdocuments/FRS%20cognitive%20testing%20of%20older%20people%20dep%20questions.pdf and;

- McKay, S. (2008), Measuring material deprivation among older people: Methodological study to revise the Family Resources Survey questions, Department for Work and Pensions Working Paper Number 54. Available at: http://www.bristol.ac.uk/poverty/downloads/keyofficialdocuments/FRS%20Older%20people%20deprivation%20questions%20report.pdf

Together, these questions form the best discriminator between those pensioner households that are deprived and those that are not.

Where they do not have a good or service, pensioner households are asked whether this is because: they do not have the money for this; it is not a priority on their current income; their health / disability prevents them; it is too much trouble or tiring; they have no one to do this with or help them; it is not something they want; it is not relevant to them; other. Where a pensioner lacks one of the material deprivation items for one of the following reasons – they do not have the money for this; it is not a priority for them on their current income; their health / disability prevents them; it is too much trouble or tiring; they have no one to do this with or help them; other – they are counted as being deprived for that item.

The exception to this is for the unexpected expense question, where the follow up question was asked to explore how those who responded ‘yes’ would cover this cost. Options were: use own income but cut back on essentials; use own income but not need to cut back on essentials; use savings; use a form of credit; get money from friends or family; other. Pensioners are counted as materially deprived for this item if and only if they responded ‘no’ to the initial question.

The same prevalence weighted approach has been used to that for children, in determining a deprivation score. Prevalence weighting is a technique of scoring deprivation in which more weight in the deprivation measure is given to households lacking those items that most already have. This means a greater importance, when an item is lacked, is assigned to those items that are more commonly owned in the pensioner population.

For children, material deprivation is presented as an indicator in combination with a low income threshold. However for pensioners, the concept of material deprivation is broad and very different from low income; therefore, it is appropriate to present it as a separate measure.

A technical note given a full explanation of the pensioner material deprivation measure is available at https://www.gov.uk/government/publications/households-below-average-income-hbai-technical-note-on-pensioner-material-deprivation.

Population Coverage

The FRS is a survey of private households. This means that people in residential institutions, such as nursing homes, barracks, prisons or university halls of residence, and also homeless people are excluded from the scope of the analysis presented here. The area of Scotland north of the Caledonian Canal was included in the FRS for the first time in the 2001/02 survey year, and from the 2002/03 survey year, the FRS was extended to include a 100 per cent boost of the Scottish sample. This has increased the sample size available for analysis at the Scottish level. Between 2002/03, the sample size has been around 5 thousand. However, following cost savings introduced to the FRS in 2010, the sample size in Scotland for 2011/12 is 4 thousand. Further detail is available in Appendix 2 of the DWP ‘Households below average income’ publication.

Reliability of estimates

The figures are estimates based on sample surveys and are therefore subject to sampling variation. Caution should be exercised in the interpretation of small year-on-year fluctuations. Identification of trends should be based on data for several years. Estimates for the confidence intervals around the key figures presented here will be available on the Income and poverty statistics website after publication via the following link: http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/Methodology#a6

The Family Resources Survey publication::

https://www.gov.uk/government/collections/family-resources-survey–2

contains information on topics such as:

- Sample design, non-response biases, weighting

- Item non-response, imputation and editing

- Accuracy of income data

Detailed HBAI definitions and methodology

More detailed information on definitions and methodology can be found in Appendix 1 and 2 of DWP’s publication:

https://www.gov.uk/government/collections/households-below-average-income-hbai–2

Annex 3: Revisions to income and poverty statistics

Following publication of the 2011 census results, new population totals for Scotland and the UK are available along with revised estimates of the population for years following the previous census in 2001. As such, the previously published statistics for 2002/03 to 2011/12 have been revised to better reflect the make-up of the population over this period, in line with the newly available evidence from the census.

The effect of this revision is small and does not affect the overall trends in poverty and income inequality seen over this period. The table below shows the headline estimates for poverty in Scotland on both the old and the new (revised) basis. Most estimates are unchanged and where there is a discrepancy, this is never greater than 1 percentage point.

Table A12 – Comparison of revised estimates of relative poverty (BHC) with previously published estimates – 2002/03 to 2011/12

All Individuals

Children

Working Age Adults

Pensioners

New

Old

New

Old

New

Old

New

Old

2002/03

20

20

24

25

18

18

23

23

2003/04

18

19

23

24

16

16

22

22

2004/05

17

17

21

21

15

15

20

20

2005/06

17

18

21

21

15

15

20

20

2006/07

17

17

22

21

14

14

19

20

2007/08

17

17

20

20

15

15

21

21

2008/09

17

17

21

21

16

16

16

16

2009/10

17

17

20

20

16

16

16

17

2010/11

15

15

17

17

14

14

16

16

2011/12

14

14

15

15

13

13

14

15

Source: HBAI dataset, DWP.

A number of minor methodological changes have also been incorporated into the population grossing following recommendations from the Office for National Statistics (ONS). These relate to the adjustments made to the sample due to factors such as housing tenure and number of households by region to ensure that the sample is representative of the population as a whole. Full details of all methodological changes can be found on the DWP website at the following link:

https://www.gov.uk/government/publications/family-resources-survey-grossing-methodology-review-and-2011-census-updates

Annex 4: Welfare Reform in 2012/13

Uprating

In April 2012 many benefits, including the State Pension, and tax credits were uprated by CPI. Child Benefit, along with several components of tax credits, were frozen in cash terms.

Council tax

Council Tax Benefit (CTB) was abolished from April 2013. Responsibility for assisting those who need help in meeting their Council Tax liabilities in Scotland now sits with the Scottish Government and Scottish Local Authorities via the Council Tax Reduction scheme (CTR). The CTR scheme replicates entitlement to CTB and allows previous entitlement criteria to be maintained. On a like-with-like basis, vulnerable people have the same net liability for Council Tax as if CTB were still in place, provided that their circumstances remain the same.

Employment and Support Allowance (ESA)

From May 2012 contributory ESA was limited to 365 days if the claimant is in the Work Related Activity Group or assessment phase. The 365 day time-limit does not include any time spent in the Support Group or the time spent in the assessment phase if they moved from the assessment phase into the Support Group at the start of their claim. ESA in youth was abolished; which means that young people can no longer qualify for contribution-based ESA without paying National Insurance contributions. The 104-week work or training linking rule was abolished; this means that someone who takes up work or training within 1 month of leaving ESA, and then returns to ESA within 104 weeks, will no longer automatically receive their original amount of ESA. The changes also mean that individuals who were previously unable to reclaim contribution based ESA, as a result of working and paying National Insurance Contributions, may now be eligible to re-claim for contribution based ESA.

Housing Benefit (HB)

From April 2012 Local Housing Allowance (LHA) rates were frozen. This was in preparation for LHAs being fixed in April 2013 by adjusting them to rise with CPI or with the bottom 30 per cent of private sector rents, whichever is the lowest. Prior to this change, LHA rates were subject to monthly reviews by Rent Officers based on movements in private sector rent levels.

Income Support (IS)

From May 2012 to qualify for IS as a lone parent, the youngest child must be under five years old, instead of under 7 years as previously. Parents of children aged five or over will need to move from income support to JSA if they are able to work.

Child Benefit

From January 2013 individuals earning above £60,000 per year will lose entitlement to child benefit, as will their partner if they are entitled to child benefit. Individuals earning between £50,000 and £60,000 per year will lose a proportion of the child benefit they receive, as will their partner if they are entitled to child benefit. For couples who are both earning over £50,000 per year, only the highest earner will lose part of their entitlement to child benefit.

Tax Credits

From April 2012, the additional amount paid to claimants aged 50 and over who are returning to the job market after a period on certain benefits – the "50-plus element" of Working Tax Credits (WTC) – was abolished, including for those who are already receiving it.

Couples with children now have to work 24 hours a week between them (previously 16 hours a week) in order to qualify for WTC. One member of the couple will have to work at least 16 hours a week. This change reduces the disparity between couples and lone parents, by ensuring that at least one member of a couple is required to work the same minimum number of hours per week as a lone parent must.

Couples with children will be able to continue working 16 hours a week between them and still qualify for WTC if:

- the partner who is working at least 16 hours per week is eligible for the disabled worker element of WTC, or is aged 60 or over; or

- one partner works at least 16 hours a week and the other partner is "incapacitated", an in-patient in hospital, or in prison.

The income threshold at which CTC begins to be withdrawn (the "first income threshold") remained at the same level as the previous year. The family element of CTC was withdrawn at the same rate as other child tax credits (the "first income threshold"); whereas in previous years the family element of CTC only began to be withdrawn at a higher income threshold (the "second income threshold").

Personal Allowance

In 2012/13 the income tax personal allowance increased by £630 for those aged under 65, with an increase of £560 for those aged 65-74 and an increase of £570 for those aged 75 or older. The threshold for the 20 per cent basic rate of income tax fell by £630.

National Insurance Contributions

The primary threshold for national insurance contributions increased by £7 (roughly 5 per cent) between 2011/12 and 2012/13; with an £8 (roughly 6 per cent) increase for the secondary threshold.

Annex 5: Where to find more information

Supplementary analysis:
This publication contains the headline poverty and income inequality statistics.

Supplementary analysis based on the FRS and HBAI datasets is published by the Scottish Government during the year at http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/CoreAnalysis.

This provides further disaggregation of the headline statistics at sub-population level: poverty in urban and rural areas, poverty in deprived areas, poverty by disability, gender, and ethnicity, poverty by household tenure, household income distributions, trends in median income, income source, savings and assets, and income inequality.

Supplementary analysis themes are based on the needs of users. If you have any suggestions for future supplementary analysis please email: stephen.smith@scotland.gsi.gov.uk or phone 0131 244 7045.

Scottish Government websites:

Income and Poverty statistics website

http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/incomepoverty

Scotland Performs website (for further information about the SG Solidarity Target and National Indicators)

http://www.scotland.gov.uk/About/scotPerforms

Uses of the data: In response to the UK Statistics Authority’s (UKSA) report http://www.statisticsauthority.gov.uk/assessment/assessment/assessment-reports/index.html the Scottish Government were required to identify and document the ways in which these statistics are used. More information on this can be found via the following link: http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/income-data-sources

Scottish Government Welfare and Tackling Poverty website includes information about what the Scottish Government is doing to reduce poverty and income inequality.

http://www.scotland.gov.uk/Topics/People/welfarereform

Confidence limits surrounding Scotland poverty estimates:

http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/Methodology#a6

High Level Summary of Statistics (Social and Welfare) http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare

For further information on all Scottish Government statistics

http://www.scotland.gov.uk/topics/statistics/

UK Government websites:

Family Resources Survey, Department for Work and Pensions

https://www.gov.uk/government/collections/family-resources-survey–2

Households Below Average Income, Department for Work and Pensions (methodology and UK estimates)

https://www.gov.uk/government/collections/households-below-average-income-hbai–2

UK Government action on child poverty

https://www.gov.uk/government/groups/the-child-poverty-unit

Local Authority level analysis and other geographies in Scotland

The figures presented here are from a sample survey which limits the analysis possible at smaller geographical areas. A few analyses are published for areas below Scotland level, (e.g. poverty in rural and urban areas and in deprived areas), however it is not possible to produce reliable estimates at Local Authority level from this source. Estimates of poverty in rural and urban areas and in deprived areas will be updated on the income and poverty statistics website soon after publication of this report.

http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty/CoreAnalysis

The Scottish Government are aware of the demand for Local Authority (LA) level poverty figures and are carrying out work to improve the quality of income information recorded by the Scottish Household Survey with the aim of producing LA level estimates. Initial estimates were published from this work in August 2010 and are classified as “data being developed” because they are undergoing quality assurance work and are published for the purpose of helping in this QA work and should not be treated as official statistics. For further detail and to comment on these data, see the Relative poverty across Scottish local authorities publication or contact the income and poverty statistics team on 0131 244 7045 or stephen.smith@scotland.gsi.gov.uk.

Academics from Heriot-Watt University have recently completed a project to develop a methodology for modelling income and poverty at local area levels in Scotland. Results are published on the Improvement Service website: http://www.improvementservice.org.uk/income-modelling-project/ .

On the income and poverty website there is also a data sources and suitability page which discusses some of the main data sources available to researchers interested in income and poverty in Scotland and their strengths and weaknesses. This discusses some of the indicators which are currently available at local authority level to find out about income and poverty in Scotland.

A National Statistics Publication for Scotland

The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

Designation can be interpreted to mean that the statistics: meet identified user needs; are produced, managed and disseminated to high standards; and are explained well.

Correspondence and enquiries

For enquiries about this publication please contact:

Stephen Smith,
Income and Poverty Statistics,
Telephone: 0131 244 7045,
e-mail: stephen.smith@scotland.gsi.gov.uk

For general enquiries about Scottish Government statistics please contact:

Office of the Chief Statistician, Telephone: 0131 244 0442,

e-mail: statistics.enquiries@scotland.gsi.gov.uk

How to access background or source data

Data cannot be made available by Scottish Government for further analysis as Scottish Government is not the data controller. Data are made available by DWP on the UK data archive:

http://www.data-archive.ac.uk/

Complaints and suggestions

If you are not satisfied with our service or have any comments or suggestions, please write to the Chief Statistician, 3WR, St Andrews House, Edinburgh, EH1 3DG, Telephone: (0131) 244 0302, e-mail statistics.enquiries@scotland.gsi.gov.uk.

If you would like to be consulted about statistical collections or receive notification of publications, please register your interest at www.scotland.gov.uk/scotstat

Details of forthcoming publications can be found at www.scotland.gov.uk/statistics