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Housing Expenditure

Volume 447: debated on Monday 12 June 2006

To ask the Chancellor of the Exchequer what his latest estimate is of the percentage of disposable income spent on housing by each income decile for each year from 1995 to 2005; and if he will make a statement. (75913)

The information requested falls within the responsibility of the National Statistician who has been asked to reply.

Letter from Karen Dunnell, dated 12 June 2006:

As National Statistician, I have been asked to reply to your recent question asking what the latest estimate is of the percentage of disposable income spent on housing by each income decile, for each year from 1995 to 2005. (75913)

Estimates of expenditure on housing are based on the Expenditure and Food Survey (EPS), an annual sample survey of approximately 6,000 to 7,000 households in the UK. Family Spending, the annual report on the EPS, recently introduced a more comprehensive treatment of housing expenditure, and for this reason comparable figures are only available from 2002/03 onwards.

The table below shows the percentage of disposable household income spent on housing for each gross income decile group since 2002/03. All housing expenditure is included: rent; mortgage payments; costs associated with second dwellings; charges such as council tax and water charges; costs associated with moving house; maintenance and repair; alterations and improvements; and household insurance.

Housing expenditure as a proportion of disposable income is highest for households in the bottom decile. The bottom decile in particular does contain some households whose total expenditure including that on housing, greatly exceeds their income. Some of these households have, or report, very little income (for example, self-employed people starting a business or someone who has just been made redundant). These households may finance their expenditure by drawing on their savings, borrowing, or other kinds of receipts which are not treated as regular income in the EPS e.g. inheritance and severance payments.

A more detailed breakdown of housing expenditure by income decile is available in Table 2.3 on page 14 of Family Spending 2004/05, albeit expressed as average weekly household expenditures, rather than as proportions of disposable income. Family Spending is available on the National Statistics website at: http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=361& Pos=l4&ColRank=l&Rank=272.

Percentage of disposable income spent on housing1 by income decile2, 2002-03—2004-05

Decile groups of all households ranked by gross income

Bottom

2nd

3rd

4th

5th

6th

7th

8th

9th

Top

All households

2002-03

30

24

22

25

24

24

22

23

22

22

23

2003-04

34

26

25

27

26

28

26

25

23

23

25

2004-05

32

25

27

28

26

31

27

27

25

23

26

1 Includes: rent; mortgage payments; costs associated with second dwellings; charges such as council tax and water charges; costs associated with moving house; maintenance and repair; alterations and improvements; and household insurance.

2 Households are ranked by unadjusted gross income.