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Income

Volume 475: debated on Tuesday 6 May 2008

To ask the Chancellor of the Exchequer what proportion of household income came from (a) tax credits, (b) means-tested benefits, (c) other benefits, (d) earned income excluding tax credits and (e) other sources in each year since 2003-04, broken down by (i) income quintile and (ii) income decile. (196462)

[holding answer 26 March 2008]: I have been asked to reply.

The information requested is given in the following tables. In all categories the percentage of household income made up of benefits is decreasing year on year as more people move into work and families can benefit from wages not benefits.

Table 1a: Proportion of household income from various sources by quintile, before housing costs, United Kingdom, 2003-04 to 2005-06

Percentage of income

Quintile

Component

2003-04

2004-05

2005-06

Bottom

Tax credits

6

8

10

Means tested benefits

24

22

19

Other benefits

26

26

24

Earnings (excluding tax credits)

34

35

39

Other sources

9

9

8

Second

Tax credits

6

7

7

Means tested benefits

9

9

9

Other benefits

21

20

20

Earnings (excluding tax credits)

55

55

55

Other sources

10

10

9

Middle

Tax credits

3

3

3

Means tested benefits

3

3

3

Other benefits

11

12

12

Earnings (excluding tax credits)

73

74

72

Other sources

10

9

10

Fourth

Tax credits

1

1

1

Means tested benefits

1

1

1

Other benefits

6

6

6

Earnings (excluding tax credits)

83

82

83

Other sources

9

10

10

Top

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

2

2

2

Earnings (excluding tax credits)

86

86

85

Other sources

12

12

13

Source:

Family Resources Survey 2003-04, 2004-05, 2005-06

Table 1 b: Proportion of household income from various sources by quintile, after housing costs, United Kingdom, 2003-04 to 2005-06

Percentage of income

Quintile

Component

2003-04

2004-05

2005-06

Bottom

Tax credits

6

8

10

Means tested benefits

28

24

21

Other benefits

20

19

17

Earnings (excluding tax credits)

38

40

44

Other sources

9

8

7

Second

Tax credits

6

6

7

Means tested benefits

7

7

7

Other benefits

20

19

19

Earnings (excluding tax credits)

59

59

59

Other sources

8

9

8

Middle

Tax credits

3

2

3

Means tested benefits

2

2

2

Other benefits

12

12

12

Earnings (excluding tax credits)

74

75

74

Other sources

9

9

9

Fourth

Tax credits

1

1

1

Means tested benefits

1

1

1

Other benefits

7

7

7

Earnings (excluding tax credits)

83

82

82

Other sources

9

10

9

Top

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

2

2

2

Earnings (excluding tax credits)

85

84

83

Other sources

13

13

14

Source:

Family Resources Survey 2003-04, 2004-05, 2005-06

Table 1c: Proportion of household income from various sources by decile, before housing costs, United Kingdom, 2003-04 to 2005-06

Percentage of income

Decile

Component

2003-04

2004-05

2005-06

Bottom

Tax credits

6

8

9

Means tested benefits

20

20

16

Other benefits

27

26

24

Earnings (excluding tax credits)

36

36

41

Other sources

11

10

9

Second

Tax credits

7

9

11

Means tested benefits

26

23

21

Other benefits

26

25

24

Earnings (excluding tax credits)

33

34

37

Other sources

8

9

8

Third

Tax credits

6

8

8

Means tested benefits

12

12

11

Other benefits

24

23

23

Earnings (excluding tax credits)

48

48

49

Other sources

10

9

9

Fourth

Tax credits

5

6

6

Means tested benefits

6

6

6

Other benefits

18

18

18

Earnings (excluding tax credits)

60

60

61

Other sources

11

10

10

Fifth

Tax credits

3

3

4

Means tested benefits

4

4

4

Other benefits

13

13

14

Earnings (excluding tax credits)

70

70

68

Other sources

10

10

10

Sixth

Tax credits

2

2

2

Means tested benefits

2

2

2

Other benefits

10

10

11

Earnings (excluding tax credits)

76

77

75

Other sources

10

9

9

Seventh

Tax credits

1

1

1

Means tested benefits

1

1

1

Other benefits

7

7

7

Earnings (excluding tax credits)

81

80

81

Other sources

9

10

9

Eighth

Tax credits

1

1

1

Means tested benefits

0

0

0

Other benefits

5

5

5

Earnings (excluding tax credits)

85

84

84

Other sources

9

10

10

Ninth

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

3

3

3

Earnings (excluding tax credits)

88

87

87

Other sources

8

9

9

Top

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

1

1

1

Earnings (excluding tax credits)

85

85

84

Other sources

14

14

15

Source:

Family Resources Survey 2003-04, 2004-05, 2005-06.

Table 1d: Proportion of household income from various sources by decile, after housing costs, United Kingdom, 2003-04 to 2005-06

Percentage of income

Decile

Component

2003-04

2004-05

2005-06

Bottom

Tax credits

5

7

8

Means tested benefits

25

24

19

Other benefits

18

17

15

Earnings (excluding tax credits)

41

42

48

Other sources

11

10

9

Second

Tax credits

6

9

11

Means tested benefits

29

25

23

Other benefits

22

21

19

Earnings (excluding tax credits)

35

39

41

Other sources

7

7

6

Third

Tax credits

7

8

8

Means tested benefits

10

10

11

Other benefits

23

22

22

Earnings (excluding tax credits)

52

53

53

Other sources

8

8

7

Fourth

Tax credits

5

6

6

Means tested benefits

4

4

5

Other benefits

18

18

18

Earnings (excluding tax credits)

65

63

64

Other sources

8

9

8

Fifth

Tax credits

3

3

3

Means tested benefits

2

2

3

Other benefits

14

13

14

Earnings (excluding tax credits)

72

73

71

Other sources

9

8

9

Sixth

Tax credits

2

2

2

Means tested benefits

1

2

1

Other benefits

10

11

11

Earnings (excluding tax credits)

77

77

77

Other sources

9

9

9

Seventh

Tax credits

1

1

1

Means tested benefits

1

1

1

Other benefits

8

8

8

Earnings (excluding tax credits)

81

81

81

Other sources

9

9

9

Eighth

Tax credits

1

1

1

Means tested benefits

0

0

0

Other benefits

6

6

6

Earnings (excluding tax credits)

84

84

84

Other sources

9

10

9

Ninth

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

3

4

4

Earnings (excluding tax credits)

86

86

85

Other sources

10

10

11

Top

Tax credits

0

0

0

Means tested benefits

0

0

0

Other benefits

2

2

2

Earnings (excluding tax credits)

84

83

82

Other sources

15

15

16

Notes:

1. The incomes used employ the same methodology as the Department for Work and Pensions publication ‘Households Below Average Income’ (HBAI) series, which uses disposable household income, adjusted (or “equivalised”) for household size and composition, as an income measure as a proxy for standard of living.

2. Income has been equivalised using OECD equalisation factors.

3. The information shown is for the United Kingdom.

4. Quintiles are income values which divide the population, when ranked by income, into five equal-sized groups. The lowest quintile describes individuals with incomes in the bottom 20 per cent. of the income distribution. Deciles are income values which divide the population, when ranked by income, into 10 equal-sized groups. The lowest decile describes individuals with incomes in the bottom 10 per cent. of the income distribution.

5. All statistics are rounded to the nearest percentage point. Percentages may not sum to 100 because of this rounding.

6. Earnings exclude tax credits, but include income from self-employment. Remaining income includes incomes from investments, (non-state) pensions and remaining income not classified elsewhere.

7. Small changes in estimates from year to year, particularly at the bottom of the distribution, may not be significant because of data uncertainties such as sampling errors.

Source:

Family Resources Survey, 2003-04, 2004-05, 2005-06