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Annual Households Below Average Income and Separated Families Statistics 2020-21

Volume 711: debated on Thursday 31 March 2022

The Department for Work and Pensions has today published its annual statistics on incomes and living conditions covering 2020-21, the first year of the pandemic. This includes households below average income (HBAI), which includes statistics on household incomes and a range of low-income indicators for 2020-21, derived from the family resources survey. This consisted of around 10,000 households—half our usual sample size due to moving from face-to-face to telephone interviews in response to the pandemic.

Rigorous quality assurance and weighting of the statistics means we can have confidence in the headline statistics published. However, the impact of the changes to data collection during the pandemic become more evident when the statistics are disaggregated into smaller groups. To ensure these statistics maintain high levels of quality, DWP’s chief statistician has taken the decision that HBAI statistics on smaller sub-groups should not be released this year. The full data, however, will be made available on the UK data archive. As a result of impacts on data quality, the Scottish Government publication “Poverty and Income Inequality in Scotland 2015-18” will not be available this year, and statistics published by the Welsh Government and the Northern Ireland Executive will be released with significant caveats.

The HBAI statistics show that between 2019-20 and 2020-21, the proportion of people below the absolute low income line fell. Before housing costs, there was a decrease of one percentage point to 13% or 8.8 million people. After housing costs, there was a decrease of one percentage point to 17% or 11.1 million people.

Compared to 2009-10, there were 1.2 million fewer people in absolute low income, before housing costs: 200,000 fewer children, 500,000 fewer working age adults and 400,000 fewer pensioners.

Between 2019-20 and 2020-21, median incomes fell. The proportion of people below the relative low income line also fell. Before housing costs, there was a decrease of two percentage points to 16% or 10.5 million people. After housing costs, there was a decrease of two percentage points to 20% or 13.4 million people. This shows how relative poverty is affected by median income and reinforces why the Government’s focus has been on absolute poverty as a better measure of real changes in living standards for the poorest in society, as well as on material deprivation.

This year, the Department has published new statistics for children and working age people that combine material deprivation with HBAI’s statutory absolute low income measure. The statistics show that combined absolute low income and material deprivation among working age people fell three percentage points—reducing from 3.1 million in 2010-11 to 2.2 million in 2019-20. A decade of rising employment will clearly be a contributing factor in this trend. In 2020-21, 5%, or 700,000 children and 5%, or 1.9 million working age people were in combined absolute low income and material deprivation, lower than the numbers of children and working age people in low income alone.

Recognising the new statistics released today, the Department has also announced it will not proceed with developing new statistics using the work of the Social Metrics Commission as a starting point.

The Separated Families publication released alongside HBAI also shows the significant impact that child maintenance payments can have on reducing the number of children living in low income households. Overall, as a result of child maintenance payments from 2018-19 to 2020-21, 80,000 children were moved out of absolute low income before housing costs each year; 140,000 after housing costs.

This is the second year that the Department has collected data on food security. In 2020-21, 93% of households were classed as food secure, up from 92% in 2019-20.

The statistics published today show how the Government’s covid support package of over £400 billion helped support jobs and incomes. We are now easing the current pressures people are facing with the cost of living, taking action to support families worth over £22 billion in 2022-23. This includes a £9.1 billion energy bill rebate package, worth up to £350 each for around 28 million households.

Also, from April, the Government are providing an additional £500 million to help households with the cost of essentials, on top of what we have already provided since October 2021, bringing the total funding for this support to £1 billion. In England, £421 million will be provided to extend the existing household support fund, while the devolved Administrations will receive £79 million through the Barnett formula.

With unemployment back to the low levels we saw before the pandemic and vacancies at record highs, our focus is on helping people to move into and boost incomes through work: for example, through the change to the universal credit taper rate and an increase to the work allowances which means millions of families are on average £1,000 a year better off, the rise to the national living wage from April and increasing the level at which people pay national insurance on their income, saving a typical employee over £330 in the year from July.

As we help people to keep more pounds in their pockets, these statistics highlight the unprecedented support we provided to protect livelihoods during the pandemic.