WIREDGOV

A National Statistics Publication for Scotland.

Poverty in Scotland

Relative poverty in Scotland, before housing costs, decreased in 2013/14, reflecting more people moving into employment, increases in hours worked, and increases in hourly pay. While the overall rate of poverty decreased, the largest decrease was in the rate of child poverty.

However, after housing costs are accounted for, poverty in Scotland has not decreased to the same extent. This is particularly true for families with children. This reflects rent values increasing at a faster rate than income, combined with changes to housing benefit eligibility, meaning little improvement in standards of living overall.

Scotland’s Chief Statistician today released the latest Poverty and Income Inequality Statistics, for the year 2013/14. The figures show relative poverty, before housing costs (BHC) in Scotland has decreased to 14 per cent for the whole population, from 16 per cent the previous year. In 2013/14 there were 730,000 people living in poverty, 90,000 fewer than the previous year. After housing costs (AHC), relative poverty in Scotland was 18 per cent, with 940,000 people living in relative poverty AHC, 60,000 fewer than the previous year.

Relative child poverty (BHC), decreased to 14 per cent in 2013/14, from 19 per cent the previous year. In 2013/14, there were 140,000 children living in relative poverty in Scotland, 40,000 fewer than the previous year. This is the lowest rate of child poverty BHC in Scotland since the series began (in 1994/95). However, after housing costs, relative poverty remained at 22 per cent, with 210,000 children living in relative poverty AHC in 2013/14. 

Relative poverty (BHC) among working age adults in 2013/14 was 14 per cent, a decrease from 15 per cent the previous year. This brings the number of working age adults in relative poverty to 440,000, 40,000 fewer than in 2012/13. After housing costs, 19 per cent of working age adults were in relative poverty in 2013/14. In 2013/14, 600,000 working age adults were in relative poverty AHC, 60,000 fewer than the previous year. 

Relative poverty (BHC) among pensioners in 2013/14 was 15 per cent, unchanged from the previous year. There were 160,000 pensioners in relative poverty in 2013/14, 10,000 more than the previous year. After housing costs, 12 per cent of pensioners were in relative poverty with 120,000 pensioners in relative poverty AHC, the same number as the previous year. The lower rates of pensioner poverty after housing costs reflect the fact that many pensioners own their home or have low housing costs compared with working age adults

In-work poverty, where families have at least one adult in employment but household income is below the poverty threshold, decreased in Scotland in 2013/14.

• 56 per cent of children in relative poverty BHC lived in working households in 2013/14, a decrease from 59 per cent the previous year.
• In 2013/14, 48 per cent of working age adults in relative poverty BHC were in working households.
   

Income in Scotland

Overall, median income in 2013/14 increased, the first rise in three years. Scottish equivalised median household income was £24,000, up from £23,700 in 2012/13. However, median incomes for families with children continued to fall, and in 2013/14 were similar to pensioner incomes.

Increasing employment levels, and people working more hours, led to higher household incomes overall. In particular, 2013/14 saw a shift from part-time to full-time employment for those on the lowest incomes.

Furthermore, the lowest paid employees in Scotland had the largest increases in hourly earningsin 2013/14, with little change for those in the middle and no increase in hourly earnings for the highest paid 10 per cent of employees. 

However, housing costs for low income households have been increasing more quickly than those for middle income households. For example, housing costs for those in rental accommodation have been increasing at a faster rate than incomes and mortgage interest rates. Increases in income have therefore not necessarily meant increases in standards of living for those on low income. 

In 2013/14, most working age benefits and tax credits were uprated by 1.0 per cent, median earnings in Scotland increased by 1.1 per cent. Most working age benefits were therefore increased at a rate in line with earnings increases, but below inflation, which was 2.9 per cent on average over the year. 

In 2013/14, there was little change in income inequality. The Gini coefficient, a measure of income inequality, showed a small decrease in 2013/14, reflecting the increase in income for the lowest income households and a small decrease for the highest income households. While income did increase for the lowest income households, it has not returned to the level in 2011/12. Conversely, while income fell for the highest income households in 2013/14, it has returned to the level in 2012/13. 

The proportion of income received by the lowest 3 income deciles remained at 14 per cent. This proportion has remained at between 13 and 14 per cent since 1998/99. 

Notes To Editors

The full statistical publication is available at: http://www.gov.scot/stats/bulletins/01168

This publication contains information on poverty and income inequality statistics for Scotland. Figures presented here are from the Department for Work and Pensions’ Family Resources Survey, Households Below Average Income dataset. Comparable UK income and poverty figures are published on the same day by DWP. See the DWP website for further details. 
https://www.gov.uk/government/collections/households-below-average-income-hbai--2

Further information on income and poverty statistics within Scotland can be accessed at:http://www.scotland.gov.uk/Topics/Statistics/Browse/Social-Welfare/IncomePoverty

The 2013/14 publication includes changes to the publication compared with previous publications. 
* The publication includes the receipt of Personal Independence Payments 
* The publication incorporates the increases in the qualifying age for women to receive the state pension.

See publication for explanation of these changes.

The way in which housing costs are treated when measuring income has some important implications for poverty analysis and conclusions about the anti-poverty effects of policy reforms. This is because the number of people counted as poor (e.g. with income falling below a threshold) depends crucially on the income concept adopted. This publication presents relative and absolute poverty before and after housing costs, material deprivation before and after housing costs, and in-work poverty before and after housing costs.

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 notion that, in order to enjoy a comparable standard of living, larger households will need a higher income than smaller households. The process of adjusting income in this way is known as equivalisation and is needed in order to make sensible income comparisons between households.

Official statistics are produced by professionally independent statistical staff – more information on the standards of official statistics in Scotland can be assessed at:http://www.scotland.gov.uk/Topics/Statistics/About