Poverty in Scotland and the UK 2014/15Communities Analysis July 2016

Relative poverty measures whether incomes of the poorest households are increasing at the same rate as middle income households. If income for the poorest increases faster than middle income, relative poverty falls. If increases in income for middle households are greater than that for poor households, relative poverty increases.

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Absolute poverty measures whether people are better off over time. If income for the poorest increases faster than inflation, absolute poverty falls. If income for the poorest increases more slowly than inflation, absolute poverty increases.

In 2014/15, 15% of people were living in relative poverty before housing costs in Scotland, compared with 16% in the UK. There was a small increase in poverty BHC in both Scotland and the UK compared with the previous year.

After housing costs, 18% of people were living in relative poverty in Scotland, compared with 21% in the UK. Poverty AHC in both Scotland and the UK was unchanged compared with the previous year.

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In 2014/15, 14% of people were living in absolute poverty before housing costs in Scotland, compared with 15% in the UK. There was no change in absolute poverty BHC in Scotland and a small decrease across the UK compared with the previous year.

After housing costs, 17% of people were living in absolute poverty in Scotland, compared with 20% in the UK. There was a small decrease in absolute poverty AHC in both Scotland and the UK compared with the previous year.

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Relative poverty before and after housing costs remain lower in Scotland than across the UK. Median income in both Scotland and in the UK increased in 2014/15, but middle income households saw larger increases in income than low income households. This meant relative poverty increased in Scotland and the UK. Poverty after housing costs was unchanged in Scotland and the UK, reflecting decreases in real terms housing costs for low income households. Absolute poverty BHC was unchanged in Scotland, and decreased slightly in the UK. This reflects that increases in the incomes of low income households were keeping up with inflation. After housing costs, absolute poverty fell in Scotland and the UK, reflecting a decrease in real terms housing costs combined with small increases in income and low inflation.

Child poverty in Scotland and the UK 2014/15

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In 2014/15, 17% of children were living in relative poverty before housing costs in Scotland, compared with 19% in the UK. There was an increase in child poverty BHC in both Scotland and the UK compared with the previous year.

After housing costs, 22% of children were living in relative poverty in Scotland, compared with 29% in the UK. While child poverty AHC in Scotland was unchanged, there was a small increase across the UK, compared with the previous year.

Relative child poverty before housing costs increased in both Scotland the UK in the latest year. After housing costs, child poverty remained unchanged in Scotland but increased across the UK. While income for families with children increased in 2014/15, median income for families with children remains below the pre-recession level and below median income for working age adult and pensioner households. Families with children remain in receipt of benefit income, even when in employment, for longer than other family types. As earning increased, benefit income decreased, as most working age benefits are means tested. This meant income for lower income families with children increased less than for middle income families, and so relative poverty before housing costs increased in Scotland and the UK. Poverty after housing costs was unchanged in Scotland but increased across the UK, reflecting decreases in real terms housing costs for low income households in Scotland. Absolute child poverty before housing costs increased in Scotland, and decreased slightly in the UK. Increases in low income households with children were not keeping up with inflation in Scotland. After housing costs, absolute poverty fell

in Scotland and the UK, reflecting a decrease in real terms housing costs in Scotland combined with small increases in income and low inflation.

In 2014/15, 16% of children were living in absolute poverty before housing costs in Scotland, compared with 17% in the UK. There was a small increase in absolute child poverty BHC in Scotland and a small decrease in the UK, compared with the previous year.

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After housing costs, 21% of children were living in absolute poverty 27% in the UK. There was a small decrease in absolute child poverty AHC in both Scotland and the UK compared with the previous year.

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Child material deprivation in Scotland and the UK 2014/15

An additional indicator, child material deprivation, measures whether low income families can afford basic goods and activities, which are considered necessities. It is a more direct measure than income alone, as it captures changes in living standards.

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Change in material depriva-tion questions in 2010/11

Child material deprivation decreased in Scotland but remained unchanged in the UK. Parents moving into employment in recent years have led to an increase in income for families with children. However, the move into employment for low income families in 2014/15 was largely into part time work, especially for lone parents. As income has increased, combined with low inflation, material deprivation has fallen in Scotland in the latest year and there has been an improvement in the standard of living for some of the poorest families with children.

In-work poverty in Scotland and the UK 2014/15In-work poverty means at least one adult in a household is in employment (either full time or part time), but the household is in relative poverty.

In Scotland, as in the UK, over half of working age adults in poverty, live in working households. Households where no one is in employment face the highest risk of poverty, but households where there is low work intensity (such as part time employment) face a high risk of poverty too. Family type also has an impact – households, especially those with children, where one person is in full time employment and the other is not in employment (often the case where there are pre-school children) face a higher risk of poverty than households where both adults are in employment.

In 2014/15, 10% of children were living in households with low income before housing costs and material deprivation, compared to 13% of children in the UK. There was a decrease in child material deprivation BHC in Scotland while it was unchanged across the UK, compared with the previous year.

In 2014/15, 67% of children and 55% of working age adults were in in-work poverty, compared with 66% of children and 63% of working age adults in the UK.

The proportion of working age adults and children in poverty who were living in working households in Scotland increased in 2014/15, and is now similar to that for the UK. This reflects the increase in the number of working households and the decrease in the number of workless households in Scotland and in the UK. However, the increase in employment for low income families in Scotland in 2014/15 was largely into part time work, especially for women and single parents. Increases in earnings were balanced against withdrawal of benefit income (as working age benefits are means tested), and the benefit uprating was capped at 1% (significantly lower than the increase in average earnings). For low income families, this meant employment was not enough to move them out of poverty.

Child material deprivation measures the number of children living in households with income below 70% of UK median income, and who lack basic goods and activities, due to a lack of household income. The measure is based on a list of 21 items, relating to both children and their parents, recognising that parents will do without so children can have the things they need. The items included are based on public consensus about which items are seen as necessities in society. The items included were changed in 2010/11, reflecting changes in society. Data prior to 2010/11 is not directly comparable with data after 2010/11.

Working age poverty in Scotland and the UK 2014/15

Relative working age adult poverty before housing costs increased in both Scotland the UK in the latest year. There were increases in employment in 2014/15, and increases in hourly pay, meaning increases in earnings. The largest increases in income were for households with earnings income only (not in receipt of in-work benefits). Households who had a mixture of earnings and in-work benefits saw a smaller increase, as increases in earnings were balanced against withdrawal of benefit income (as many working age benefits are means tested). Households not in employment saw the smallest increase in income, as working age benefit uprating was capped at 1% (significantly less than the increase in average earnings). After housing costs, working age adult poverty remained unchanged in both Scotland and the UK. Absolute working age poverty before housing costs was unchanged in Scotland, and decreased slightly in the UK, meaning increases in incomes for the poorest households kept up with inflation. After housing costs, absolute working age poverty fell in Scotland and the UK, reflecting a decrease in real terms housing costs combined with small increases in income greater than inflation.

In 2014/15, 15% of working age adults in Scotland were living in relative poverty before housing costs, the same rate as across the UK. There was a small increase in working age poverty BHC in both Scotland and the UK compared with the previous year.

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After housing costs, 19% of working age adults were living in relative poverty in Scotland, compared with 21% in the UK. Working age poverty AHC was unchanged in both Scotland and the UK, compared with the previous year.

In 2014/15, 14% of working age adults in Scotland were living in absolute poverty before housing costs, the same rate as across the UK. There was no change in absolute working age poverty BHC in Scotland and a small decrease across the UK compared, with the previous year.

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After housing costs, 18% of working age adults were living in absolute poverty in Scotland, compared with 20% in the UK. Absolute working age poverty AHC decreased in both Scotland and the UK, compared with the previous year.

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Pensioner poverty in Scotland and the UK 2014/15

Relative pensioner poverty was unchanged in Scotland and in the UK, both before and after housing costs in the latest year. The triple guarantee meant that the basic State Pension increased by 2.7%, since this was greater than both earnings and the minimum increase, and was in line with CPI inflation (2.7%). Pension Credit increased by 2.0%, greater than the minimum standard. Overall, increases in income for pensioners on lower income were greater than working age households reliant on benefits, but less than middle income working households.

Absolute pensioner poverty decreased in Scotland and in the UK both before and after housing costs. This reflects increases in income greater than inflation. There was little change in housing costs for pensioners. For those that do not own their homes, in Scotland many are in the social rented sector, and benefit from lower rents compared with the private rented sector.

Pensioner material deprivation measures both financial and non-financial aspects of deprivation, such as health and disability, or a lack of support, reflecting that deprivation for older people is about more than income. Pensioner material deprivation decreased to 7% in Scotland and to 8% across the UK in the latest year.

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In 2014/15, 14% of pensioners in Scotland were living in absolute poverty before housing costs, compared with 15% across the UK. The rates decreased in both Scotland and the UK compared with the previous year.

After housing costs, 10% of pensioners were living in absolute poverty in Scotland, compared with 13% in the UK. Absolute poverty AHC decreased in both Scotland and the UK, compared with the previous year.

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In 2014/15, 15% of pensioners in Scotland were living in relative poverty before housing costs, compared with 16% across the UK. There rates were unchanged in both Scotland and the UK compared with the previous year.

After housing costs, 12% of pensioners were living in relative poverty in Scotland, compared with 14% in the UK. Poverty AHC was unchanged in both Scotland and the UK, compared with the previous year.