Child poverty strategy: annual report, 2016

2. Child Poverty In Scotland

This chapter details progress, both before and after housing costs, against the four income-based measures that formed the basis of the Child Poverty Act 2010 targets. These are the same measures that the Scottish Government proposes to base the new Child Poverty Bill targets on. The four income-based child poverty indicators are:

• Relative poverty - the percentage of children living in households with equivalised ^[1] net incomes of less than 60% UK median household income, in the same year.
• Absolute poverty - the percentage of children living in households with equivalised net incomes of less than 60% of UK median household income, in the base year (2010/11), adjusted for inflation.
• Combined low income and material deprivation - the percentage of children living in low income households that lack certain basic necessities. Low income here is defined as an equivalised net household income of less than 70% of the UK median household income.
• Persistent poverty - the percentage of children living in a household in relative poverty for at least three years out of a four-year period.

The measures set out above consider poverty in two ways - before and after housing costs:

• Before Housing Costs ( BHC) measures the disposable income households have - from employment, benefits, savings etc. - before they have paid for their housing.
• After Housing Costs ( AHC) measures the disposable income households have once they have paid their housing costs.

Scotland-level analysis of persistent poverty is not currently available. It is anticipated that estimates of persistent poverty levels in Scotland will be available in 2017.

Relative child poverty

Relative poverty measures whether incomes for the lowest income households are changing at the same rate as those for middle income households in any year.

In 2014/15, 17% of children in Scotland were in relative poverty before housing costs - 160,000 children. This was an increase from 14% the previous year, with 20,000 more children in poverty in 2014/15.

After housing costs, 22% of children were in relative poverty - 220,000 children. This was the same as in 2013/14.

Over the last decade, relative child poverty before housing costs has been falling, although there was an increase in the most recent year. Relative child poverty was 17% in 2014/15, a decrease from 21% in 2005/06. After housing costs are taken into account, while child poverty has fallen, the decrease is less than that seen for the before housing costs measure.

Source: HBAI dataset, DWP

Absolute child poverty

Absolute poverty measures whether incomes for the lowest income households are changing in line with inflation (in other words, whether living standards are maintained over time). Children are in absolute poverty if they are living in a household where equivalised income is below 60% of the inflation-adjusted median income in 2010/11.

In 2014/15, 16% of children in Scotland were living in absolute poverty before housing costs - 150,000 children. This was an increase from 14% the previous year, with 10,000 more children living in absolute poverty in 2014/15.

After housing costs, 21% of children were living in absolute poverty - 200,000 children. This was a decrease from 23% the previous year, with 30,000 fewer children in absolute poverty in 2014/15.

The rate of absolute poverty before housing costs has been falling over the last decade, from 23% in 2005/06 to 16% in 2014/15. After housing costs, the decrease in absolute child poverty over the last decade is significantly smaller, from 25% in 2005/06 to 21% in 2014/15.

Source: HBAI dataset, DWP

Combined low income and material deprivation

Material deprivation is a measure of whether children are going without necessities which are considered essential to maintain an acceptable standard of living.

In 2014/15, 10% of children were living in low income before housing costs and material deprivation - 100,000 children. This was a decrease from 13% in the previous year, with 30,000 fewer children in low income and material deprivation in 2014/15. This follows two years of increasing child material deprivation.

After housing costs, 12% of children in Scotland were living in low income and material deprivation - 120,000 children. This is a decrease from 14% the previous year, with 20,000 fewer children in low income and material deprivation in 2014/15. This follows two years of increases.

Source: HBAI dataset, DWP