Poverty and Income Inequality in Scotland 2013/14

Key points

All individuals:

• 14 per cent of people in Scotland were living in relative poverty, before housing costs (BHC), in 2013/14, a decrease from 16 per cent the previous year. This equates to 730 thousand people, 90 thousand fewer than in 2012/13.
• After housing costs, 18 per cent of people in Scotland were living in relative poverty, a decrease from 19 per cent in 2012/13. This equates to 940 thousand, 60 thousand fewer than in 2012/13.
• The decrease in 2013/14 continues the downward trend in relative poverty in Scotland seen over the last decade, following the increase in 2012/13.
• However, the rate of relative poverty remains above the level in 2010/11.

Child poverty:

• 14 per cent of children in Scotland were living inrelative poverty BHC in 2013/14, a decrease from 19 per cent the previous year. This equates to 140 thousand children, 40 thousand fewer than in 2012/13.
• After housing costs, 22 per cent of children in Scotland were living in relative poverty, unchanged from the previous year. This equates to 210 thousand children living in relative poverty AHC, 10 thousand fewer than in 2012/13.
• The decrease in 2013/14 continues the downward trend in relative child poverty BHC over the last decade,following an increase in 2012/13The rate of relative child poverty is now at the lowest level since 1994/95.
• However, there has been no change in the rate of relative child poverty after housing costs. While incomes have increased, standards of living have not necessarily improved.
• In 2013/14, 13 per cent of children were living in combined low income and material deprivation, an increase from 11 per cent the previous year. This equates to 130 thousand children living in material deprivation, 20 thousandmore than the previous year.
• After housing costs 14 per cent of children were living in combined low income and material deprivation, an increase from 12 per cent the previous year. This equates to 140 thousand children living in material deprivation, 20 thousand more than the previous year.
• This increase continues the upward trend in child material deprivation seen over recent years.

Working age adult poverty:

• 14 per cent of working age adults in Scotland were living in relative poverty in 2013/14, a decrease from 15 per cent the previous year. This equates to 440 thousand working age adults living in relative poverty BHC, 40 thousand fewer than in 2012/13.
• After housing costs, 19 per cent of working age adults in Scotland were living in relative poverty, a decrease from 21 per cent the previous year. This equates to 600 thousand working age adults living in relative poverty AHC, 60 thousand fewer than in 2012/13.
• The decrease in relative poverty BHC continues the gradual downward trend seen over the recent past, following an increase in working age poverty in 2012/13
• Relative working age poverty AHC, although recording a decrease, remains at levels seen in 2009/10. There have been changes to housing benefit eligibility since 2011/12, and rent values increasing faster than income, meaningstandard of living has not necessarily improved for working age adults.

Pensioner poverty:

• 15 per cent of pensioners in Scotland were living in relative poverty in 2013/14, unchanged from the previous year. This equates to 160 thousand pensioners in Scotland living in relative poverty BHC, 10 thousand more than in 2012/13.
• After housing costs, 12 per cent of pensioners in Scotland were living in relative poverty, an increase from 11 per cent the previous year. This equates to 120 thousand pensioners were living in relative poverty AHC, the same number as the previous year.

In-work poverty:

• In 2013/14, 48 per cent of working age adults in poverty BHC were living in working households, as were 56 per cent of children in poverty.
• After housing costs, 50 per cent of working age adults in poverty were living in working households, as were 56 per cent of children.
• While employment remains the best route out of poverty, employment is no longer a protection against poverty. While in-work poverty for working age adults and children showed a small decrease in 2013/14, the rate of in-work poverty remains at levels seen in recent years.

Income Inequality:

• Median income in Scotland in 2013/14 was £24,000, equivalent to £460 per week. Median income in Scotland has increased in 2013/14, following three years of decreases.
• In terms of income inequality, the percentage of income received by the lowest 3 income deciles in 2013/14 was 14 per cent, unchanged from 2012/13. There has been very little change in this measure of income inequality since 1998/99.
• The Gini coefficient, which measures the degree of inequality in the household income distribution, in 2013/14 was 30 This is a decrease from 31 in 2012/13. Income inequality, as measured by the Gini coefficient, has remained at these levels over the last four years.

Poverty in Scotland - A headline measure:

To date, the Scottish Government have focused on poverty before housing costs as the headline measure of poverty in Scotland. This was because these were the measures set in the Child Poverty Act (2010).

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.

The Scottish Government will talk with stakeholders over the summer to gather views on which poverty measure should be the headline measure for poverty in Scotland.

Please Note:

In this publication, all statistics are based on net income. That is, income after taxes and including benefits. Income is calculated at the household level, and reflects the income available to the household after taxes (including council tax) are paid and all benefits and tax credits have been received. Unless otherwise stated, incomes for previous years are in 2013/14 prices (real prices).

All figures in this publication are rounded to the nearest 10 thousand individuals or whole percentage point. In some cases calculations based on the unrounded figures do not match those based on the rounded ones. Unless specifically stated, annual changes in the numbers and percentages of people in poverty presented in the body of this report are not statistically significant.

Poverty is measured at the household level. If household income is below the poverty threshold, all people within the household are in poverty. This is based on the assumption that income is shared equally across all members of the household, and they have the same standard of living.

The estimates presented in this publication are based on a sample survey and are therefore subject to sampling error. Confidence intervals are a measure of sampling error. A 95 per cent confidence interval for an estimate is the range that contains the ‘true’ figure on average 19 times out of 20 if sampling error were the only source of errors. Many of the changes referred to in this publication are within the width of the confidence limits and caution should be exercised when looking at year on year comparisons, with longer term trends often giving a clearer picture. More information can be found here:

Scottish Government - Income and Poverty Statistics - Methodology

Presentation of key points and definitions

Each section starts with a magenta box providing the key facts for that section. Where relevant, additional information is provided in a blue box at the end of each section. This includes important definitions and links to National Indicators relating to poverty and income inequality on Scotland Performs

Changes to statistics 2013/14:

This publication includes changes to the statistics compared with previous
publications:

1. Personal Independence Payment (PIP): 2013/14 is the first year of data that includes the receipt of PIP. PIP is a benefit to help with the extra costs caused by living with long-term ill health or a disability, for those aged between 16 and 64. The amount of benefit received depends how the condition affects the recipient rather than the condition itself.

2. Pensioners are defined as all those adults above State Pension age. Working age adults are defined as all adults up to the state pension age. Prior to April 2010, women reached the state pension age at 60. Between April 2010 and March 2016 the state pension age for women is increasing to 63 and will then increase to 65 between April 2016 to November 2018. At this point the state pension age for men and women will be the same. The changes do not affect the state pension age for men, which remains at 65. Therefore, as with the previous three reports, the age groups covered by the analysis of working age adults and pensioners will change for the 2013/14 report. The pensioner material deprivation statistics will continue to be based on pensioners aged 65 and over.

This publication includes changes to the statistics compared with previous publications:

Personal Independence Payment (PIP): 2013/14 is the first year of data that includes the receipt of PIP. PIP is a benefit to help with the extra costs caused by living with long-term ill health or a disability, for those aged between 16 and 64. The amount of benefit received depends how the condition affects the recipient rather than the condition itself.

Pensioners are defined as all those adults above State Pension age. Working age adults are defined as all adults up to the state pension age. Prior to April 2010, women reached the state pension age at 60. Between April 2010 and March 2016 the state pension age for women is increasing to 63 and will then increase to 65 between April 2016 to November 2018. At this point the state pension age for men and women will be the same. The changes do not affect the state pension age for men, which remains at 65. Therefore, as with the previous three reports, the age groups covered by the analysis of working age adults and pensioners will change for the 2013/14 report. The pensioner material deprivation statistics will continue to be based on pensioners aged 65 and over.

Changes to the publication 2013/14:

This publication includes statistics not included in previous publications. Combined low income and child material deprivation and in-work poverty estimates after housing costs have been included in the 2013/14 publication for the first time.