Severe Poverty in Scotland

EXECUTIVE SUMMARY

Introduction

The most frequently used indicator of poverty is relative poverty which represents individuals who have household incomes below 60 per cent of the UK median income. However, within this, there are different 'depths' of poverty, which are referred to in this report as severe and extreme poverty. Exploring the numbers of individuals at these depths reveals how poor those in poverty actually are. Understanding this is important for policymakers and organisations involved in tackling poverty.

In the context of a decade when relative poverty has been falling in Scotland, this report investigates the extent of severe and extreme poverty and how it has changed over time for different population groups: children, working age adults and pensioners.

Key Findings

Note: key findings cover 2012/13, before housing costs, unless otherwise stated.

Six in ten people in relative poverty in 2012/13 were in severe or extreme poverty.

• Of the 820,000 individuals (16% of the population) in relative poverty in 2012/13, 510,000 individuals (10% of the population) were living in severe poverty.
• Of these, 230,000 individuals (4% of the population) were living in extreme poverty.
• Severe poverty represents household incomes below 50 per cent of UK median annual household income - or less than £11,500 in 2012/13.
• Extreme poverty represents household incomes below 40 per cent of UK median annual household - or less than £9,200 in 2012/13.

Factoring in housing costs makes the considerable extent of severe and extreme poverty still more evident.

• In 2012/13, 710,000 individuals (14 per cent) were living in severe poverty after housing costs (AHC)
• 500,000 (10 per cent) were living in extreme poverty after housing costs.

Working age adults and children were more likely than pensioners to live in severe poverty, particularly after housing costs.

• While factoring in housing costs increases severe poverty rates for working age adults and children, for pensioners they decrease, reflecting the lower housing costs of many pensioners.
• In 2012/13, 330,000 working age adults (10 per cent) lived in severe poverty. This increased to 500,000 (16 per cent) working age adults after housing costs.
• 100,000 children (10 per cent) lived in severe poverty. This increased by half to 150,000 children (15 per cent) after housing costs.
• 80,000 pensioners (8 per cent) lived in severe poverty. This decreased to 60,000 pensioners (6 per cent) after housing costs. This lower rate for pensioners (AHC) is because many have lower, or no, housing costs.

Working age adults were the group most likely to live in extreme poverty, particularly after housing costs

• In 2012/13, 170,000 working age adults (5 per cent) lived in extreme poverty. This increased to 370,000 working age adults (12 per cent) after housing costs.
• 30,000 children (3 per cent) lived in extreme poverty. This increased to 90,000 children (9 per cent) after housing costs.
• 30,000 pensioners (3 per cent) lived in extreme poverty. This increased slightly to 40,000 pensioners (4 per cent) after housing costs.

Poverty has deepened in recent years.

• Looking over the last decade, although relative poverty has fallen (despite a rise in the most recent year) a greater proportion of households in poverty are now in severe or extreme low income.
• Those in poverty in 2012/13 are more likely to be in extreme low income than in 2002/03. This is especially the case after housing costs: in 2012/13, 50 per cent of all people in poverty lived in extreme low income after housing costs, compared with 36 per cent in 2002/03.
• This has implications for policy - those who are in the lowest income groups are more likely to be furthest from the labour market, hardest hit by welfare reform, and least able to increase household income without help.

Employment is no guarantee against severe or extreme poverty

• While being in employment remains a protection against poverty, it is no longer a guarantee against poverty. In 2012/13, 43 per cent of working age adults in severe poverty lived in households where at least one adult was in employment, as did 55 per cent of children. Twenty-seven per cent of working age adults in severe poverty lived in households with one person in full time employment, as did 39 per cent of children.
• Other risk factors for severe and extreme poverty include larger families, being a member of a minority ethnic group and, for families with children, the age of the mother.