Annual Households Below Average Income and Separated Families Statistics 2020-21

The Department for Work and Pensions has today published its annual statistics on incomes and living conditions covering 2020-21, the first year of the pandemic. This includes households below average income (HBAI), which includes statistics on household incomes and a range of low-income indicators for 2020-21, derived from the family resources survey. This consisted of around 10,000 households—half our usual sample size due to moving from face-to-face to telephone interviews in response to the pandemic.

Rigorous quality assurance and weighting of the statistics means we can have confidence in the headline statistics published. However, the impact of the changes to data collection during the pandemic become more evident when the statistics are disaggregated into smaller groups. To ensure these statistics maintain high levels of quality, DWP’s chief statistician has taken the decision that HBAI statistics on smaller sub-groups should not be released this year. The full data, however, will be made available on the UK data archive. As a result of impacts on data quality, the Scottish Government publication “Poverty and Income Inequality in Scotland 2015-18” will not be available this year, and statistics published by the Welsh Government and the Northern Ireland Executive will be released with significant caveats.

The HBAI statistics show that between 2019-20 and 2020-21, the proportion of people below the absolute low income line fell. Before housing costs, there was a decrease of one percentage point to 13% or 8.8 million people. After housing costs, there was a decrease of one percentage point to 17% or 11.1 million people.

Compared to 2009-10, there were 1.2 million fewer people in absolute low income, before housing costs: 200,000 fewer children, 500,000 fewer working age adults and 400,000 fewer pensioners.

Between 2019-20 and 2020-21, median incomes fell. The proportion of people below the relative low income line also fell. Before housing costs, there was a decrease of two percentage points to 16% or 10.5 million people. After housing costs, there was a decrease of two percentage points to 20% or 13.4 million people. This shows how relative poverty is affected by median income and reinforces why the Government’s focus has been on absolute poverty as a better measure of real changes in living standards for the poorest in society, as well as on material deprivation.

This year, the Department has published new statistics for children and working age people that combine material deprivation with HBAI’s statutory absolute low income measure. The statistics show that combined absolute low income and material deprivation among working age people fell three percentage points—reducing from 3.1 million in 2010-11 to 2.2 million in 2019-20. A decade of rising employment will clearly be a contributing factor in this trend. In 2020-21, 5%, or 700,000 children and 5%, or 1.9 million working age people were in combined absolute low income and material deprivation, lower than the numbers of children and working age people in low income alone.