The Department for Work and Pensions has today published its annual statistics on incomes and living standards covering 2022-23. This includes Households Below Average Income, which contains estimates of household incomes and a range of low-income indicators for 2022-23, derived from the family resources survey. Further publications in today’s release are: “Income Dynamics”, “Pensioners’ Income Series”, “Children in Low Income Families”, “Improving Lives Indicators”, “Separated Families Statistics” and the family resources survey. These publications cover the four statutory measures of child poverty required to be published by DWP under the 2010 Child Poverty Act.
In 2022-23 the war in Ukraine and global supply chain challenges led to unexpected and high rates of inflation, which averaged 10% over the year. This outstripped growth in wages and occupational pensions, as well as benefits, which were increased by 3.1% in 2022-23, in line with the rate of consumer price inflation in September 2021, as is standard practice. As a result, there was upward pressure on poverty.
In response to these pressures, the Government provided an unprecedented cost of living support package worth £96 billion over 2022-23 and 2023-24, including £20 billion for two rounds of cost of living payments for over 8 million households on eligible means-tested benefits, over 6 million people on eligible disability benefits and over 8 million pensioner households. This support helped to shield households from the impact of inflation. Analysis today shows that the Government cost of living support prevented 1.3 million people from falling into absolute poverty after housing costs in 2022-23. That includes 300,000 children, 600,000 working-age adults and 400,000 pensioners.
This Government have overseen significant falls in absolute poverty since 2009-10, underpinned by increases in labour market participation, with 4.1 million more people currently in employment, and sustained increases to the national living wage. In 2022-23, there were 1.1 million fewer people in absolute low income after housing costs compared to 2009-10, with the rate falling by 3 percentage points. This includes 100,000 fewer children, 700,000 fewer working age adults and 200,000 fewer pensioners.
In the context of global energy price rises, the war in Ukraine and surge in inflation, between 2021-22 and 2022-23 median incomes fell slightly, and there were increases in the number of children in absolute poverty after housing costs and, to a lesser extent, for working-age adults. Absolute poverty rates for pensioners after housing costs remained stable.
Since the period covered by these statistics, the economy has turned a corner. Inflation has more than halved and is forecast to fall below 2% in 2024-25. Wages are rising in real terms. Together with our cuts in national insurance, this means more money in people’s pockets.
As inflation comes down to target, we are continuing to provide extra support to those who need it most, with the extension of the household support fund in England for a further six months to help vulnerable families with the cost of essentials. Following the Government’s uprating of benefits and pensions by 10.1% in 2023-24, from April benefits will also increase by 6.7%, while the basic and new state pensions and the standard minimum guarantee in pension credit will be uprated by 8.5% in line with average weekly earnings. This delivers on our manifesto commitment to honour the triple lock for state pensions.
To further support those on low incomes, local housing allowance rates will rise to the 30th percentile of local market rents in April 2024. This will benefit 1.6 million low-income households by around £800 a year on average in 2024-25. In addition, from April, we are further supporting the lowest paid with a 9.8% rise in the national living wage, following the largest ever cash increase last year, which means it will increase to £11.44 per hour.
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