Last year the Department for Work and Pensions (DWP) did not publish the usual range of poverty and material deprivation data because of data quality issues with 2020-21 data, due to the COVID-19 pandemic. For 2021-22 data, although there remains some impact on quality due to the continued reliance on telephone interviews rather than face-to-face interviews, the DWP have assessed the data quality to be more robust.
Household income distribution
Single year figures for the whole of the UK show an increase in real terms median household income between 2020-21 and 2021-22. The increase was 0.5% before housing costs (BHC) and 1.6% after housing costs (AHC). The growth in UK household income (BHC) varied across the income distribution:
- the household incomes of individuals in the bottom quarter of the income distribution showed real terms reductions.
- those between the 25th and 75th percentiles recorded increases in real incomes.
- there was a more mixed picture for the highest income quintile.
Relative income poverty
People living in relative income poverty are those who live in a household where the total household income from all sources is less than 60% of the average UK household income (as given by the median).
For regions and countries of the UK, the latest data point published this year is for the period between 2019-20 and 2021-22. Estimates do not include 2020-21 survey data in calculations, as data for that year is judged to be of too low quality, as mentioned above.
Between 2019-20 and 2021-22, 21% of all people in Wales were living in relative income poverty (after housing costs were paid).
The percentage of people living in relative income poverty has been relatively stable in Wales for over 17 years, with children more likely to be in relative income poverty than the population overall. Although rates of people living in relative income poverty in Wales decreased in the most recent period across the age groups, none of these changes were statistically significant.
Figure 1.8: Percentage of each age group in Wales living in relative income poverty (after housing costs), three-financial-year averages
Description of Figure 1.8: A line chart showing people in Wales living in relative income poverty (after housing costs were paid) from 1998 onwards. The percentage of people living in relative income poverty has been relatively stable in Wales for over 17 years, with children more likely to be in relative income poverty than the population overall.
Source: Welsh Government Analysis of the DWP's Households below average income dataset, based on the Family Resource Survey
[Note 1] Estimates for periods which span 2020-21 do not include the data collected during 2020-21 in calculations. For the latest two periods shown, estimates formerly calculated as 3 year rolling averages are based on 2 year rolling averages that omit the 2020-21 survey data. 2020-21 estimates are unreliable as they are based on data collected during the first year of the COVID-19 pandemic, when lockdown rules severely disrupted the data collection.
Material deprivation
Material deprivation is a measure of living standards, and a person is defined to be living in material deprivation if they are not able to access a certain number of goods and services. Low income households are those that had a total household income below 70% of the UK average household income, before housing costs were paid.
The continuation of COVID-19 pandemic restrictions into 2021-22 affected the measurement of material deprivation, as it did in 2020-21. The restrictions that remained in place affected people’s access to some social opportunities or services, regardless of deprivation or financial constraint. This means that statistics for both years are not directly comparable with the pre-pandemic period.
Figure 1.9: Percentage of people in material deprivation (for pensioners) and combined relative low income (for children and working age adults) in Wales, financial years 2010-11 to 2021-22
Description of Figure 1.9: A line graph showing that the proportion of working-age adults living in low-income households which were materially deprived and of pensioners who were materially deprived both fell prior to the pandemic. The trend for children living in low-income households which were materially deprived has fluctuated much more.
Source: Welsh Government Analysis of the DWP's Households below average income dataset, based on the Family Resource Survey
[Note 1] Estimates for periods which span 2020-21 do not include the data collected during 2020-21 in calculations. For the two new data points, estimates formerly calculated as 3 year rolling averages are based on 2 year rolling averages that omit the 2020-21 survey data. 2020-21 estimates are unreliable as they are based on data collected during the first year of the COVID-19 pandemic, when lockdown rules severely disrupted the data collection.
[Note 2] For 2021-22, estimates of material deprivation are not strictly comparable with the pre-pandemic period. Several of the questions asked as part of the material deprivation measure were affected by pandemic-related restrictions on access to social opportunities and services.
In the years prior to the pandemic, the proportion of working-age adults living in low income households which were materially deprived followed a downward trend from 18% in the period between 2010-11 and 2012-13, to 13% in 2017-18 to 2019-20. There was also a decrease in material deprivation among pensioners (income is not considered for this measure), although less steep. There was a decrease in the earlier part of this period for children, but after the period ending 2016-17 rates of combined low income and material deprivation for children fluctuated.
As explained above, the latest estimates are for the period between 2019-20 and 2021-22 and are not directly comparable with the pre-pandemic period. For this period, 13% of children, and 11% of working-age adults living in Wales were living in low income households which were materially deprived. 7% of pensioners living in Wales were in material deprivation (income is not considered for this measure).
In 2022-23, 3% of households said they had received food from a food bank due to a lack of money in the last 12 months, with a further 3% saying they hadn’t but had wanted to.
Persistent poverty
A person is considered to be in persistent poverty if they are in relative income poverty in at least 3 out of 4 consecutive years. Data from the Understanding Society survey shows that an individual in Wales had a 12% likelihood of being in persistent poverty between 2017 and 2021 (after housing costs were paid). A child in Wales had a higher likelihood of being in persistent poverty at 17%.
Income spent on housing costs
A national indicator on the percentage of households spending 30% or more of income on housing costs was added to the national indicator set in December 2021, based on data from the DWP Family Resources Survey. Data collection for the Family Resources Survey was impacted by the COVID-19 pandemic during 2020-21 so survey data for that year is not included in the calculations for the most recent period (2019-20 to 2021-22) as it is judged to be of low quality.
For the latest period for which sufficient data is available (2019-20 to 2021-22), 18% of households spent 30% or more of their income on housing costs. This percentage has been fairly consistent at 19% since the period 2011-12 to 2013-14, but varies by housing tenure. It is too early to say whether the change indicated in the most recent period is a genuine decrease or whether it is due to the greater volatility as a result of the reduced survey sample size.
In the period to 2019-20 to 2021-22, only 2% of households who own their own home outright and 14% of those who own a home with a mortgage spent 30% or more of their income on housing cost. Percentages are higher for the other two tenures: 36% for private rented households, 43% of those in social rented housing.
Rising household energy costs have been a notable feature of the last couple of years and this has led to an increase in the percentage of households in fuel poverty. Whilst the 2021 headline figure was that an estimated 14% of households were living in fuel poverty, this is estimated to have risen to as much as 45% by April 2022. The percentage of households in severe fuel poverty is estimated to have risen from 3% to 8% over the same period.
The significant increases in fuel prices are a major factor in escalating costs for both households and businesses with all types of fuel reaching a peak in 2022. Compared to 2010, costs in 2022 were 95% higher for electricity, 67% higher for gas, 24% higher for solid fuel, and 46% higher for liquid fuel. A number of support schemes were introduced, such as the Energy Price Guarantee and the Winter Fuel Support Scheme in Wales, to reduce the impact of these increases on households and businesses.
Fuel poverty affects different households disproportionately, with those living in the oldest dwellings (pre-1919) more likely to be in fuel poverty (22% of such households in 2021), and almost three quarters (74%) of all households on the lowest 10% of incomes in Wales likely to have been in fuel poverty in 2021.