Guidance

Background information and methodology: Children in low income families: local area statistics

Updated 21 March 2024

1. Context

The children in low income families (CiLIF) statistics, provide information on the number and proportion of children living in Relative and Absolute low income Before Housing Costs by local area across the United Kingdom.

Statistics on the number of children (by age) and the proportion of children under 16 in low income families each year are published. Figures are calibrated to the Households Below Average Income (HBAI) survey regional estimates but provide more granular local area information not available from the HBAI for example, by local authority, parliamentary constituency and Ward.

Impact of the coronavirus (COVID-19) pandemic on statistics

The statistics are calibrated to the regional Households Below Average Income (HBAI) statistics. A full assessment of the impact of the coronavirus pandemic on these statistics is available in the technical reports. which should be considered alongside interpretation of these statistics.

While the data for FYE 2021, FYE 2022 and FYE 2023 has undergone extensive quality assurance prior to publication, we recommend that users exercise additional caution when using the data, particularly when making comparisons with previous years and for local areas across countries.

These statistics replace earlier Official Statistics previously published by Department for Work and Pensions (DWP) Children in out-of-work benefit households and HM Revenue & Customs (HMRC) Children in low-income families local measure. In December 2018, DWP and HMRC published their respective releases with a commitment to combine releases going forward.

The new combined set of statistics provide a more coherent picture of children in low income families at a local level across the United Kingdom.

2. Purpose

Sourced from survey data the HBAI provides estimates of children in low-income families only at national and regional levels. To fill the demand from users for local estimates, administrative data has historically been used to produce Official Statistics on measures such as the number of children in out-of-work benefit households (DWP) and children in low income families derived primarily from Tax Credits income data (HMRC).

With the rollout of Universal Credit and the Higher Income Child Benefit charge, neither measure now offers an accurate view of children in low income families at a local level. Both DWP and HMRC announced that a new set of statistics would be developed and published to better meet users’ needs.

3. Illustration

To illustrate what these statistics show.

In Bexley local authority, 7,500 children under 16 years lived in Relative low-income families in 2020 to 2021 (Relative measure Before Housing Costs).

This represents 15% of children under 16 in Bexley.

Of these 7,500 children, 5,200 (70%) lived in working families and 3,600 (48%) lived in lone parent families.

4. Methodology

The methodology underpinning these statistics addresses 3 of the key limitations of the previous official statistics:

1. Inclusion of Universal Credit claimants transitioning from Tax Credits
2. Calibration to HBAI estimates at regional level and by work-status
3. Calculation of rates for under 16s, using Office for National Statistics (ONS) mid-year population estimates rather than Child Benefit claims which no longer provide a useable proxy given the Higher Income Child Benefit charge

Calibration

Statistics are calibrated to HBAI estimates at regional level and by work status. Thus, the figures will be consistent with HBAI regional estimates which use a 3-year average of the number of children in low income families with the exception of FYE 2022 and FYE 2023 which use a 2-year average (excluding FYE 2021) (see technical reports).

Income

The number of children in families (not households), Before Housing Costs (BHC) in both Absolute (2010 to 2011 index) and Relative terms is derived from analyses of family income over the entire tax year.

Income is defined as Gross Personal Income from benefits or tax credits, from employment and self-employment, and from occupational pensions.

This is not the same as HBAI income measures, but for the purposes of looking at the distribution of family income across local areas, it offers a consistent approach that captures the main income streams.

The Self Employment Income Support Scheme (SEISS) data has not been used in the derivation of the income measures for the self-employed for the FYE2021. This is because the SEISS amount is generated on a different basis to Self Assessment. All Coronavirus Job Retention Scheme (CJRS) payments are paid via the PAYE system as part of weekly or monthly earnings and thus form part of the income measure.

During 2022 to 2023 the government announced and implemented additional support to families with several cost-of-living support schemes, depending on peoples’ circumstances. These family income streams are included in the derivation of the statistics.

Scottish Child Payments are not included as part of the derivation of family income.

Equivalisation

In order to allow comparisons of the living standards of different types of households, income is adjusted to account for variations in the size and composition of the households in a process known as equivalisation. This assumes that all individuals in the household benefit equally from the combined income of the household. Thus, all members of any one household will appear at the same point in the income distribution.

Equivalence scales conventionally take an adult couple without children as the reference point, with an equivalence value of one. The process then increases relatively the income of single person households (since their incomes are divided by a value of less than one) and reduces relatively the incomes of households with three or more persons, which have an equivalence value of greater than one.

Relationships

Statistics are derived from the database “RAPID” (Registration and Population Interaction Database) which provides a single coherent view of citizens’ interactions with DWP and HMRC within a tax year. Relationships are built from analyses of household benefits. That is, information on sole or joint claimants of Universal Credit, Tax Credits and Housing Benefits payments which is used to determine claimant and partner information. When combined with Child Benefit claimant data, this view provides a measure of the family unit.

The methodology accounts for changes in family composition throughout the year (for example re-partnering, multiple partners, becoming a sole parent) by tracking these changes in benefit claims and the associated personal income of claimants and partners.

Time-series

Statistics on the number of children in low income families from 2014 to 2023 are published. Limitations in the coverage of RAPID mean that earlier statistics using this methodology are not available. In addition, figures for the latest year are provisional as some self-employment data from the previous year is used as a proxy to fill in gaps in timely recording.

Building local areas

Consistent with DWP’s approach to building local area statistics, Census Output Area (COA) is used as the building block to derive standard geographies including:

• Lower Layer Super Output Area (LSOA) GB only
• Middle Layer Super Output Area (MSOA) GB only
• Ward
• (Higher Tier) Local Authority
• Westminster Parliamentary Constituency

Work status

RAPID provides weekly views of income and hours worked from employment and self-employment over the tax year. For the purposes of these statistics, “in-work” status is defined as a family who, combined, have had employment or self-employment for more than 26 weeks of the tax year.

Rates

Rates have been derived by dividing the number of children aged 0 to 15 in low income families by the number of all children aged 0-15 (sourced from latest mid-year population estimates).

For Government Office Regions and Local Authorities, the mid-2022 population estimates are not yet available for Scotland at the time of release therefore mid-2021 population estimates have been used (including estimate for the United Kingdom). For Parliamentary Constituencies, mid-2020 population estimates have been used in the latest years within England, Wales and Northern Ireland, and mid-2021 population estimates for Scotland. For wards, mid-2021 population estimates have been used in the latest year for Scotland. Percentages for England and Wales (2022 ward boundaries) and Northern Ireland wards are not shown as ward-level population estimates are not available at this time. Percentages are shown for children aged under 16 due to the complexity in identifying 16 to 19 year olds defined as child dependents in the population estimates.

5. Data source

These statistics draw data from the database “RAPID” (Registration and Population Interaction Database) which provides a single coherent view of citizens’ interactions with DWP and HMRC within a tax year for the UK. RAPID provides a basis for analyses of children, the family unit, and gross personal incomes (benefits/tax credits, employment, self-employment, occupational pensions) from which estimates of the number of children in low income families can be derived calibrated to HBAI regional estimates on Absolute and Relative definitions.

RAPID is based on 100% extracts of various DWP benefit systems and is supplemented with 100% data extracts from HMRC systems. RAPID collates information on individual activities (and the income generated from those activities) within each tax year, including benefit, employment and in-work benefit interactions, for example Tax Credits and Housing Benefit. Children have been identified from HMRC Child Benefit scans.

6. Definitions

Term	Definition
Children	Dependent individuals aged under 16; or aged 16 to 19 in full-time non-advanced education.
Family	A single adult; or a married or cohabitating couple; or a Civil Partnership; where one adult is claiming Child Benefit and other DWP and HMRC household benefits and tax credits, and any dependent children.
Lone Parent	A single adult who is claiming Child Benefit and other DWP/HMRC household benefits/tax credits, and dependent children.
Low income	Gross income measure is Before Housing Costs (BHC) and includes contributions from earning, state support and pensions. Equivalisation adjusts incomes for household size and composition, taking an adult couple with no children as the reference point. For example, the process of equivalisation would adjust the income of a single person upwards, so their income can be compared directly to the standard of living for a Couple
In-work	A family who, combined, have been in employment or self-employment for over 26 weeks of the year.
Out-of-work	A family who, combined, have been in employment or self-employment for under 26 weeks of the year
Age of child	Child age is derived as the duration from Date of Birth (DoB) to 31 March in each year. For 2022 to 2023, analyses of family relationships and income during that year are linked to child ages as at 31 March 2023.

7. Revisions

The statistics reflect revisions to previously published statistics. Statistics for FYE 2022 were badged as provisional and have now been updated based on more complete information for that year. In addition, technical improvements to the methodology mean that all data from 2014 is subject to small levels of revision. Geographies reflect the National Statistics Postcode Lookup for May 2023.

8. Interpretation of the statistics

• the statistics are calibrated to the regional Households Below Average Income (HBAI) statistics. A full assessment of the impact of the coronavirus pandemic on these statistics is available in the technical reports, which should be considered alongside interpretation of these statistics
• while the data for FYE 2021, FYE 2022 and FYE 2023 has undergone extensive quality assurance prior to publication, we recommend that users exercise additional caution when using the data, particularly when making comparisons with previous years and for local areas across countries
• the statistics are not directly comparable with the previous statistics produced by HMRC for the reasons outlined in section 3
• the statistics are calibrated to 3-year average (2-year for FYE 2022 and FYE 2023) HBAI published estimates of children in low-income families at national and regional level
• they are designed to provide local area insights for small geographical areas
• whilst the HBAI estimates are built from a survey of households, these administrative statistics cover the family unit as defined in section 6
• statistics are available for individual ages of children 0 to 19. Rates are calculated for children under 16 for both the numerator and denominator

9. Uses of the data

Uses:

• to meet the demand from users for local estimates of the number and proportion of children living in low income families to enable strategic decision making and allocation of services at local levels
• to compare and contrast changes in the number and proportion of children in low-income families across local areas within the same country
• to do so in a way that accounts for the rollout of Universal Credit to produce consistent statistics from 2014

Strengths:

• calibrated to HBAI estimates of children in low-income families at the national and regional level
• provide local area insights for low level geographies
• whilst the HBAI estimates are built from a survey of households, these administrative statistics covering the family unit, are derived from analyses of multiple administrative sources of benefit, tax credit, and earnings data

Limitations:

• the statistics are a measure of children and cannot be used to obtain the number of low-income families
• a family must have claimed Child Benefit and at least one other household benefit (Universal Credit, tax credits or Housing Benefit) at any point in the year to be classed as low income in these statistics
• income is Before Housing Costs (BHC) and is equivalised to adjust for family size and composition. Income is defined as Gross Personal Income from benefits/tax credits, from employment and self-employment, and from occupational pensions. Income from Scottish Child Payments is not included. This is not the same as HBAI income measures, but for the purposes of looking at the distribution of family income across local areas, it offers a consistent approach that captures the main income streams
• relationships are built from analyses of household benefits in payment. That is, information on sole or joint claimants of Universal Credit, Tax Credits and Housing Benefits which is used to determine claimant and partner information. When combined with Child Benefit claimant data, this view provides a measure of the family unit
• the statistics are not directly comparable with the predecessor of these statistics produced by HMRC

10. Status

These statistics are badged as Official Statistics.

11. Feedback

Email [email protected] with feedback and queries about the statistics.

12. Related statistics

Estimates of numbers in low income in a single year from Households Below Average Income are available.

Other related DWP statistics include:

• DWP Family Resources Survey

• DWP Income Dynamics

The following ONS publications provide useful information and guidance on alternative sources of data on earnings and income:

• income and earnings coherence work plan
• GSS income and earnings statistics interactive database

Indices of multiple deprivation by country are available:

• English Indices of Deprivation

• Welsh Index of Multiple Deprivation

• Scottish Index of Multiple Deprivation

Details of other National and Official Statistics produced by the Department for Work and Pensions can be found on the DWP statistics homepage with a schedule of statistical releases over the next 12 months and a list of the most recent releases.

In accordance with the Code of Practice for Statistics, all DWP National Statistics are announced in the government statistics calendar.