Official Statistics

Income Dynamics: income movements and the persistence of low income, 2010 to 2021

Published 23 March 2023

1. Main stories

The main stories are:

• between 2017 to 2018 and 2020 to 2021, 9% of all individuals were in persistent low income before housing costs (BHC), and 12% after housing costs (AHC). These rates have been relatively stable over time
• children (10%) and pensioners (11%) were more likely to be in persistent low income BHC than working-age adults (7%)
• children had the highest rates of persistent low income AHC (19%) compared to working-age adults (11%) and pensioners (10%)
• between 2019 to 2020 and 2020 to 2021, roughly equivalent numbers of individuals moved into low income as moved out of low income
• changes in earnings and benefits were closely linked to movements into and out of low income
• new analysis confirmed that transitions to and from worklessness as well as changes in the numbers of hours worked were also closely linked to low income entries and exits

2. What you need to know

This is the seventh annual Income Dynamics (ID) publication. It provides information on rates of persistent low income for children, working-age adults, and pensioners in the UK. Individuals are in persistent low income if they are in relative low income for at least three out of four consecutive annual interviews. ID meets DWP’s statutory obligation to publish a measure of persistent low income for children, as set out under Section 4 of the Welfare Reform and Work Act 2016.

ID also includes analysis of movements across the income distribution, including low income entry and exit rates, and statistics on how various socio-economic factors are linked to low income entry and exit.

Income measures

ID uses a disposable household income measure, adjusted for household size and composition, to calculate a proxy measure of income available to each individual in the sample. The statistical adjustments made to ID income measures are in line with international best practice and allow us to make comparisons over time and across household compositions on a consistent basis. They do mean, however, that that the measures may not always be directly relatable to the amounts understood by individuals on a day-to-day basis.

An individual is said to be in relative low income if their household equivalised income is below 60% of median income. ID statistics are routinely reported both before and after housing costs.

Survey data

ID estimates are based on Understanding Society (USoc), a longitudinal survey run by the University of Essex, which follows sampled individuals over time. It has a two-year survey period (“wave”) based upon calendar years, with individuals interviewed once a year. The most recent wave is Wave 12, covering the calendar years 2020 and 2021.

The Wave 12 longitudinal sample included approximately 28,000 individuals. For the purposes of the longitudinal analysis presented here, individuals are classified according to characteristics reported at the first wave of any analytical period. For example, where analysis covers the period between 2017 to 2018 and 2020 to 2021, working-age adults are adults who were below State Pension age and over 16, not in further education and not classed as a dependent child, when they were interviewed for the 2017 to 2018 wave. Similarly, other breakdowns such as employment status or tenure also reflect individual status at the start of any longitudinal period.

Use of survey data means that estimates in this report are subject to a margin of error. Care should therefore be taken in interpreting apparent change over time or differences between sub-groups, which may reflect sampling error rather than real differences. This holds particularly true over the short term, for groups with smaller sample sizes, and where percentage point differences are small. Percentages are rounded to the nearest percentage point independently, and as a result may not sum to 100.

Revisions to the data

This ID publication contains longitudinal statistics covering the period from 2010 to 2021 (data from Waves 2 to 12 of USoc). Each annual USoc data release provides revised data for all waves of the survey. Revisions are made to improve data quality. For this reason, it is always best to use the most recent ID publication. Note also that statistics derived for a certain time period in this ID publication may therefore be different to those derived for the same time period in a previous ID publication. Please refer to the USoc user guide and specific information published on revisions for more information.

Changes for ID 2010 to 2021

The following changes have been made to the ID 2010 to 2021 publication:

• A change to the sample: USoc’s Immigrant and Ethnic Minority Boost (IEMB) sample has been included in ID for the first time. The IEMB was introduced by USoc in 2014 to 2015 and comprised approximately 2,900 households where at least one member was born outside the UK or who considered either themselves, or a parent or grandparent to be an ethnic minority. The inclusion of the IEMB has improved the representativeness of our statistics as well as increased the size of ethnic minority categories, reducing the need for the suppression of statistics associated with small sample counts. Although the inclusion of the IEMB will have affected our statistics, testing the change on the Wave 11 dataset indicated no major changes to headline statistics compared to those we published last year. More information on this is included in this year’s Background information and methodology report.
• A change to the starting point for some of our income mobility analysis: following the integration of the IEMB, analysis across income quintiles which had formerly used 2010 to 2011 as its starting point was revised to take 2015 to 2016 as its starting point. This enabled individuals from the IEMB to be included, and affects findings presented in Section 8.
• The addition of two new ‘events’ to our analysis of events associated with low income entry and exit: these explore the role of a household changing from workless to working (and the other way around), and transitions between full-time and part-time work.
• A new sub-component has been included in the Private Benefit income component: this follows a new category on income from Student Loans and/or Tuition Fee Loans having been included in the USoc Wave 12 survey questionnaire. This change is understood to have affected some of our statistics and is discussed in the Background information and methodology report.

The coronavirus (COVID-19) pandemic

The coronavirus pandemic affected USoc fieldwork and data collection during Wave 12, which took place over calendar years 2020 and 2021. It also affected Wave 11 (2019 and 2020). Policy changes associated with the pandemic affected household incomes during this period, and income-related questions were revised to capture these changes. This is discussed further in Section 11, together with the implications for ID statistics.

Data tables

Data tables have been published alongside this release. Relevant table references are provided within the text. Please also refer to the new ID Tables Guide for details of the statistics included in the various ID tables files.

Further information

For further information on the way in which ID statistics are produced, please refer to Section 12 below, the ID Quick Guide, and the Background information and methodology report which are published alongside this 2010-2021 summary.

3. An overview of persistent low income

Between 2017 to 2018 and 2020 to 2021 the rate of persistent low income for all individuals was 9% before housing costs (BHC) and 12% after housing costs (AHC). The BHC rate has been 9% in all previous four-wave periods. The AHC rate was 12% in the previous four-wave period, and 13% in all four-wave periods before then.

In addition to all individuals, persistent low income is considered separately for three main population groups: children, working-age adults, and pensioners.

Rates of persistent low income for these three groups have changed little over time

The highest rate of persistent low income in all four-wave periods has been for children AHC. This rate was 19% in the most recent four-wave period, compared to 11% for working-age adults and 10% for pensioners.

Working-age adults have had the lowest rates of persistent low income BHC over time. In the most recent four-wave period, this was 7%, compared to higher rates for children (10%) and pensioners (11%). The BHC rate for children ranged between 11% to 12% in all previous four-wave periods, but it is too soon to tell if the decrease seen in the most recent period will be sustained.

Sections 4, 5 and 6 discuss the experience of persistent low income among children, working-age adults and pensioners respectively. The remainder of this section focuses on all individuals.

Rates of persistent low income varied across the regions and countries of the UK

The rate of persistent low income BHC varied only slightly across the four countries of the United Kingdom, from 8% in Scotland and Wales, to 9% in England and Northern Ireland.

Within England the highest rates of persistent low income were in Yorkshire and the Humber (13%), the North East (11%), the East Midlands (11%), and in the West Midlands (10%). The lowest rates of persistent low income were in the South East and London (both 6%). This reflects the longer-term trend of higher rates of persistent low income BHC in regions in the north of England and the West and East Midlands, and lower rates in the south and east of England.

When looking at persistent low income AHC by country, England (13%) had the highest rate, followed by Scotland and Wales (both 12%), with Northern Ireland (9%) having the lowest rate. Within England, the highest rate was in London (16%), reflecting higher housing costs in the capital. Relatively high rates were also seen in Yorkshire and the Humber, the North East and West Midlands (all 14%). The South East and South West had the lowest rates of persistent low income AHC (both 10%). This broad variation in AHC rates across England has been present since the first four-wave period (2010 and 2011 to 2013 and 2014).

See Tables 2.2p and 2.8p in the Individuals in persistent low income file for more information.

Families headed by couples tended to have lower rates of persistent low income than those headed by single adults

Couples without children had the lowest rates of persistent low income BHC (4%). Couples with children and pensioner couples had slightly higher rates of persistent low income BHC (both 7%), and 10% of single adults without children, whether male or female, were in persistent low income. The highest rates of persistent low income BHC were experienced by single parents (19%), followed by single female pensioners, of whom 18% were in persistent low income compared with 13% of single male pensioners. Single adults with children and single female pensioners have consistently had the highest rates of persistent low income BHC.

When looking at rates of persistent low income AHC, pensioner couples and couples without children were again least likely to be in persistent low income (6% and 5% respectively). However, the AHC income distribution resulted in higher rates of persistent low income for families with children compared to their BHC rates: 13% for couples with children and, most notably, 34% for single adults with children. While individuals living in single parent families made up 7% of our sample, they represented 19% of all individuals living in persistent low income AHC.

Once housing costs were considered, the difference between rates of persistent low income for single female pensioners and single male pensioners narrowed: single female pensioners had the same rate of persistent low income AHC as BHC (18%) while single male pensioners had an AHC rate of 17%.

See Tables 2.1p, 2.7p, 2.1c, 2.7c and 2.13c in the Individuals in persistent low income file. Please also see the ID Tables Guide for information about composition measures and how these can be used to support interpretation of ID findings.

Individuals with a White head of household had lower rates of persistent low income than individuals from other ethnic groups

The sample sizes of individuals with a head of household of Mixed ethnicity or from an Other ethnic group are relatively small. This means that statistics based on these sub-groups can fluctuate. They are included in the Individuals in persistent low income tables file, but not discussed here.

Individuals with a White head of household had lower rates of persistent low income BHC (8%) than those with an Asian/ Asian British head of household (15%) or a Black/ African/ Caribbean/ Black British head of household (10%).

The rate of persistent low income AHC for individuals with a Black/ African/ Caribbean/ Black British head of household was 27%, considerably higher than their BHC rate, indicating that housing costs are more significant in terms of their effect on income for these individuals. The persistent low income rate AHC for individuals with an Asian/ Asian British head of household was 19%, and for individuals with a White head of household it was 12%.

While people with an Asian/ Asian British or Black/ African/ Caribbean/ Black British head of household have consistently experienced higher rates of persistent low income than individuals with a White head of household, both BHC and AHC, the rate of persistent low income BHC among people with a Black/ African/ Caribbean/ Black British head of household has seen a steady decrease since the first four-wave period (from 2010 and 2011 to 2013 and 2014). The rate of persistent low income AHC for these individuals has, however, remained relatively high over the same period.

See Tables 2.1p, 2.7p, 2.13p, 2.1c and 2.7c. in the Individuals in persistent low income file for more information.

Individuals living in the social rented sector were most likely to be in persistent low income

Amongst tenure types, the highest rate of persistent low income BHC was seen in the social rented sector (16%). This was followed by the private rented sector (11%), where the percentage of individuals in persistent low income BHC was slightly higher than that that of individuals who owned their home outright (10%). Those living in households which were buying their homes with a mortgage were much less likely to be in persistent low income (3%). This may reflect higher incomes among individuals in these households compared to those living in rented homes, and those living in owner-occupied homes who are much more likely to be pensioners.

After housing costs were taken into account, individuals who were renting were much more likely to be in persistent low income (AHC rates were 26% and 31% for private and social sector renters respectively). Renters were over-represented among those in persistent low income: while they comprised just under a third (32%) of the sample population, they accounted for 50% of those in persistent low income BHC, and 72% of those in persistent low income AHC.

See Tables 2.2p, 2.8p, 2.2c, 2.8c and 2.14c in the Individuals in persistent low income file for more information.

4. Children in persistent low income

Between 2017 to 2018 and 2020 to 2021, 10% of children were in persistent low income before housing costs (BHC) and 19% after housing costs (AHC). These figures have remained relatively stable over time.

Rates of AHC persistent low income among children were higher than BHC rates across every country and region of the UK

Children in England and Wales were slightly more likely to be in persistent low income BHC (both 10%) than children in Scotland (9%) and Northern Ireland (8%). AHC rates were higher than BHC rates for all four countries. England had the highest rate of persistent low income AHC for children (19%), followed by Scotland (18%), Wales (17%) and Northern Ireland (12%).

Within England, the South East (6%), London (7%), and the South West (8%) stood out as having lower rates of persistent low income BHC, compared to higher rates in the East Midlands (16%) and Yorkshire and the Humber (15%). Although rates of persistent low income for children in the South East and South West have been relatively low in previous four-wave periods, this has not been the case for London, which had a rate of 15% BHC in the four-wave period between 2016 to 2017 and 2019 to 2020. Some of the other regional persistent low income BHC rates for children have shown relatively large changes over the most recent four-wave period. For example, the rate fell from 18% to 11% in the North East, while it rose from 11% to 16% in the East Midlands. Regional rates of persistent low income BHC for working-age adults or pensioners have not seen similar changes.

While some of this observed change may be linked to smaller sample sizes (the North East, for example, is the region with the fewest children in the sample), this is not the case for London. Persistent low income rates are affected by rates of low income in the individual waves that make up the four-wave period, as well as rates of low income entry and exit, which affect the chances that an individual will be in low income for three out of four waves.

ID statistics do not point to substantial changes in single wave estimates of low income overall (Table M.9), although it is possible there are regional changes affecting children (we do not publish statistics on these rates). ID statistics do show a small increase in low income exit rates overall (Table 8.1), which is particularly pronounced in London (Table 8.4b), and this may be a contributing factor. It is also possible that the relatively large changes in persistent low income rates seen in this most recent four-wave period may not persist in future years.

Housing costs have a notable effect on rates of persistent low income for children, and for all regions, rates of persistent low income AHC were higher than their BHC rates. The difference was most marked in London, where AHC rates of persistent low income were the highest, at 24%. AHC rates were also high in the East of England, where 23% of children were living in persistent low income, and in the West Midlands, where 20% of children were living in persistent low income.

See Tables 3.2p and 3.8p in the Children in persistent low income file for more information.

Children in workless families were more likely to be in persistent low income

Rates of persistent low income among children were clearly affected by whether adults in the family were working or not: children who lived in workless families were much more likely to be in persistent low income both BHC and AHC (28% and 50% respectively) compared to those where all adults were in work (4% BHC and 9% AHC).

Children who lived in families where at least one adult was in work but not all were less likely to be in persistent low income than those in workless families, but more likely than those where all adults were in work: 20% BHC and 32% AHC. Since the four-wave period starting in 2010 and 2011, the likelihood of being in persistent low income for these children has steadily increased, from 15% to 20% BHC, and from 24% to 32% AHC. Over the same period, there have been small increases in the rates of persistent low income for children in families where all adults were working, both BHC and AHC, while rates for children in workless families have been more changeable.

See Tables 3.1p and 3.7p in the Children in persistent low income file for more information.

Children in social rented accommodation were most likely to be in persistent low income

Children living in social rented homes were more likely to be in persistent low income BHC than children in other tenures: 22% of children living in the social rented sector were in persistent low income. This compared to 13% of children living in privately rented homes, 14% of children living in owner-occupied homes and 4% of children in homes being bought with a mortgage.

After housing costs were taken into account, many more children living in the social rented sector were in persistent low income (40%), and they were again more likely to be in persistent low income than children living in other tenures. While the rates of persistent low income BHC were similar for children in privately rented and owner-occupied homes, the percentage of children in persistent low income in privately rented homes AHC was 32%, much higher than it was for children in owner-occupied homes (14%). That housing costs made no difference to the percentage of children in owner occupied homes who were in persistent low income is probably to be expected. Housing costs made very little difference to the rate of persistent low income among children in homes being bought with a mortgage (6%).

More than three-quarters (77%) of the children who were in persistent low income AHC were living in rented homes, even though they made up 39% of children in the four-wave sample.

See Tables 3.2p, 3.8p, 3.8c and 3.14c in the Children in persistent low income file for more information.

Rates of persistent low income in children were lower in families headed by couples

Children living in a family headed by a couple had much lower rates of persistent low income than those living in a lone parent family. Before housing costs, 8% of children living in a couple family were in persistent low income compared to 19% of children in lone parent families. After housing costs, these rates of persistent low income were 14% and 35% respectively. Although 80% of children in the sample were living in families headed by a couple, they accounted for under two-thirds of children in persistent low income, both BHC (63%) and AHC (62%). This reflects their lower risk of being in persistent low income compared to those children living in lone parent families.

See Tables 3.1p, 3.7p, 3.1c, 3.7c and 3.13c in the Children in persistent low income file for more information.

Children in families with three or more children were more likely to be in persistent low income than those in families with one or two children

Children in families with one or two children had the same rates of persistent low income, both BHC (8%), and AHC (14%). Children in families with three or more children were much more likely to be living in persistent low income (16% BHC and 30% AHC).

See Tables 3.1p and 3.7p in the Children in persistent low income file for more information.

5. Working-age adults in persistent low income

Between the period 2017 to 2018 and 2020 to 2021, the rate of persistent low income for working-age adults was 7% before housing costs (BHC) and 11% after housing costs (AHC). These rates have been stable over time.

Among working-age adults, the rate of persistent low income varied more by region than by country

The rate of persistent low income BHC for working-age adults was similar for the four countries of the UK: 7% in both Scotland and Wales, and 8% in both England and Northern Ireland. Within the English regions, Yorkshire and the Humber (10%) and the North East (10%) had the highest rates of persistent low income. Lower rates of persistent low income BHC were seen in the South East (5%), the East (6%), and in London (6%).

Rates of persistent low income for working-age adults AHC were slightly higher than BHC rates, and again similar across the four countries of the UK: 10% in Scotland, Wales, and Northern Ireland, and 11% in England. Within England, the regional pattern of persistent low income AHC for working-age adults was similar to the BHC pattern, with two differences. Firstly, in London, taking housing costs into account resulted in the highest rate of persistent low income (15%). Secondly, the South East and East regions were joined in having the lowest persistent low income rates by the South West and the East Midlands (all 9%).

See Tables 4.2p and 4.8p in the Working-age adults in persistent low income file for more information.

Working-age adults in workless families were more likely to be in persistent low income than those in families where someone was in work

70% of working-age adults in the sample were living in families where all adults were in work. Rates of persistent low income for these adults were low (4% BHC and 6% AHC). In contrast, working-age adults in workless families had much higher rates of persistent low income both BHC and AHC (19% and 26% respectively). Persistent low income rates for working-age adults in families where at least one adult was in work but not all lay between these two groups, but closer to rates for workless families (13% BHC and 18% AHC).

Rates of persistent low income among working-age adults where all adults are in work have remained relatively stable over time. There has been an overall increase in the rate of persistent low income BHC for working-age adults where one adult is in work but not all since 2010 to 2011 (the AHC picture is less clear-cut). Over the same time period, there has been a steady decrease in the percentage of working-age adults in workless families who were in persistent low income, both BHC and AHC.

See Tables 4.1p, 4.7p and 4.13c in the Working-age adults in persistent low income file for more information.

Working-age adults who rented their homes had higher rates of persistent low income, particularly AHC

Working-age adults living in the social rented sector had the highest rate of persistent low income BHC (16%). Rates for private renters and working-age adults who owned their homes outright were similar to each other: 9% and 8% respectively. Just 3% of those buying their homes with a mortgage were in persistent low income.

Taking housing costs into account resulted in large increases in the rate of persistent low income for both social and private sector renters. Around a quarter (27%) of working-age adults in the social rented sector were in persistent low income, as were a fifth (21%) of those in the private rented sector. Rates of persistent low income for working-age adults who owned their homes outright or who were buying with a mortgage were much lower (6% and 4% respectively). Although 33% of working-age adults in our sample population rented in the private or social sector, they were over-represented among working-age adults in persistent low income, accounting for 56% of this group BHC, and 72% AHC.

See Tables 4.2p, 4.8p, 4.2c, 4.8c and 4.14c in the Working-age adults in persistent low income file for more information.

Rates of persistent low income were higher for working-age adults with lower levels of educational qualifications, BHC and AHC

Rates of persistent low income increased as level of educational qualification decreased. Working-age adults with no qualifications had the highest rates: 18% BHC and 30% AHC, although it is worth noting that those with no qualifications only accounted for 5% of the sample population. Working-age adults with degree level qualifications (32% of the sample population) had the lowest rate of persistent low income: 4% BHC and 5% AHC. This pattern is likely to reflect the fact that working-age adults with higher levels of educational qualifications have access to a wider range of employment opportunities with higher pay than those with lower levels of qualifications, although there may be other contributing factors. Rates of persistent low income across all educational qualifications have changed little over time.

See Tables 4.2p, 4.8p and 4.14c in the Working-age adults in persistent low income file for more information.

6. Pensioners in persistent low income

Between the period 2017 to 2018 and 2020 to 2021, the rate of persistent low income for pensioners was 11% before housing costs (BHC) and 10% after housing costs (AHC). Both rates have varied little over time. Unlike children and working-age adults, rates of BHC and AHC persistent low income were roughly the same for pensioners. This reflects the fact that most pensioners own their homes outright (74% of the sample population).

Persistent low income for pensioners varied by region more than by country, both BHC and AHC

Rates of persistent low income BHC for pensioners, were roughly the same across the four countries of the UK: 11% in England, Scotland and Northern Ireland, and 10% in Wales. Rates of persistent low income AHC were similar to BHC rates for all countries (11% in Wales and 10% in both England and Scotland), except for Northern Ireland, where the rate of persistent low income for pensioners was 4% AHC. Northern Ireland has consistently had low rates of AHC persistent low income for pensioners.

Within England, pensioners in Yorkshire and the Humber had the highest rate of persistent low income BHC (18%), followed by pensioners in the North East (15%), and in the East Midlands (13%). BHC rates were lowest in London and the South East (5% and 8% respectively). Pensioners in Yorkshire and the Humber and in the North East also had the highest rates of persistent low income AHC (both 14%), with rates in the East similarly high (13%). In London, 12% of pensioners were in persistent low income AHC compared to 5% BHC. In no other part of the England did housing costs make such a difference to the persistent low income rate for pensioners. Although around 80% of all pensioners in the ID sample owned their own homes, this finding indicates that the higher housing costs typically found in London still affect the chances of pensioners being in persistent low income. This may also reflect tenure patterns - please see next section on the rates of persistent low income for pensioners by tenure.

See Tables 5.2p, 5.8p and 5.14c in the Pensioners in persistent low income file for more information.

Rates of persistent low income among pensioners varied more by tenure AHC than BHC

Pensioners who were buying their homes with a mortgage had the lowest rates of persistent low income BHC of all tenures (5%). Pensioners who owned their homes outright or who were living in the social rented sector had higher rates of persistent low income BHC (11% and 10% respectively), while those in the private rented sector had the highest rates of persistent low income (14%).

Taking housing costs into account resulted in much higher rates of persistent low income for pensioners who were renting their homes, particularly those in the private rented sector, 38% of whom were in persistent low income. Of those pensioners living in the social rented sector, 28% were in persistent low income, while pensioners buying their homes with a mortgage or who owned their homes outright had much lower AHC rates (3% and 5% respectively). Pensioners who were renting their homes accounted for 60% of all pensioners in persistent low income AHC, although they represented just 20% of the ID sample population.

See Tables 5.2p, 5.8p, 5.8c and 5.14c in the Pensioners in persistent low income file for more information.

7. Long-standing illness or disability and persistent low income

The way in which information on long-standing illness or disability is gathered by USoc changed between Waves 7 and 8. Prior to Wave 8, only those who reported having a long-standing illness or disability were asked if that condition was limiting or not. In the Wave 9 questionnaire (2017 to 2018), which is the wave used as the basis for the figures discussed here, limiting health problems or disabilities did not have to be linked to long-standing illness or disability so, for example, a person may report having a limiting health problem or disability but no long-standing illness or disability. Compared to previous publications, the way we describe the findings in this section has been revised to reflect these changes. Please refer to the Background information and methodology document for more detail.

Overall, pensioners were more likely than working-age adults to have a long-standing illness or disability (55% compared to 33%). Pensioners were also more likely to have a limiting health problem or disability (38% compared to 20%).

Pensioners had similar rates of persistent low income regardless of the presence of any health problems or disabilities

Rates of persistent low income BHC were very similar for pensioners regardless of whether they had no long-standing illness or disability (11%), or if they had a limiting or non-limiting health problem or disability (11% and 10% respectively). Housing costs had little effect on rates of persistent low income for these different groups of pensioners, reflecting higher home ownership among pensioners in general. Pensioners with a non-limiting health problem or disability were slightly more likely to be in persistent low income AHC (12%) than those with no long-standing illness or disability or those with a limiting health problem or disability (both 10%).

The presence of health problems or disabilities was associated with higher rates of persistent low income among working-age adults

11% of working-age adults with a limiting health problem or disability were in persistent low income BHC, as were 10% of those adults with a non-limiting health problem or disability. These rates compared with 7% for those who did not have a long-standing illness or disability. Once housing costs were taken into account, all three groups were more likely to be in persistent low income: 16% of working-age adults with a limiting health problem or disability were in persistent low income AHC, as were 12% of those with a non-limiting health problem or disability. 10% of those with no long-standing illness or disability were in persistent low income.

See Tables 4.1p, 4.7p, and 4.13c in the Working-age adults in persistent low income file and 5.1p, 5.7p and 5.13c in the Pensioners in persistent low income file for more information.

8. Movement between income quintiles

The data used in Income Dynamics is longitudinal, meaning that it follows individuals over time. This enables us to look at income mobility, which we do here using income quintiles. Income quintiles divide the population, when ranked by household income, into five equally sized groups. Quintile 1 (Q1) represents the fifth of the population with the lowest household incomes. Quintile 5 (Q5) represents the fifth of the population with the highest household incomes.

Previous ID publications used 2010 to 2011 as the starting point for much of this analysis. However, following the inclusion of the IEMB sample for this ID publication, we took 2015 to 2016 as the starting point for income mobility analysis. This allowed IEMB sample members to be included, resulting in a slightly larger sample size and more reliable findings.

Firstly, we compare where individuals were in the income distribution in 2015 to 2016 to where they were in the income distribution in 2020 to 2021, both before and after housing costs. This does not look at where individuals were in the income distribution in the intervening years.

Individuals in the top income quintile in 2020 to 2021 were most likely to have also been in the top quintile in 2015 to 2016, both BHC and AHC

Individuals with the highest incomes (5th quintile) in 2020 to 2021 were more likely to have been in the same quintile in 2015 to 2016 (55% BHC and 56% AHC) than individuals who were in any other income quintile in 2020 to 2021. Those with the lowest incomes (1st quintile) in 2020 to 2021 were the individuals next most likely to have also been in the same quintile in 2015 to 2016 (46% BHC and 45% AHC). Those in the second to fourth quintiles in 2020 to 2021 were more likely to have moved from adjacent income quintiles in 2015 to 2016 (BHC and AHC).

A closer look at the income quintiles in which individuals spent most of their time in the years between 2015 to 2016 and 2020 to 2021 shows that most individuals experienced movement into other income quintiles at some point. Those in the top quintile, however, were most likely to spend all or most of the intervening years in the same quintile (50% BHC and 51% AHC), followed by those in the bottom quintile (34% both BHC and AHC). Individuals in Quintiles 2 to 4 were less likely than individuals in the top or bottom quintiles to spend all or most of their time in the same quintile: rates ranged from 16% to 20% (BHC and AHC).

For more information, please see Table 6.1 in the Movements between Quintiles file and 7.1 from Quintile movements over time file, both of which can be found here.

9. Low income entries and exits

This section presents analysis on those who enter into or exit from low income across consecutive waves. The first part of the section looks at rates of low income entry and exit for all individuals, children, working-age adults and pensioners, measured across the most recent two waves. It then discusses low income entry and exit rates for socio-economic and other demographic characteristics. As with analysis of persistent low income, individuals are categorized according to their characteristics in the first wave of each two-wave period considered here.

Analysis of entries and exits only includes ‘clear’ transitions. For an entry or exit to count, household incomes must cross the 60 per cent of median income threshold and be at least 10 per cent higher or lower than the threshold in the following wave. As individuals live in households and we assume that all members of the household benefit equally from the household’s income, they will be affected by changes at the household level.

The number of individuals who entered and exited low income across the period 2019 and 2020 to 2020 and 2021 were similar, both BHC and AHC. Rates of low income entry and exit were, however, very different because they are based upon different sized populations, with the number not in low income in 2019 and 2020 and therefore eligible for a low income entry being much larger than the number who were in low income in 2019 and 2020 and therefore eligible for a low income exit.

Rates of entry into low income between 2019 to 2020 and 2020 to 2021

The rate of entry into low income for all individuals was 7% BHC and 8% AHC. The highest risk of entering low income was for children both BHC (8%) and AHC (12%). In contrast to this, pensioners had the lowest risk of entering low income (5% BHC and 6% AHC). Rates of entry into low income - including for different types of individuals - have been relatively stable over time, both BHC and AHC, although the entry rate for children AHC has gradually increased over time.

Rates of exit from low income between 2019 to 2020 and 2020 to 2021

As noted above, rates of exit from low income are greater than rates of entry even though roughly equivalent numbers of individuals enter and exit low income across each two-wave period.

The rate of exit from low income for all individuals was 42% BHC and 39% AHC. These rates have increased from 39% BHC and 35% AHC over the previous two-wave period. For all three groups, rates of low income exit were higher than they were over the previous two-wave period, although the longer-term trend is unclear. It is likely that some of the overall increase in the rate of exit from low income is due to the addition of income from Student and/or Tuition Fee Loans in Wave 12 of the USoc survey. Please refer to the Background information and methodology note for further information on this change.

Working-age adults were most likely to exit low income both BHC (47%) and AHC (42%). Children were more likely to exit from low income BHC (40%) than AHC (35%), while pensioners were more likely to exit low income AHC (34%) than BHC (31%). This reflects the fact that pensioners are more likely to own their own homes.

See Tables 8.1 and 8.9 in the Low income entry and exit rates file for headline rates of low income entry and exit.

Rates of low income entry and exit associated with other characteristics

ID also produces entry and exit statistics for other sub-groups using rates averaged over three two-wave periods: the following analysis spans the period between 2017 to 2018 and 2020 to 2021. Individuals are classified according to their status in the first of each of the two-wave periods. For those characteristics which are less likely to stay the same over time, Section 10 which looks at events associated with low income entry and exit - offers better insight because it examines how status changes – e.g. a change in the number of workers in a household – are associated with low income movements. The focus in this section is on characteristics that are not examined via Section 10, as well as those which are less likely to see frequent change.

Ethnicity

• Individuals living with a White head of household were least likely to enter into low income, both BHC and AHC. Rates of low income entry were higher and fairly similar for individuals with a head of household from all other ethnic groups
• While rates of low income exit BHC for individuals with a Black/ African/ Caribbean/ Black British head of household were slightly higher than they were for individuals in households headed by a White or Asian/ Asian British person, AHC rates of exit for these individuals were lower than for households headed by a White or Asian/Asian British person

There were differences in low income entry rates by ethnicity. Individuals with a White head of household were less likely to enter low income BHC (6% across the most recent period) than individuals with Asian/ Asian British heads of household (11%) and with Black/ African/ Caribbean/ Black British heads of household (10%). A similar pattern - but with higher rates of entry - was observed AHC, and these rates of entry have changed little over time. Rates of low income entry for individuals with heads of household from Mixed/ multiple ethnic groups have been increasing over time, and were 12% BHC and 16% AHC in the most recent period. For individuals with heads of household from an Other ethnic group, low income entry rates were 10% BHC and 12% AHC. Smaller sample sizes for both those of Mixed/ multiple ethnic groups and Other ethnic groups are likely to result in some of the variation observed in statistics for these categories.

There was less variation in rates of low income exit for individuals in households with a White, Asian/ Asian British or Black/ African/ Caribbean/ Black British head of household. 39% of individuals who were in low income and who had a White or an Asian/ Asian British head of household, exited from low income BHC; this rate was slightly higher for individuals with a Black/ African/ Caribbean/ Black British head of household (43%). Rates of low-income exit AHC were lower than BHC rates for all three of these groups, but most notably for individuals with Black/ African/ Caribbean/ Black British heads of household (32%).

Rates of low income exit for individuals with a head of household of Mixed or multiple ethnicity or from the Other ethnic group category tended to differ somewhat from individuals in the above three ethnic groups as well as from each other. This variation is likely to be driven by relatively small sample sizes in these two categories.

See Tables 8.5 and 8.13 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by ethnicity.

Tenure

• Social and private renters were more likely to enter low income than individuals in homes being bought with a mortgage or which were owner-occupied. This was true both BHC and AHC
• Individuals living in homes being bought with a mortgage were most likely to exit low income, while owner-occupiers were least likely to. This probably reflects the demographics associated with this tenure category

Across tenure types, individuals living in the social rented sector were most likely to enter low income, both BHC (12%) and AHC (18%), followed by those renting privately (9% BHC and 16% AHC). People living in homes which were either owned outright or being bought with a mortgage were least likely to enter low income BHC (6% and 4% respectively) and AHC (both 5%). These differences in rates of low income entry between tenants and home-owners have persisted over time.

Owner occupiers were least likely to exit from low income BHC (33%): this is likely to reflect the demographics associated with this tenure type i.e. older age groups, particularly pensioners, who are associated with lower levels of low income exit. Renters (both private and social sector) had higher BHC exit rates (43% and 38% respectively) than owner occupiers, but were least likely to exit low income AHC (both 30%). Those buying their homes with a mortgage had the highest rate of low income exit (51% both BHC and AHC).

See Tables 8.3 and 8.11 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by tenure.

Qualifications

When looking at the qualifications of working-age adults, there is a clear pattern across low income entry and exit rates, which has been consistent over time. Those with fewer qualifications were at greater risk of entering low income while those with more qualifications were more likely to exit from low income. For example, over the most recent four-wave period, 15% of individuals with no qualifications entered low income BHC, and 16% did so AHC. This contrasted with individuals with GCSE level qualifications, who had 8% BHC and 10% AHC low income entry rates. Individuals with degree level qualifications were least likely to enter low income (4% BHC and 6% AHC).

Working-age adults with no qualifications were also least likely to exit from low income (30% BHC and 27% AHC). By contrast, 54% of those with degree level qualifications exited low income BHC, and 49% exited low income AHC. While 40% of those with GCSE level qualifications exited low income BHC over this period, 33% exited low income AHC.

See Tables 8.6 and 8.14 in the Low income entry and exit rates file for rates of entry and exit for working-age adults with other levels of qualification.

Family type

• Couples without children and pensioner couples were least likely to enter low income, while single adults with children were most likely to
• Couples without children were most likely to exit from low income, while single pensioners and single adults with children were least likely to

Single adults with children were most likely to enter low income compared to other family types, both BHC (13%) and AHC (20%). Compared to this, pensioner couples (4% BHC and AHC) and couples without children (5% BHC and AHC) had the lowest rates of entry into low income. While rates of low income entry for most family types have, overall, changed little over time, there has been an evident increase in the rates of low income entry for single adults with children AHC.

Couples without children were most likely to exit low income (50% BHC and 51% AHC). Single pensioners had the lowest rates of exit from low income BHC (28% for both single male and single female pensioners), with similarly low levels of exit AHC (28% for single male pensioners and 29% for single female pensioners). Single adults with children, however, had the lowest rate of low income exit AHC, at 26%. Over time, the rates of low income exit for male pensioners have been falling, while rates for single adults (both males and females) without children, have been rising. Rates of low income exit for other family types have changed less.

See Tables 8.2 and 8.10 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by family type.

These are just some of the sub-groups covered in the entry and exit tables. For more breakdowns see Tables 8.1 to 8.16 in the Low income entry and exit rates file for more information.

10. Events associated with entries into and exits from low income

The associations between various household events and movements into and out of low income are explored in this section. We consider the role of changes in income components and household employment, as well as changes in household demographic composition. We also include changes in housing costs and tenure, but only in terms of their relationship with AHC low income entries and exits. For this reason and to manage the length of this section, only AHC findings over the most recent two waves are presented here. BHC tables, and data from previous waves are also available as part of the current release.

To further investigate the role of work in low income entry and exit, two new events are included in this publication. These are:

• A change in the number of full-time workers in a household where the number of workers (as well as household size) remains the same. This aims to capture what happens when there is a transition from full to part-time work, and whether this is associated with low income entry; and when there is a transition from part-time to full-time work, and whether this is associated with low income exit
• A household changing from one in which there is paid work to one where there is no paid work or the other way around. A transition from a working to a non-working household is explored in relation to low income entry, and a transition from a non-working to a working household is explored in relation to low income exit. Household size is kept constant for this event

For each event, we present three statistics. These will be explained using the following example:

	Prevalence (%)	Entry rate (%)	Share of entries (%)
Fall in earnings	11	27	37

Prevalence – this tells us how common an event is among the population at risk of either entering or exiting low income. When considering the relationship between a fall in earnings and low income entry, the prevalence statistic tells us that 11% of those who were not in low income in 2019 to 2020 experienced a fall in earnings between then and 2020 to 2021.

Entry or exit rate if experienced event - in the above example, 27% of those who were not in low income in 2019 to 2020 and who experienced a decrease in earnings, entered low income in 2020 to 2021.

Share of entries – this tells us what percentage of all those who entered or exited low income experienced each event. In the above example, 37% of all those who entered low income across the two most recent waves, experienced a fall in earnings.

In defining these events, attempts have been made to limit the effects of other important factors which might have a bearing on the event. For example, when looking at a change in earnings, there must be no change in the number of workers in the household. Please note that not all such factors can be controlled for.

Events associated with entering low income between 2019 to 2020 and 2020 to 2021, AHC: key findings[1]

	Prevalence (%)	Entry rate (%)	Share of entries (%)[2]
Fall in earnings [3]	11	27	37
Fall in benefit income [3]	17	16	34
Fall in investment income [3]	20	7	17
Fall in occupational pension income [3]	6	11	8
Fall in the number of workers in household - same household size	11	12	16
Fall in the number of full-time workers in household - same household size	11	16	21
Change from full-time to part-time work for at least one household member - same household size	4	21	11
Change from working to workless household - same household size	3	25	9
Change in household type	13	13	22
Change from living as a couple to single person status [4]	1	15	1
Increase in number of children	3	11	4
Change in tenure	6	11	9
Rise in housing costs [3]	8	9	9

[1] Not all events are included here. Please refer to Tables 9.1n to 9.18n in Events associated with low income entries and exits for further information on events associated with low income entry.

[2] The share of entries column does not sum to 100% as individuals can experience more than one event.

[3] For a change in monthly income or housing costs to be considered an event, it must have risen or fallen by at least 20% and a minimum of £10. Certain demographic changes are controlled for when examining income events: changes in household earnings are only included if the number of workers stays the same. For all other income events, the number of people in the household must not change.

[4] These households do not have children in either wave.

Decreases in earnings and benefit income were clearly linked to low income entries. 11% per cent of those not in low income experienced a fall in earnings between 2019 to 2020 and 2020 to 2021, of whom 27% entered low income. Of all individuals who entered low income between 2019 to 2020 and 2020 to 2021, 37% had experienced a fall in earnings. This event represents the highest single share of entries into low income out of all the events in this analysis.

A fall in benefit income was experienced by 17% of individuals not in low income in 2019 to 2020. While more households experienced this than a fall in earnings, it was less likely to be associated with an entry into low income (16%): this may reflect differences in the sizes of these decreases, or in income levels beforehand. A fall in benefit income was experienced by 34% of all those who entered low income, making it the event with the second highest single share of all entries into low income.

When looking at work-related events, our new analysis found that becoming a workless household was uncommon among those who were not in low income in 2019 to 2020: just 3% of these individuals lived in a household that became workless. However, a quarter (25%) of them entered low income, and 9% of all low income entries were individuals who had experienced this transition to living in a workless household.

Turning to reductions in the amount of full-time work in a household, we consider two events. Our new event specifically aims to capture changes from full to part-time work by counting a reduction in the number of full-time workers while keeping the total number of workers constant as well as the household size. The other event includes a reduction in the number of full-time workers while only keeping household size constant. A change from full-time to part-time work was less prevalent (4%) than any reduction in the number of full-time workers (11%), but 21% of those who experienced it subsequently entered low income. This was higher than the 16% of individuals where the number of full-time workers fell but where there was no requirement for the number of workers to remain the same. A change from full-time to part-time work was experienced by fewer individuals who entered low income (11%) than any reduction in the number of full-time workers (21%).

A change from living as a couple to single person status only occurred for 1% of those who were not in low income in 2019 to 2020. However, of those, 15% entered low income. Partly to provide context, we include a measure of household type change. This measure covers a range of scenarios that affect household composition, such as changes to the numbers of working-age adults, pensioners, or children. Although it does not refer to specific types of change, it does highlight how prevalent a household type change was (13%) and, more relevantly, identify that a change in household type was associated with over a fifth (22%) of low income entries.

Events associated with exiting low income between 2019 to 2020 and 2020 to 2021, AHC: key findings [1]

	Prevalence (%)	Exit rate (%)[2]	Share of exits (%)[3]
Rise in household earnings [4]	22	63	36
Rise in benefit income [4]	32	51	42
Rise in investment income [4]	12	53	16
Rise in occupational pension income [4]	6	67	11
Increase in no. of workers in household - same household size	12	59	18
Increase in no. of full-time workers in household - same household size	12	70	21
Change from part-time to full-time work for at least one household member - same household size	6	69	10
Change from workless to working household - same household size	5	60	7
Change in household type	15	48	19
Change from single person status to living as a couple [5]	1	..	1
Decrease in number of children	9	57	13
Change in tenure	7	49	9
Decrease in housing costs [4]	8	30	6

“..” indicates that the figure has been suppressed due to small sample size

[1] Not all events are included here. Please refer to Tables 9.1x to 9.18x in Events associated with low income entries and exits tables for findings on events associated with low income exit.

[2] Because those in low income are a smaller group than those who are not, and are generally closer to the low income threshold, they have a greater chance of exiting low income if they experience an income-boosting event than those not in low income have of entering low income if they experience a loss of income event. This explains why exit rates tend to be higher than entry rates.

[3] The share of entries column does not sum to 100% as individuals can experience more than one event.

[4] For a change in monthly income or housing costs to be considered an event, it must have risen or fallen by at least 20% and a minimum of £10. Certain demographic changes are controlled for when examining income events: changes in household earnings are only included if the number of workers stays the same. For all other income events, the number of people in the household must not change.

[5] These households do not have children in either wave.

An increase in benefit income (32%) followed by an increase in household earnings (22%) were the most prevalent events experienced by individuals in low income in 2019 to 2020. Of the individuals who experienced an increase in household earnings, 63% exited low income, and of those who experienced an increase in benefit income, 51% exited low income. An increase in these two income sources was closely linked to all low income exits, 42% of whom had an increase in benefit income, and 36% of whom had an increase in household earnings. Although relatively few individuals in low income experienced an increase in occupational pension income (6%), it was associated with a 67% rate of exit.

As noted above, two new work-related events are included this year, one which considers the link between a transition from a workless household to one in which someone is in paid work; and another which looks at what happens when there is an increase in the number of full-time workers but the number of workers (and household size) remains the same, thus aiming to capture transitions from part-time to full-time work.

The findings show that while just 5% of individuals in low income went from living in a workless to a working household across the period 2019 to 2020 and 2020 to 2021, 60% of them exited low income. Just 7% of all low income exits experienced this type of change, which reflects its low prevalence rate.

The second new event had a similarly low prevalence rate, with 6% of individuals experiencing someone in their household moving from part-time to full-time work. However, this change was associated with a 69% likelihood of exiting from low income. The other event which considers any increase in the number of full-time workers in a household was more prevalent (12%) but associated with a similarly high rate of exit from low income (70%). Overall, these two events were associated with the highest low income exit rates, and while we cannot state with certainty that observed differences in rates of exit are statistically significant, these findings on work transitions indicate that gaining full-time work may be more closely associated with low income exit than gaining any work.

11. Policy Context

The coronavirus pandemic and policies implemented in response to it affected fieldwork and incomes over parts of Waves 11 (2019 and 2020) and 12 (2020 and 2021). Please refer to ID 2010 to 2020 for specific information regarding the implications for Wave 11. This section addresses the key points relevant to this publication.

Wave 12 fieldwork was conducted mainly from January 2020 to December 2021. The first UK-wide lockdown began in March 2020, with on-going measures affecting social mixing to a varying degree in different areas and for different individuals until the end of fieldwork in December 2021.

Throughout Wave 12, USoc maintained the web-first approach which was introduced when face-to-face interviewing was suspended in March 2020. While response rates held up well, the shift in mode was associated with lower response rates for some groups. Weights have been adjusted accordingly.

As for Wave 11, the questionnaire content for Wave 12 was adapted midway through fieldwork in order to capture income-based support available to employees via the Coronavirus Job Retention Scheme (CJRS or ‘furlough’), and to the self-employed via the Self-Employment Income Support Scheme (SEISS). These changes were implemented at the end of July 2020.

The extent to which measures of persistent low income may reflect policy-changes linked to the pandemic is not fully clear. Persistent low income measurement takes place over a four-wave period, with the most recent four waves covering the period 2017 and 2018 to 2020 and 2021. In addition, persistent low income is based on a relative measure, and rates are affected by various other factors, including those linked to income mobility and the income distribution.

The two most recent two-wave periods over which low income entry and exit rates have been measured indicate some small increases in both entry and exit rates. It is possible that these reflect a period of greater change in income sources as well as income levels across this period.

Analysis of the events associated with low-income entry and exit is limited in the extent to which it can reflect pandemic-related policy changes. It is likely, for example, that the experience of income loss due to furlough has not been fully captured by the event which considers a change in earnings, since this analysis requires at least a 20% fall in earnings to qualify as a real change (workers on furlough received at least 80% of their pre-pandemic income). In addition, USoc respondents were asked to report ‘usual’ levels of pay, and so may not have reported reduced amounts.

Similarly, it is possible that increased payments received by Universal Credit and Working Tax Credit recipients between April 2020 to October 2021 did not meet the threshold required for them to be counted as increases in benefit income (it requires an increase of at least 20%). Although the events analysis does indicate small increases in the prevalence of an increase in benefit income, which is associated with slightly higher rates of low income exits and shares of all exits, ID statistics on low income exits tend to fluctuate more than those on low income entries due to smaller sample sizes. For this reason, it is advisable to look at any short-term changes in the context of longer-term patterns.

For events which rely on counting the number of workers in a household, a change to our code was made to ensure that individuals who reported being on furlough (which was possible in the survey but only from the end of July 2020), were also included in the count of workers. Had we not made this change, any individual reporting a furlough status would have appeared as a reduction in the number of workers in the household. This decision was made because it was felt that retention of at least 80% of earnings was, in income terms, much closer to retaining an employed status than to being classed as not working.

Please refer to the Background information and methodology note for further details.

Low income statistics

While ID provides estimates of individuals in persistent low income over a four-year period, estimates of numbers in low income in a single year are available in the annual Households Below Average Income (HBAI) publication. Persistent low income rates are lower than the single year rates published by HBAI because fewer people remain in low income for three years out of four than experience low income in any single year.

Official Statistics

Income Dynamics are Official Statistics.

National, Official and Experimental Statistics are produced in accordance with the Statistics and Registration Service Act 2007 and the Code of Practice for Statistics.

Official and Experimental Statistics may be awarded National Statistics status following an assessment by the Office for Statistics Regulation, the regulatory arm of the UK Statistics Authority. National Statistics status means that official statistics meet the highest standards of trustworthiness, quality and public value, signifying compliance with all aspects of the Code.

Further information about National, Official and Experimental Statistics status can be found in the Code glossary.

12. More information

ID uses data from Understanding Society to derive a measure of disposable household income. A household income measure implicitly assumes that all members of the household benefit equally from the combined income of the household, and so all members of a household will appear at the same position in the income distribution. Adjustments are made to take into account the size and composition of households to make figures comparable – see section on equivalisation, below.

Key information on the definitions and measures used in ID is provided here. Please also refer to the Background information and methodology note for more detail.

Definitions

Understanding Society

Understanding Society, led by the University of Essex, is a longitudinal survey of individuals in the United Kingdom which has been running since 2009. The Wave 12 sample (2020 and 2021) included around 28,000 individuals available for longitudinal analysis. Those not in private households at the start of the survey in 2009 are not included.

Income

This includes income from a number of sources:

• Labour income – usual pay and self-employment earnings. Includes income from second jobs. For Waves 11 and 12, this includes any income received from the government Coronavirus Job Retention Scheme (‘furlough’ income). Self-employment income is reported for either the previous financial year or, if not, for the most recent 12 months. Income received by self-employed individuals from the Self-Employment Income Support Scheme (SEISS) over the years 2020 and 2021 is understood to have been reported via existing questions on income from self-employment.
• Miscellaneous income – educational grants, payments from family members and any other regular payments
• Private benefit income – includes trade union/friendly society payments, maintenance or alimony and sickness or accident insurance. For the first time, the Wave 12 survey gathered data on income from Student Loans or Tuition Fee Loans, which is included in this category
• Investment income – private pensions/annuities, rents received, income from savings and investments
• Pension income – occupational pensions income
• State support – tax credits and all state benefits including State Pension and Universal Credit

Before Housing Costs (BHC) Income

Often used for non-pensioner analysis and is net of income tax payments, National Insurance contributions; and council tax.

After Housing Costs (AHC) Income

Derived by subtracting housing costs (mortgage interest and rent payments) from the BHC income measure. It is often used for pensioner analysis.

Equivalisation

An adjustment is made to household income to make the amount available to each individual comparable according to the size and composition of the household they belong to. For example, the process of equivalisation adjusts the income of a single person upwards, so their income can be compared directly to that of a couple. Equivalisation is explained below this table.

Relative Low Income

This is defined for this publication as an individual in a household with an equivalised household income of less than 60% of median income. A household is in persistent low income if they are in low income for at least three of the last four survey periods.

Households and families

ID presents information on an individual’s household income by various household and family characteristics. There are important differences between households and families. Please see below this table.

Inflation

This concerns how goods and services increase in price (generally) over time. ID uses an adjustment based on the Consumer Prices Index (CPI), also used in HBAI, to compensate for the effects of inflation over time.

Sampling Error

Results from surveys are estimates and not precise figures – in general terms the smaller the sample size, the larger the uncertainty. We are unable to calculate sampling uncertainties for these statistics, but please note that small changes are unlikely to be statistically significant.

Non-sampling Error

Survey data represents the best data from respondents to the survey. If people give inaccurate responses or certain groups of people are less likely to respond, this can introduce bias and error. This non-sampling error can be minimised through effective and accurate sample and questionnaire design and extensive quality assurance of the data. However, it is not possible to eliminate it completely, nor can it be quantified.

Equivalisation explained

Equivalisation allows comparisons of income levels to be made between individuals of different ages from different sized households.

Each household member is given a weighting which is summed together to provide a household weighting factor. Household weekly net income is divided by that factor to give equivalised income. A couple with no children is the reference point.

Weights are: first adult 0.67; other adult or child 14 years and over 0.33; child under 14 years 0.2.

Households and families

A household is one person living alone or a group of people (not necessarily related) who either share living accommodation OR who share one meal a day and who have the address as their only or main residence. A household can comprise one or more families. A family is either a single adult or a couple living as married, together with any dependent children.

Related information and statistics

Reference tables and the ID Background information and methodology report, which provides further detail on how we estimate ID measures, are available for our most recent release, together with the ID Quick Guide and ID Tables Guide.

Analysis of Income Dynamics data from previous years can be found on our collections page.

Estimates of numbers in low income in a single year are available from HBAI statistics. The following ONS publications provide information about alternative sources of data on earnings and income:

• A guide to sources of data on income and earnings
• An interactive tool which enables users to quickly locate information about key statistics on income and earnings
• Explaining income and earnings: important questions answered

Please refer to the ID Background information and methodology note for more information on related statistics.

Contact information and feedback

DWP would like to hear your views on our statistical publications. If you use any of our statistics publications, we would be interested in hearing what you use them for and how well they meet your requirements.

Press enquiries should be directed to the DWP Press Office at [email protected]. Telephone: 0115 965 8781.

Enquiries about these statistics should be directed by email to the ID team inbox at [email protected].

Lead Analyst: Helen Smith

ISBN: 978-1-78659-498-3