Poverty and income inequality: it’s getting worse

The latest figures produced by National Statistics service indicate rising poverty and income inequality in Scotland in recent years.

The incomes of low-income households fell further behind those of middle and high income households, pushing more people into poverty, and increasing income inequality further.

The proportion and number of the overall population in poverty increased in recent years. This follows a relatively stable decade, with some fluctuations year on year.

• Over the three-year period 2015-18, one in five people in Scotland, 20 percent, or 1.03 million people each year, were in relative poverty after housing costs. This shows a slight increase compared to 2014-17 (19 percent, 1 million people).
• Over the four-year period 2013-2017, 11 percent of people in Scotland were in persistent poverty after housing costs. This compares to 10 percent in 2012-2016.

Trends in child poverty are more complex to assess. The latest estimates suggest a slow increase in relative child poverty, whereas absolute poverty remained stable. The combined low income and material deprivation rate for children as well as persistent child poverty both fluctuated in recent years and showed no clear trend.

• In 2015-18, 24 percent of children in Scotland, 240,000 children each year, were living in relative poverty after housing costs, the same proportion but a larger number than in the previous period (24 percent, 230,000 children).
• Of those children in relative poverty, almost two thirds (65 percent) were living in a household where at least one adult was in paid employment. This proportion had previously shown a steep rising trend since 2007-10 which slowed in 2015-18.
• Single-year estimates of child poverty are required for reporting as part of the Child Poverty Act. These all show an increase in child poverty compared to last year’s single-year estimates. This confirms the rising trend in relative child poverty. Absolute child poverty appears to be fairly stable, while further data will be required to clarify any longer term trends in persistent child poverty and children in combined low income and material deprivation.

Pensioner poverty and pensioner material deprivation present a mixed picture as well.

Relative poverty for pensioners had been stable at a lower level than other age groups for many years, but started to rise in recent years. Pensioner material deprivation on the other hand appears to remain stable.

• In 2015-18, 18 percent of pensioners in Scotland, or 150,000 pensioners each year, were living in relative poverty after housing costs. This compares to 17 percent in 2014-17.
• The proportion of pensioners in material deprivation was six percent in 2015-18, the same as in 2014-2017.

Poverty by gender, disability and ethnicity: In the three-year period 2015-18, after housing costs poverty rates for single women were higher than for single men, particularly if they had dependent children.

Poverty rates for minority ethnic groups were higher than for white people. Poverty rates for adult Muslims were higher than those for adults of other or no religion. Poverty rates for families with a disabled family member were higher than for those with no disabled family member.

Income inequality continued to rise in the three-year period 2015-18. The top ten per cent of households saw larger increases compared to lower income households. This resulted in low income households falling behind those in the middle and even further behind those at the top of the income distribution.

Background

The Poverty and Income Inequality in Scotland publication contains statistics on poverty and income inequality for Scotland. The data comes from the Department for Work and Pensions’ (DWP) Family Resources Survey, Households Below Average Income dataset. Comparable UK income and poverty figures are published on the same day by DWP.

The data is presented as three-year averages of each estimate. Single-year estimates are also available in the associated tables. Single-year estimates are best used for understanding the current situation, whereas trends over time are better identified using three-year estimates.

The Persistent Poverty in Scotland publication presents estimates of how many people in Scotland live in persistent poverty. The data comes from the Understanding Society Survey.

These poverty statistics are used by the Scottish Government and other organisations to monitor progress in tackling poverty and child poverty, and to analyse what drives poverty and what works for tackling poverty and income inequality.

Key poverty measures:

• Relative poverty: A household is in relative poverty if its income is below 60 percent of the middle household income in the UK (the poverty threshold). Relative poverty is a measure of whether the income of the poorest households are keeping pace with middle income households across the UK.
• Absolute poverty: A household is in absolute poverty if its income is below the poverty threshold from 2010/11. This way, it measures whether the incomes of the poorest households are keeping pace with rising prices.
• Combined low income and material deprivation identifies the number of children in families that cannot afford basic essential goods and services because of a low income (below 70 percent of the middle household income).
• Persistent poverty identifies the number of people in relative poverty for three or more out of four years. People who live in poverty for several years are affected by it through their lifetime.

Household income is adjusted for household size.

The poverty publications present poverty figures before and after housing costs. Before housing costs figures are a basic measure of household income from earnings and benefits. After housing costs figures subtract spending on rents, mortgage interest payments and other unavoidable housing costs from this basic income. In Scotland, poverty statistics focus mainly on poverty after housing costs.

Further information on income and poverty statistics within Scotland.

Official statistics are produced by professionally independent statistical staff – more information on the standards of official statistics in Scotland.