Household incomes fall but fewer children in poverty

| June 14, 2012 | 0 Comments
Household incomes fall but fewer children in poverty

There was a fall in the average household income in 2010—11, due to rising inflation and recession, according to the government’s annual Household Below Average Income (HBAI) report.

The number of children living in poverty in the UK also fell because this figure is based on median incomes, and incomes fell proportionally more for wealthier households than poorer ones.

In 2010-11, 2.3 million children, 18 per cent of the total number of children in the UK, lived in households classed as below the poverty line, 2 per cent fewer than in the previous year.

The Households Below Average Income statistics define child poverty as children living in homes taking in less than 60 per cent of the median UK income.

Median household income fell by 3.1 per cent in 2010—11 to £419 a week, after accounting for inflation.

At this level, households with weekly income of £251 a week or less are classed as in “in poverty”, compared with £259 a week in 2009-2010.

This took 300,000 children out of the “in poverty” bracket.

Surprisingly, in the previous two years, median income increased despite the recession and rising unemployment, helped by a fall in inflation and higher benefits.

Jonathan Cribb of the IFS Institute for Fiscal Studies said: “The fall in median income in 2010-11 of 3.1 per cent was the largest one-year fall since 1981 and returned it to the level last seen in 2004-05.

“This was driven largely by a decline in real earnings, as the impact of the late 2000s recession on incomes finally started to become clear.

“Inequality also fell, as those on benefits had their incomes relatively better protected,” he continued.

The government is considering taking issues such as drug addiction, homelessness and unemployment into account, as well as household income, when defining child poverty.

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