Publication - Statistics

# Poverty and Income Inequality in Scotland 2010/11

Published: 14 Jun 2012
ISBN:
9781780458694

This National Statistics publication presents annual estimates for the proportion and number of children, working age adults and pensioners living in low income households in Scotland. The estimates are used to measure progress towards UK and Scottish Government targets to reduce poverty and income inequality.

Poverty and Income Inequality in Scotland 2010/11
Chapter 3: Income Inequality and the distribution of income

### Chapter 3: Income Inequality and the distribution of income

The tables and charts in this section provide information about income inequality, the distribution of income and the types of families which are most common at the top and bottom of the income distribution.

Deciles / decile points:

Deciles (or decile points) are the income values which divide the Scotland population, when ranked by income, into ten equal-sized groups. Therefore nine decile points are needed in order to form the ten groups. Decile is also often used as a shorthand term for decile group; for example 'the bottom decile' is used to describe the bottom ten per cent of the income distribution.

Decile groups:

These are groups of the population defined by the decile points. The lowest decile group is the ten per cent of the population with the lowest incomes. The second decile group contains individuals with incomes above the lowest decile point but below the second decile point.

The following chart and table present figures that relate to the Scottish Government's Solidarity Purpose Target which is "to increase overall income and the proportion of income earned by the three lowest income deciles as a group by 2017".

Chart 6 shows the proportion of total income received by the three lowest income deciles (the thirty per cent of the population with the lowest incomes), from 1998/99 to 2010/11. It also shows the proportion of total income received by the three highest income deciles. This is a measure of how equally income is distributed across the population.

Chart 6. Percentage of total equivalised income going to the bottom and three income deciles, 1998-99 - 2010/11

Source: HBAI dataset, DWP. Note: The sum of all parts may not equal the total due to rounding.

Main points:

• In 2010/11 the proportion of income received by those in the bottom 3 deciles increased slightly to 14%.
• Between 2009/10 and 2010/11 the proportion of income received by those in the top three income deciles fell from 54 per cent to 51 per cent
• The factors outlined in Section 2.1 above explain possible drivers behind this reduction in income inequality observed in 2010/11.
• Over the longer term it can be seen that there has been very little change in income inequality since 1998/99 with the proportion of income received by the bottom 3 deciles remaining at between 13 and 14 per cent.

3.1 Income thresholds

Most of the income figures in this publication are based on equivalised income. One consequence of the equivalisation process is that there are different poverty thresholds for households of different sizes and compositions. To help readers understand the figures in this publication, the following table presents some commonly used income thresholds, before equivalisation, for families of different sizes.

Table 1 - Income thresholds for different family types (income after tax and BHC)

Single person with no children Couple with no children Single person with children aged 5 and 14 Couple with children aged 5 and 14 weekly annual weekly annual 281 14,600 419 21,800 502 26,200 641 33,400 279 14,500 416 21,700 499 26,000 636 33,200 168 8,800 251 13,100 301 15,700 384 20,000 147 7,700 220 11,500 264 13,800 337 17,600 149 7,800 223 11,600 267 13,900 341 17,800 185 9,700 277 14,400 332 17,300 423 22,100 217 11,300 323 16,900 388 20,200 495 25,800 248 12,900 370 19,300 443 23,100 565 29,500 279 14,500 416 21,700 499 26,000 636 33,200 319 16,600 476 24,800 571 29,800 728 38,000 364 19,000 544 28,300 652 34,000 832 43,400 425 22,100 634 33,000 760 39,700 969 50,600 528 27,500 788 41,100 945 49,300 1205 62,800

Source: HBAI dataset, DWP. Note: To create ten decile groups only nine decile points are needed to split the population.

Main points:

• The relative poverty (BHC) threshold in 2010/11 is equivalent to £168 per week for a single person with no children; £251 for a couple with no children; or £384 per week for a couple with one young and one older child.
• A couple with no children with a combined income of over £33,000 (after tax) would be in the highest income 20 per cent of the population.

3.2 Trends in income distributions

Chart 7 shows how the median equivalised household income in Scotland has changed from 1998/99 to 2010/11.

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A6).

Main points:

• There has been a gradual increase in median equivalised weekly household income (BHC) in Scotland from £360 in 1998/99 to £439 in 2009/10 followed by a drop to £416 in 2010/11. All incomes are quoted in 2010/11 prices.
• The pattern is similar for median equivalised weekly household income (AHC) in Scotland, which was £304 in 1998/99 to £393 in 2009/10, followed by a drop to £370 in 2010/11.

Chart 8 shows how the weekly equivalised incomes have changed from 2006/07 to 2010/11 across the different income decile points.

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A7).

Main points:

• Between 2006/07 and 2009/10, equivalised weekly household income in Scotland has been broadly increasing in real terms across all the income decile points.
• In 2010/11, there was a drop in equivalised weekly household incomes in all but the bottom two income decile points. This is linked to the drop in average earnings.
• Households in the bottom two deciles receive a greater proportion of their income from benefits and a smaller proportion from earnings. Since benefits are uprated annually by inflation they have not seen the same drop in income as those households who are dependent on earnings.

Chart 9 below shows how the distribution of income across Scotland changed between 1998/99 and 2010/11. The shaded area shows the shape of the 2010/11 income distribution, the continuous orange line for 2009/10 and the black line for 1998/99. The 1998/99 and 2009/10 figures are adjusted for inflation and are in 2010/11 prices.

Chart 9: Equivalised weekly household income distribution (before housing costs): Scotland - 1998/99, 2009/10 and 2010/11

Source: HBAI dataset, DWP.

Main points:

• The median equivalised household income fell in real terms from £439 per week to £416 between 2009/10 and 2010/11.
• The relative poverty threshold is based on the median and therefore also fell. (The UK median (£419) is used to calculate the poverty threshold, which is £251 per week for a couple with no children).

Chart 10 below shows the composition of family types by equivalised income decile.

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A8).

Main points:

• There are higher proportions of single people with dependent children towards the lower end of the income distribution.
• Single people without dependent children make up almost 30 per cent of those in the lowest decile, and around 20 per cent in the other deciles.
• There are also more pensioners towards the lower end of the income distribution - the second, third and fifth income deciles contain the highest proportions.
• There are more couples without children towards the top end of the income distribution.

Chart 11 below shows the composition of the economic status of families by equivalised income decile.

Source: HBAI dataset, DWP. These figures are also presented in Annex 1 (Table A9).

Notes: 1. The 'workless, other inactive category' would include, for example, non-working single parents, or those who cannot work due to long-term sickness or disability.

Main points:

• Families where no-one is working either through unemployment, retirement or economic inactivity (those who are neither in work, nor looking for work) are more common towards the bottom of the income distribution. 55 per cent of people in the bottom three income deciles are in families of these types compared to 10 per cent in the top three deciles.
• People in families where at least one adult is working full-time (including those who are self-employed) make up 85 per cent of those in the top three deciles. Such families make up 33 per cent of those in the bottom three deciles.

### Contact

Email: Anne MacDonald