Discussion and analysis of the number of people in a household where income is less than 60% of the UK median.

First published:
22 March 2018
Last updated:

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What is relative income poverty?

We define a person to be living in relative income poverty if he or she is living in a household where the total household income from all sources is less than 60 per cent of the average UK household income (as given by the median).

This means that relative income poverty is a measure of income inequality, not a direct measure of living standards.

For more information on what relative income poverty means, please see our 'What is relative income poverty?' presentation.

The data we have for relative income poverty comes from the Households Below Average Income (HBAI) report published by the Department of Work and Pensions (DWP).

The headline figure for Wales from this report is the percentage of all individuals in Wales who were living in relative income poverty – this is a national indicator which means it is used to measure progress being made in Wales towards the achievement of the 7 well-being goals.

This data uses equivalised disposable household income.

This data is available from the financial year 1994-95, for UK countries and regions of England by different age groups (all individuals, children, working-age adults and pensioners).

We also carry out extra analysis to consider economic, family, ethnicity and disability characteristics.

What to keep in mind when interpreting these statistics

Small sample

These figures are based on results from the Family Resources Survey (FRS) which samples around 900 households in Wales every year. This is quite a small sample and that is why three or more years of data are rolled together to give multi year moving averages. For example, a three-year average is an average of the latest year and the previous two years. This way any unreliability in the single-year estimates is reduced, but it is not eliminated.

Many factors drive change

Movements in these figures are driven by changes in the wider economy, the labour market, the tax/ benefit system and the relative effects of these changes on different groups. Therefore, as there are a large number of complex and interacting factors it is difficult to assess exactly which changes have driven movements in these figures or to predict how things may change in future.

Different costs of living

The use of the UK median in the relative income poverty measure, allows us to compare Wales to other similar UK regions. However, as the cost of living in Wales tends to be below what it is in other areas of the UK, the figures for Wales may suggest the standard of living in Wales is lower than it actually is.  

No statistical significance

None of the changes over time in the headline relative income poverty figures are statistically significant. We advise caution when looking at year on year changes, with longer term trends often giving a clearer picture.

Also, when comparing relative income poverty estimates of different groups of people, bear in mind the likely wide confidence intervals due to small sample sizes. We are working on methodology to allow us to estimate these confidence intervals in future.

Rounded data

All figures shown are rounded to the nearest 10 thousand individuals or whole percentage point.

Methodology