Accredited official statistics

Households below average income series: quality and methodology information report FYE 2024

Published 27 March 2025

Introduction

The Households Below Average Income (HBAI) report presents information on living standards in the United Kingdom and is the foremost source for data and information about household income, and inequality in the UK. It provides annual estimates on the number and percentage of people living in low-income households.

HBAI statistics incorporate widely used, international standard measures of low income and inequality. They provide a range of measures of low income, income inequality, and material deprivation to capture different aspects of changes to living standards. The current series started in Financial Year Ending (FYE) 1995 and so allows for comparisons over time, as well as between different groups of the population.

The statistics are based on the Family Resources Survey (FRS), whose focus is capturing information on incomes, and as such captures more detail on different income sources compared to other household surveys. The FRS collects a lot of contextual information on the household and individual circumstances, such as employment, education level and disability. This is therefore a very comprehensive data source allowing for a lot of different analysis.

This report provides detailed information on key quality and methodological issues relating to HBAI data. Information on the FRS methodology is available in the FRS Background Information and Methodology. An additional report providing a detailed description of the FRS sampling methodology, fieldwork operations, data processing and data source quality management are presented in the FRS Quality Assessment Report.  

Accredited Official Statistics

These Accredited Official Statistics were independently reviewed by the Office for Statistics Regulation in November 2012. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled ‘accredited official statistics’. Accredited official statistics are called National Statistics in the Statistics and Registration Service Act 2007.

OSR introduced the term ‘Accredited Official Statistics’ to describe National Statistics in September 2023. This was done following OSR’s review of the National Statistics designation and subsequent designation refresh project, which found the term ‘National Statistics’ was not well understood by users of statistics.

It is DWP’s responsibility to maintain compliance with the standards expected of Accredited Official Statistics. If DWP becomes concerned about whether these statistics are still meeting the appropriate standards, we will discuss any concerns with the Office for Statistics Regulation. Accredited Official Statistics status can be removed at any point when the highest standards are not maintained, and reinstated when standards are restored.

Acknowledgements

As in previous years, the DWP would like to thank the Institute for Fiscal Studies (IFS) for the substantial assistance that they have provided in checking and verifying the income data and grossing factors underlying the main results in this edition.

We are also grateful to HM Revenue and Customs (HMRC) for the provision of aggregated data from the Survey of Personal Incomes.

Users and uses

HBAI is a key source for data and information about household income and inequality and is used for the analysis of low income by researchers and the Government. Users include policy and analytical teams within the DWP, the Devolved Administrations, other Government departments, local authorities, Parliament, academics, journalists, and the voluntary sector.

Department for Work and Pensions’ responsibilities include helping people move into work and supporting in-work progression, with the aim of increasing overall workforce participation; helping people plan and save for later life, while providing a safety net for those who need it; providing effective, efficient, and innovative services to claimants, including the most vulnerable in society, and improving the experience of DWP services while maximising value for money for the taxpayer. Progress towards some of these responsibilities will affect the HBAI results.

HBAI is a key data source for the Child Poverty Strategy. Tackling Child Poverty: Developing Our Strategy (HTML) - GOV.UK outlines that relative poverty after housing costs will be a headline measure, with further work to also consider measurement of the most severe and acute forms of poverty. The Child Poverty Taskforce is working with Devolved Governments, partner organisations and individuals to develop the Child Poverty Strategy.

The key uses of the published statistics and datasets are:

• to provide detail on the overall household income distribution and low- income indicators for different groups in the population;
• for international comparisons;
• for parliamentary, academic, voluntary sector and lobby group analysis. Examples include using the HBAI data to examine income inequality, the distributional impacts of fiscal policies and understanding the income profile of vulnerable groups; and

The HBAI statistics also meet DWP’s statutory obligation to publish the first three of the four income-related measures included under section 4 of the Welfare Reform and Work Act 2016. The four measures cover the percentage of children in the United Kingdom:

• who live in households whose equivalised net income for the relevant financial year is less than 60% of median equivalised net household income for that financial year;
• who live in households whose equivalised net income for the relevant financial year is less than 70% of median equivalised net household income for that financial year and who experience material deprivation;
• who live in households whose equivalised net income for the relevant financial year is less than 60% of median equivalised net household income for the financial year beginning 1 April 2010, adjusted to take account of changes in the value of money since that financial year; and
• who live in households whose equivalised net income has been less than 60% of median equivalised net household income in at least 3 of the last 4 survey periods

Definitions for relevant key terms in the Act are consistent with those given in the Glossary, Income Definition, Equivalisation, and Combined Low income and Child Material Deprivation sections of this report.

Data for reporting against the fourth measure will be released via the Income Dynamics publication.

Further details of the uses of HBAI statistics are given in Annex 3.

What do you think?

We are constantly aiming to improve this report and its associated commentary. We would welcome any feedback you might have and would also be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: team.hbai@dwp.gov.uk.

New for this publication

Family Resources Survey (FRS) fieldwork during FYE 2024

Survey fieldwork operations continued with face-to-face interviewing as the predominant way of completing the survey, as was the case for FRS FYE 2023. Telephone interviewing was retained as an alternative based on household preference and interviewer availability.

Across the UK, 86% of FRS households were interviewed face-to-face during FYE 2024.

This year, while the achieved sample of just under 17,000 households is lower than that achieved in FYE 2023 (due to the boost in the sample size) it returned to more usual levels and compares well with FYE 2022. Additionally, the response rate increased to 31% in FYE 2024. As with previous years, we have completed extensive quality assurance of all published estimates, including comparing changes with external data sources, and analysing subgroups in detail.

We continue to advise users that changes in estimates over recent years should be interpreted being mindful of the differences in data collection approaches across the period and the effect this had on sample composition. Details of this can be found in the technical reports which were issued alongside the FYE 2021 and FYE 2022 statistical releases. In this year’s report we continue to make assessments of observed changes in the data compared with both FYE 2023 and with pre-pandemic trends and estimates.

Updated material deprivation measures 

Material deprivation estimates for FYE 2024 are based on updated measures and therefore not directly comparable to previous estimates. On charts we have shown this as a break in the series with a dotted vertical line. We advise users not to make a direct comparison of changes in material deprivation estimates between FYE 2023 and FYE 2024.

This update to material deprivation measures follows the inclusion of new questions in the FRS from April 2023 to March 2024 and analysis by the Department to review the previous measures. More information on the changes to the material deprivation FRS questions can be found in the FRS Background Information and Methodology report.

A technical report has been published alongside this year’s HBAI statistics publication and sets out the analysis and decisions underpinning the updated material deprivation measures for FYE 2024. This technical report presents analysis for the old and the updated measures; although as explained above these are not directly comparable. 

Material deprivation estimates for the coronavirus (COVID-19) pandemic period (FYE 2021 and FYE 2022) continue to be presented as individual data points. We advise users not to make a direct comparison of changes in material deprivation estimates over this period with those published prior to the pandemic.

Treatment of Cost of Living Support Schemes, Warm Home Discount and Scottish Winter Heating Payment

During FYE 2023, the UK Government implemented additional support for families through several cost of living support schemes, depending on people’s circumstances. There were further changes in FYE 2024 to these schemes. These payments are included in the HBAI estimates of household income and reflect the support specific to FYE 2024.

Additionally, income received in respect of the Warm Home Discount and the Scottish Winter Heating Payment is also included in the FYE 2024 HBAI estimates of household income.

Most of the schemes were introduced at pace, in a timeframe which made it difficult to adapt the FRS questionnaire to capture them. As each support scheme came with clear eligibility guidelines, receipt of the payments was imputed based on respondent characteristics. Further details on the methodology can be found in the FRS Background Information and Methodology document.

Review of the imputation methodology for Scottish Child Payment

The FRS began collecting data on Scottish Child Payment (SCP) in FYE 2021, following introduction of the benefit in February 2021. The FRS caseload as collected via the survey has remained substantially below official caseloads published by Scottish Government (SG). To reduce under-reporting, receipt of SCP was imputed (for eligible benefit units) for FYE 2023 survey year and has been further revised for FYE 2024, in consultation with SG analysts, to provide more accurate estimates of state support income in the FRS dataset. Further details can be found in the FRS Background Information and Methodology document.

Correction to Educational Attainment

In last year’s publication for FYE 2023, an issue with the FRS variable EDUCQUAL was identified. This variable is used to present estimates of low income for working-age adults by their level of educational attainment. Estimates were withdrawn from the FYE 2023 publication, affecting the following tables: 5.3db BHC, 5.3db AHC, 5.6db, and 5.9db. The FYE 2023 breakdown was also removed from Stat-Xplore.

For FYE 2024, data for FRS variable EDUCQUAL has been corrected and validated, and relevant estimates have been re-instated in tables: 5.3db BHC, 5.3db AHC, 5.6db, and 5.9db. 

During the investigation of the issues identified with the EDUCQUAL variable it was found that issues were present for several survey years, dating at least to FYE 2020.  Work will continue to provide revised outputs for historical HBAI datasets, and an update will be available in due course.

The FRS Background Information and Methodology document contains more detail on the underlying issue with the FRS variable EDUCQUAL. 

Correction to Cost of Living Support Schemes for FYE 2023 data

In the FYE 2023 HBAI release, the element of the low-income benefits and tax credits Cost of Living Payment relating to Pension Credit recipients was not included, which impacted on the FRS-based publications and therefore HBAI income estimates for this year. Revised FYE 2023 data is included in the time series and trend tables in the FYE 2024 HBAI release. Stat-Xplore and the underlying dataset have also been updated to reflect the revised FYE 2023 data. The impact of the revision is small, mainly affecting pensioners in low income. Whilst most low-income measures are unchanged, the revision reduces the number of pensioners in low income by up to 50 thousand and the low-income rates for pensioners by between 0.1 and 0.4 percentage points in FYE 2023.

Other points of note

Following our decision to not publish breakdowns of the FYE 2021 HBAI estimates, all rolling averages published for any period including FYE 2021 are based on two data points only. For FYE 2024 we have reverted to using three data points in the rolling average.

Using and Interpreting HBAI Results

Guide to published tables

A wide range of ODS supported tables are available alongside this release, breaking down the results presented in this report for different demographic characteristics. This includes breakdowns of the statistics by region, ethnic group, family type, and economic status. All tables can be downloaded via the HBAI homepage (see Directory of Tables link on this webpage to locate tables referenced in the following pages and to generally find the desired tables). Results are available for most series back to FYE 1995.

For FYE 2024, the published tables presenting combined low income and material deprivation estimates for working age and children are available on both a Before Housing Costs (BHC) and After Housing Costs (AHC) basis.

UK-level HBAI data is also available between FYE 1995 and FYE 2024 on the Stat-Xplore online tool. You can use Stat-Xplore to recreate measures in our static tables and create your own bespoke HBAI analysis.

The source data behind these statistics is available for download and further analysis via the UK Data Service.

Note that unpublished FYE 2021 data is excluded from both the tables and Stat-Xplore. The HBAI dataset underpinning the headline estimates for FYE 2021 remains available for expert users and researchers in the UK Data Service, and we recommend consulting the FYE 2021 technical report for more guidance on use and interpretation of sub-national estimates.

Estimates of the change in the percentage and number that are significantly different from a previous year are shown with the notation [s]. Changes marked with an [s] are unlikely to have occurred because of chance. Changes that are not significant are shown with the notation [ns].

The series started in FYE 1995 and so allows for comparisons over time, as well as between different groups of the population.

What do we mean by average?

In HBAI, the term ‘average’ is used to describe the median income. This divides the population of individuals, when ranked by income, into two equal-sized groups, and unlike the mean is not affected by extreme values.

HBAI measures

There are a range of measures of low income, income inequality, and material deprivation to capture different aspects of changes to living standards:

• Relative low income measures the number and proportion of individuals who have household incomes below a certain proportion of the average in that year - and is used to look at how changes in income for the lowest income households compare to changes in incomes near the ‘average’. In the HBAI report we concentrate on those with household incomes below 60 per cent of the average. Information on those with household incomes below 50 and 70 per cent of the average is available in the detailed tables published on the HBAI homepage

• Absolute low income measures the proportion of individuals who have household incomes a certain proportion below the average in FYE 2011, adjusted for inflation. It is used to look at how changes in income for the lowest income households compare to changes in the cost of living. In the HBAI report we concentrate on those with household incomes below 60 per cent of the average FYE 2011 income. Information on those with household incomes below 50 and 70 per cent of the average is available in the detailed tables published on the HBAI homepage

Rounding

Due to rounding, the estimates of change in percentages or numbers of may not equal the difference between the total percentage or number of individuals for any pair of years.

The publication and tables follow the following conventions:

[low] the estimate is less than 50,000 or the percentage is less than 0.5 per cent

[u] the estimate is not available due to small sample sizes (fewer than 100)

[x] the estimate is not available. In FYE 2021 this was due to sample quality concerns across different household sizes and compositions.

Population estimates are rounded to the nearest 0.1 million.

Percentages are rounded to the nearest 1 per cent.

Key terminology

Income

This is measured as total weekly household income from all sources after tax (including child income), national insurance and other deductions. An adjustment called ‘equivalisation’ is made to income to make it comparable across households of different size and composition.

Median

Median household income divides the population, when ranked by equivalised household income, into two equal-sized groups. The median is the value at the very middle of the distribution.

Deciles and Quintiles

These are income values which divide the whole population, when ranked by household income, into equal-sized groups. This helps to compare different groups of the population.

Decile and quintile are often used as a standard shorthand term for decile/quintile group.

Decile groups

Decile groups are ten equal-sized groups - the lowest decile describes individuals with incomes in the bottom 10 per cent of the income distribution.

Quintile groups

Quintile groups are five equal-sized groups - the lowest quintile describes individuals with incomes in the bottom 20 per cent of the income distribution.

Income distribution

The spread of incomes across the population.

Equivalisation

Equivalisation adjusts incomes for household size and composition, taking an adult couple with no children as the reference point. For example, the process of equivalisation would adjust the income of a single person upwards, so their income can be compared directly to the standard of living for a couple.

Housing costs

Housing costs include rent, water rates, mortgage interest payments, buildings insurance payments and ground rent and service charges. A full list can be found in the glossary at the end of this report.

Benefit units and households

HBAI presents information on an individual’s household income by various household and benefit unit (family) characteristics. There are important differences between households and benefit units.

Household

The definition of a household used in the FRS is ‘one person living alone or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room, sitting room, or dining area’. So, for example, a group of students with a shared living room would be counted as a single household even if they did not eat together, but a group of bed-sits at the same address would not be counted as a single household. A household may consist of one or more benefit units, which in turn will consist of one or more people (adults and children).

Family or Benefit Unit

A family in the FRS is defined as ‘a single adult or couple living as married and any dependent children’. A dependent child is aged 16 or under, or is 16 to 19 years old, unmarried and in full-time non-advanced education. This is consistent with the DWP term “benefit unit”, which is a standard grouping used for assessing benefit entitlement.

So, for example, a husband and wife living with their young children and an elderly parent would be one household but two families or benefit units. The husband, wife and children would constitute one benefit unit, and the elderly parent would constitute another.

Other terms

For more information on these and other terms used throughout the report, see the glossary at the end of this report, and the infographics explaining key terms.

Issues to consider

The following issues should be considered when using HBAI data:

Impact of the coronavirus (COVID-19) pandemic on FYE 2021 and FYE 2022 statistics

Fieldwork operations for the Family Resources Survey (FRS) were changed in response to the coronavirus (COVID-19) pandemic and the introduction of national lockdown restrictions in March 2020. The established face-to-face interviewing approach employed on the FRS was suspended and replaced with telephone interviewing from April 2020 for the whole of the 2020 to 2021 and 2021 to 2022 survey year. This change impacted on both the size and composition of the achieved samples for those years. The data published for FYE 2021 is limited to headline measures and not available in our supplementary tables or on our Stat-Xplore tool. It is, however, still deposited for download by users in the UK Data Service.

We recommend caution is exercised when interpreting any data published for these survey years, particularly when making comparisons with years prior to the coronavirus (COVID-19) pandemic.

This methodology report does not detail the effect the coronavirus (COVID-19) pandemic had on the sample data and estimates. For this information, users are advised to consult the technical reports which accompanied the FYE 2021 and FYE 2022 publications.

Lowest incomes

Comparisons of household income and expenditure suggest that those households reporting the lowest incomes may not have the lowest living standards. The bottom 10 per cent of the income distribution should not, therefore, be interpreted as having the bottom 10 per cent of living standards. Results for the bottom 10 per cent are also particularly vulnerable to sampling errors and income measurement problems. For HBAI tables, this will have a relatively greater effect on results where incomes are compared against low thresholds of median income. We have also presented money value quintile medians in Table 2.3ts on three-year averages to reflect this uncertainty (any period including FYE 2021 is based on two data points).

Adjustment for inflation

As advised in a Statistical Notice published in May 2016, from FYE 2015 HBAI made a methodological change to use variants of CPI when adjusting for inflation. Prior to the FYE 2015 HBAI publication variants of RPI were used to adjust for inflation.

This change followed advice from the UK National Statistician that use of RPI should be discontinued in statistical publications.

Full details on the impact on this methodological change, together with estimates for trends in income and absolute low income under both the old and new methodologies, are presented in Annex 4 of the FYE 2015 HBAI Quality and Methodology Report.

Benefit receipt

Relative to administrative records, the FRS is known to under-report benefit receipt. However, the FRS is the best source for looking at benefit and tax credit receipt by characteristics not captured on administrative sources, and for looking at total benefit receipt on a benefit unit or household basis. It is often inappropriate to look at benefit receipt on an individual basis because means-tested benefits are paid on behalf of the benefit unit. DWP published research (Working Paper 115) which explores the reasons for benefit under-reporting with the aim of improving the benefits questions included within the FRS. Table M.6a of the FRS publication presents a comparison of receipt of state support between FRS and administrative data. Methodology Table M.6b compares the average weekly receipt of state support in the FRS with the average weekly receipt of state support from the administrative data sources. Some benefit types have not been included in this analysis because no directly comparable administrative data source is available.

Self-employed

All analyses in the HBAI publication include the self-employed. A proportion of this group are believed to report incomes that do not reflect their living standards and there are also recognised difficulties in obtaining timely and accurate income information from this group. This may lead to an understatement of total income for some groups for whom this is a major income component, although this is likely to be more important for those at the top of the income distribution. There is little difference in the overall picture of proportions in low-income households when analysis is performed either including or excluding the self-employed.

Savings and investments

The data relating to investments and savings should be treated with caution. Questions relating to investments are a sensitive section of the questionnaire and have a low response rate. A high proportion of respondents do not know the interest received on their investments. It is likely that there is some under-reporting of capital by respondents, in terms of both the actual values of the savings and the investment income. This may lead to an understatement of total income for some groups for whom this is a major income component, such as pensioners, although this is likely to be more important for those at the top of the income distribution.

Methodological change for FYE 2020 (FRS savings and investments variable used in HBAI)

The level of savings and investments, for some families (benefit units) and households was estimated using a slightly different methodology from FYE 2020 than in previous years. The new method more accurately estimates savings in current accounts and basic bank accounts. It should be noted that savings and investments breakdowns from FYE 2020 are not directly comparable with those for previous years.

Comparisons with National Accounts

Table 1.2a shows comparisons between growth in Real Household Disposable Income and real growth in HBAI mean BHC unequivalised income. For some years, income growth in the HBAI-based series appears lower than the National Accounts estimates. The implication of this is that absolute real income growth could be understated in the HBAI series. Comparisons over a longer period are believed to be more robust. For FYE 2024, the backseries of data on Real Household Disposable Income has been updated to reflect a change to the reference year from 2019 to 2022.

High incomes

Comparisons with His Majesty’s Revenue and Customs’ Survey of Personal Incomes (SPI), which is drawn from tax records, suggest that the FRS under-reports the number of individuals with very high incomes and understates the level of their incomes. There is also some volatility in the number of high-income households surveyed. Since any estimate of mean income is very sensitive to fluctuations in incomes at the top of the distribution, an adjustment to correct for this is made to ‘very rich’ households in FRS-based results using SPI data. The median-based low-income statistics are not affected.

Gender analysis

The HBAI assumes that both partners in a couple benefit equally from the household’s income and will therefore appear at the same position in the income distribution. Research has suggested that, particularly in low-income households, the assumption regarding income sharing is not always valid as men sometimes benefit at the expense of women from shared household income. This means that it is possible that HBAI results broken down by gender could understate differences between the two groups.

Students

Information for students should be treated with some caution because they are often dependent on irregular flows of income. Only student loans are counted as income in HBAI (with both the maintenance and tuition parts of the loan included), any other loans taken out are not. The figures are also not necessarily representative of all students because HBAI only covers private households, and this excludes halls of residence.

Elderly

The effect of the exclusion of the elderly who live in residential homes is likely to be small overall except for results specific to those aged 80 and above.

Ethnicity analysis

Smaller ethnic minority groups exhibit year-on-year variation which limits comparisons over time. For this reason, analysis by ethnicity is usually presented as three-year averages. Please note that following the decision to not publish breakdowns of the FYE 2021 estimates, all three-year averages calculated and published for any period including FYE 2021 are based on two data points only.

Disability analysis

No adjustment is made to disposable household income to take account of additional costs that may be incurred due to the illness or disability in question. This means that using income as a proxy for living standards for these groups, as shown here, may be somewhat upwardly biased. Analysis excluding Disability Living Allowance and Attendance Allowance from the calculation of income has been published as part of the suite of online HBAI ODS (not available for FYE 2021).

Regional analysis

Disaggregation by geographical regions is usually presented as three-year averages. This presentation has been used as single-year regional estimates are considered too volatile. This issue was discussed in Appendix 5 of the FYE 2005 HBAI publication, where regional time series using three-year averages were presented. Although the FRS sample is large enough to allow some analysis to be performed at a regional level, it should be noted that no adjustment has been made for regional cost of living differences. It is therefore assumed that there is no difference in the cost of living between regions, although the AHC measure will partly consider differences in housing costs. Analysis at geographies below the regional level is not available from this data. Please see the Children in Low-Income Families publication for local level geographies.

Please note that following the decision to not publish breakdowns of the FYE 2021 estimates, all three-year averages calculated and published for any period including FYE 2021 are based on two data points only.

Household food security and food bank usage

The individual level statistics presented in our tables relate to the household’s food bank usage or household food security. The circumstances of the household are applied to all individuals within that household. The questions do not ask, for example, about the food bank usage of the individual or food bank usage needs of children.  It should also be noted that the statistics presented exclude shared households, such as a house shared by a group of professionals. 

Changes to deflators

Since the HBAI FYE 2018 publication, the Office for National Statistics (ONS) have made some very minor revisions to the bespoke Consumer Price Index (CPI) series we use to make real-terms income comparisons within and between survey years. However, because the effect of these revisions on low-income measures is negligible no revisions have been made to the deflators used in HBAI. See the following ONS update for more details.

Revision to FYE 1995 to FYE 2019 due to treatment of income from child maintenance

In HBAI FYE 2020 a minor methodological change was made to capture all income from child maintenance. This resulted in more income from child maintenance being included, in turn slightly increasing some household incomes and so tending to slightly reduce low-income rates for families with children. The full back series back to FYE 1995 was revised so that comparisons over time are on a consistent basis across the full time series. This means that figures for FYE 1995 to FYE 2019 may be slightly different to the equivalent figures in publications issued prior to FYE 2019. Please refer to HBAI Quality and Methodology Information Report for FYE 2020 for more information.

Income from dividends

From FYE 2022, income received from director’s dividends is included in the estimates following an addition to the Family Resources Survey. From FYE 2023 there was an adjustment to the treatment of dividends for a small group of respondents: in cases where respondents are all of (i) self-employed, and (ii) state they are directors, and (iii) where their calculated income rests on profits from annual accounts, as opposed to the other figures reported; then it is assumed that the profit figure is already inclusive of any dividend also reported. The income is treated as income from earnings. More information on the treatment of specific income sources can be found in FRS Background Information and Methodology.

Revisions to FYE 2023 data in the FYE 2024 release

Time series and trends tables in the FYE 2024 HBAI release contains revised data for FYE 2023 following the correction to Cost of Living Support schemes in the underlying FRS FYE 2023 data.

Survey Data

The statistics in the HBAI report come from the Family Resources Survey (FRS).  In FYE 2024, the FRS covered a sample of just under 17,000 households in the United Kingdom. This was smaller than the 25,000 achieved in FYE 2023. For FYE 2024 there was a target of 20,000 achieved households, comparable to the years prior to the COVID-19 pandemic. In general, this means that the degree of uncertainty around this year’s survey estimates is larger than last year.

The focus of the FRS is on capturing information on incomes and, as such, is the foremost source of income data and provides more detail on different income sources than other household surveys. It also captures a lot of contextual information on the household and individual circumstances, such as employment, education level and disability. This is therefore a very comprehensive data source allowing for a lot of different analysis.

Surveys gather information from a sample rather than from the whole population. The sample is designed carefully to allow for this, and to be as accurate as possible given practical limitations such as time and cost constraints. Results from sample surveys are always estimates, not precise figures. This means that they are subject to a margin of error which can affect how changes in the numbers should be interpreted, especially in the short-term. The latest estimates should be considered alongside medium and long-term patterns.

In addition to sampling errors, consideration should also be given to non-sampling errors. Non-sampling errors arise from the introduction of some systematic errors in the sample as compared to the population it is supposed to represent. As well as response bias, such errors include inappropriate definition of the population, misleading questions, data input errors or data handling problems – in fact any factor that might lead to the survey results systematically misrepresenting the population. There is no simple control or measurement for such non-sampling errors, although the risk can be minimised through careful application of the appropriate survey techniques from the questionnaire and sample design stages through to analysis of results.

HBAI is based on data from a household survey and so subject to the nuances of using a survey, including:

• Sampling error. Results from surveys are estimates and not precise figures. Confidence intervals help to interpret the certainty of these estimates, by showing the range of values around the estimate that the true result is likely to be within. In general terms the smaller the sample size, the larger the uncertainty. Statistical significance is an attempt to indicate whether a reported change within the population of interest is due to chance. It is important to bear in mind that confidence intervals are only a guide for the size of sampling error

• Non-response error. Prior to the coronavirus (COVID-19) pandemic, the FRS response rate each year was around 50 per cent. Following the change in mode because of the pandemic, in FYE 2021 the response rate fell to 23%, in FYE 2022 and FYE 2023 it improved to 26% and 25% respectively. In FYE 2024, the response rate increased to 31%. To correct for differential non-response, estimates are weighted using population totals

• Survey coverage. The FRS covers private households in the United Kingdom. Therefore, individuals in nursing or retirement homes, for example, will not be included. This means that figures relating to the most elderly individuals may not be representative of the United Kingdom population, as many of those at this age will have moved into homes where they can receive more frequent help

• Survey design. The FRS uses a clustered sample designed to produce robust estimates at former government office region (GOR) level. The FRS is therefore not suitable for analysis below this level

• Sample size. Although the FRS has a relatively large sample size for a household survey, small sample sizes for some more detailed analyses may require several years of data to be combined to generate reliable estimates. From April 2011, the target achieved GB sample size for the FRS was reduced by 5,000 households, resulting in an overall achieved sample size for the UK of around 20,000 households from FYE 2012 onwards. We previously published an assessment concluding that this still allows core outputs from the FRS to be produced, though with slightly wider confidence intervals or ranges

The circumstances surrounding the coronavirus (COVID-19) pandemic resulted in a smaller achieved FRS sample size than pre-pandemic, with over 16,000 households in the FYE 2022 sample. This was an improvement on FYE 2021 where the achieved sample size was around 10,000 households.

DWP had previously announced plans for a significant boost to the FRS sample size, with the aim to increase the achieved sample to 45,000 households annually, from April 2022. However, the primary challenge to achieving this stemmed from recruiting and retaining sufficient interviewers: several factors conspired to cause existing interviewers to leave at a higher rate than previously, while at the same time it was hard to attract and retain new interviewers. The impact of this was that the level of field capacity required to manage the sample boost was not achieved. For FYE 2023 the achieved sample was 25,000 households.

Response rates in FYE 2024 continued to be challenging.  A key challenge comes from recruitment and retention of interviewers, alongside increasing rates of respondent refusal.  At just under 17,000 households, the achieved sample is smaller than that achieved in FYE 2023 (just over 25,000). However, it should be noted that for FYE 2023 the issued sample was boosted to 99,000 households. For FYE 2024, the issued sample returned to around 59,000, with a target of 20,000 achieved households, comparable to the years prior to the coronavirus (COVID-19) pandemic.  

• Measurement error. The FRS is known to under-report certain income streams, especially benefit receipt. More detail can be found in Table M.6a and M.6b of the FRS report

Further methodological details relating to the FRS are given in the FRS Background Information and Methodology.

Reporting Uncertainty

As discussed above, survey results are always estimates, not precise figures and so subject to a level of uncertainty. Two different random samples from one population, for example the UK, are unlikely to give the same survey results, which are likely to differ again from the results that would be obtained if the whole population was surveyed. The level of uncertainty around a survey estimate can be calculated and is commonly referred to as “sampling error”.

We can calculate the level of uncertainty around a survey estimate by exploring how that estimate would change if we were to draw many survey samples for the same period instead of just one. This allows us to define a range around the estimate (known as a “confidence interval”) and to state how likely it is that the real value that the survey is trying to measure lies within that range. Confidence intervals are typically set up so that we can be 95% sure that the true value lies within the range – in which case this range is referred to as a “95% confidence interval”. Annex 4 of this report provides further details on the Bootstrapping methodology used to estimate confidence intervals in HBAI, alongside estimates of the sampling error.

Population

The analyses in the HBAI report are primarily based on the FRS. Households in Northern Ireland (NI) were surveyed for the first time in the FYE 2003 survey year. A detailed analysis of observed trends, together with results for NI and the UK for the first three years of NI data can be found in Appendix 3 of the FYE 2005 HBAI publication.

The FRS time series in this publication are presented with discontinuities in the years where there is a change from GB to UK. Prior to FYE 2015, for some tables, estimates for NI were imputed for the years FYE 1999 to FYE 2002. This allowed for changes since FYE 1999 to be measured at the UK level. For further details, see Appendix 4 of the FYE 2005 HBAI publication. This imputation is no longer carried out from the FYE 2015 publication.

The survey covers the private households in the UK. All the results therefore exclude people living in institutions, e.g. nursing homes, halls of residence, barracks or prisons, and homeless people living rough or in bed and breakfast accommodation. The area of Scotland north of the Caledonian Canal was included in the FRS for the first time in the FYE 2002 survey year and, from the FYE 2003 survey year, the FRS was extended to include a 100 per cent boost of the Scottish sample. This has increased the sample size available for analysis at the Scottish level.

A further adjustment is that households containing a married adult whose spouse is temporarily absent, whilst within the scope of the FRS, are excluded from HBAI. Similarly, prior to the FYE 1997 data, households containing a self-employed adult who had been full-time self-employed for less than two months were excluded. This exclusion is no longer made because of the improvements in the self-employment questions in the FRS.

Grossing

The published HBAI analysis presents tabulations where the percentages refer to sample estimates grossed-up to apply to the whole population.

Grossing-up is the term usually given to the process of applying factors to sample data so that they yield estimates for the overall population. The simplest grossing system would be a single factor, e.g. the number of households in the population divided by the number in the achieved sample. However, surveys are normally grossed by a more complex set of grossing factors that attempt to correct for differential non-response at the same time as they scale up sample estimates.

The system used to calculate grossing factors for HBAI mirrors that of FRS grossing with two differences described below.

The system used to calculate grossing factors for the FRS divides the sample into different groups. The groups are designed to reflect differences in response rates among different types of households. The FRS stratified sample structure is designed to minimise differential non-response in the achieved sample. Grossing is then designed to account for residual differential non-response. They have also been chosen with the aims of DWP analyses in mind. The population estimates for these groups, obtained from official data sources, provide control variables. The grossing factors are then calculated by a process which ensures the FRS produces population estimates that are the same as the control variables.

As an example, the grossed number of men aged 35 to 39 would be consistent with the Office for National Statistics (ONS) estimate (see Table 1). Some adjustments are made to the original control total data sources so that definitions match those in the FRS, e.g. an adjustment is made to the demographic data to exclude people not resident in private households. It is also the case that some totals must be adjusted to correspond to the FRS survey year.

A software package called CALMAR, provided by the French National Statistics Institute, is used to reconcile control variables at different levels and estimate their joint population. This software makes the final weighted sample distributions match the population distributions through a process known as calibration weighting. It should be noted that if a few cases are associated with very small or very large grossing factors, grossed estimates will have relatively wide confidence intervals.

As stated above, the system used to calculate grossing factors for HBAI mirrors that of FRS grossing with two differences. The first difference with FRS grossing is that the sample of households is smaller for HBAI purposes because households with spouses living away from home are excluded (see Population section above). The second difference is that separate control totals are introduced for ‘very rich’ households, so that the top end of the income distribution is more accurately reflected, which is particularly important for estimates of mean income or inequality as measured by the Gini coefficient.

As with the FRS, the grossing regime for HBAI currently uses population and household estimates based on the results of the 2011 Census. Prior to FYE 2013, 2001 census-based estimates were used. In addition, a review of FRS grossing was carried out on behalf of DWP by the ONS Methodological Advisory Service. In implementing the review recommendations, several relatively minor methodological improvements were implemented from FYE 2013.

The main changes implemented were as follows:

• improvements to the categorisation of tenure control totals
• a full breakdown of the total number of households into each of the English regions (in addition breakdowns for Scotland, Wales and Northern Ireland)
• a new adjustment to account for the different rates of sampling in England and Wales, Scotland, and Northern Ireland

A back-series of grossing factors calculated using the new methodology was created for each year back to FYE 2003 and are used in the HBAI publication tables from FYE 2013 onwards. Further details and analysis of the impact of these methodological changes are published in the grossing methodology review.

In developing the grossing regime, careful consideration has been given to the combination of control totals and the way age ranges, Council Tax bands and so on, have been grouped together. The aim has been to strike a balance so that the grossing system will provide, where possible, accurate estimates in different dimensions without significantly increasing variances.

There are some differences between the methods used to gross the Northern Ireland sample as compared with the Great Britain sample:

• Local taxes in Northern Ireland are collected through the rates system, so Council Tax Band as a control variable is not applicable.
• Northern Ireland housing data are based largely on small sample surveys. It is not desirable to introduce the variance of one survey into another by using it to compute control totals; therefore, tenure type has not been used as a control variable.

Details of the grossing regime for Northern Ireland are shown in Table 2.

FYE 2024 Grossing Regime

As the full set of inputs based on the 2021 Census (2022 for Scotland), which are required for grossing, were not available in time, the FYE 2024 publication is not based on the latest Census. Estimates for FYE 2024 instead have their basis in the 2011 Census, as rolled forward to 2023 by ONS’ mid-year estimates. All FRS based outputs use these population estimates for FYE 2024. These are bespoke estimates provided to DWP by ONS. Full details of our plans to use 2021 Census outputs for the production of FRS grossing factors can be found in the FRS Release Strategy.

The mid-year estimates cover the usual resident population and were adjusted to reflect the population living in private households and covered by the FRS sample. This was achieved by deflating the usual resident population using data from the 2011 Census on the proportion of people usually resident, by local authority, age and sex who live in private households.

Table 1: HBAI grossing regime for Great Britain, FYE 2024

Control variables used to generate grossing factors for private households.

Control totals for Great Britain	Groupings	Original Source
Individuals (age, sex and region)	Male children: 0-9, 10-19; Male adults: 16-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-59, 60-64, 65-74, 75-79, 80+; Female children: 0-9, 10-19;  Female adults: 16-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-59, 60-69, 70-74, 75-79, 80+. Each grouping is further broken down by region: North East, North West, Yorkshire and the Humber, East Midlands, West Midlands, East, London, South East, South West, Scotland and Wales	Office for National Statistics (ONS)
Benefit Units with children	Region: England and Wales (combined), Scotland	DWP estimates using ONS population and HM Revenue and Customs Child Benefit data
Benefit Units with children	Lone Parents: Males, Females	DWP estimates derived from the Labour Force Survey
Households by tenure type	Tenure: Local Authority or Housing Association renters, private renters, owner occupiers	Ministry of Housing, Communities and Local Government (MHCLG), Welsh Government, Scottish Government
Households by Council Tax Band	Not Valued Separately (NVS) and Council Tax Band A, B, C-D, E-H and I in Wales only.	Valuation Office Agency, Scottish Government
Households by region	Region: North East, North West, Yorkshire and the Humber, East Midlands, West Midlands, East of England, London, South East, South West, Wales, Scotland.	Office for National Statistics (England) / Welsh Government (Wales) / Scottish Government (Scotland)
Households containing ‘Very Rich’ people	Pensioners, Non-pensioners	HMRC Survey of Personal Incomes (SPI)

Table 2: HBAI grossing regime for Northern Ireland, FYE 2024.

Control variables used to generate grossing factors for private households.

Control variables for Northern Ireland	Groupings	Original Source
Individuals (age and sex)	Male children:0-19; Male adults: 16-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-59, 60-64, 65-74, 75-79, 80+; Female children:0-19; Female adults: 16-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-59, 60-69, 70-74, 75-79, 80+	Office for National Statistics (ONS)
Lone Parents	Lone parents in Northern Ireland	Department for Communities Northern Ireland (DfCNI)
Households		Northern Ireland Statistics and Research Agency (NISRA)
Households containing ‘Very Rich’ people	Pensioners, Non-pensioners	HMRC Survey of Personal Incomes (SPI)

Changes to the grossing regimes in FYE 2021 and FYE 2022

Due to the impact of the coronavirus (COVID-19) pandemic, there was a need to add in extra grossing controls during FYE 2021 and FYE 2022. Further information is available in the Households below average income series: quality and methodology information report FYE 2023 

Following the resumption of face-to-face interviewing in the FRS in FYE 2023 and FYE 2024, the methodology for these years reverted to the grossing system in place before the pandemic (detailed in tables 1 and 2).

Adjustment for individuals with very high incomes

An adjustment is made to sample cases at the top of the income distribution to correct for volatility in the highest incomes captured in the survey. This adjustment uses data kindly supplied by HM Revenue and Customs’ statisticians from HM Revenue and Customs’ Survey of Personal Incomes (SPI) to control the numbers and income levels of the ‘very rich’ while retaining the FRS data on the characteristics of their households. The methodology defines a household as ‘very rich’ if it contains a ‘very rich’ individual and it adjusts pensioners and non-pensioners separately. Thresholds have been set at the level above which, for each group, the FRS data is volatile due to small numbers of cases.

From the FYE 2010 publication, the SPI adjustment methodology was changed to be based on adjusting a fixed fraction of the population rather than on adjusting the incomes of all those individuals with incomes above a fixed cash terms level. This is intended to prevent an increasing fraction of the dataset being adjusted. The adjustment fraction was set at the same level as the fraction adjusted in FYE 2009. There was also a movement to basing all SPI adjustment decisions on gross rather than a mixture of gross and net incomes. These changes only have a very small effect on the results as presented.

The numbers of ‘very rich’ pensioners and non-pensioners in survey estimates are matched to SPI estimates by the introduction of two extra control totals into the grossing regime. One is for the total number of pensioners above the pensioner threshold and the other for the number of non-pensioners above the non-pensioner threshold. The grossing factors for individual cases are only marginally changed because of this adjustment. In addition, each ‘very rich’ individual in the FRS is assigned an income level derived from the SPI, as the latter gives a more accurate indication of the level of high incomes than the FRS. Again, this adjustment is carried out separately for pensioners and non-pensioners.

The latest SPI data available when we carried out our analysis was for FYE 2022, which was projected forward to cover the FYE 2024. For FYE 2024, pensioners in Great Britain are subject to the SPI adjustment if their gross income exceeded £107,800 per year (£89,700 in Northern Ireland). Working-age adults (including the working-age partners of pensioners) are subject to the SPI adjustment if their gross income exceeded £361,200 per year (£189,400 per year in Northern Ireland).

Equivalisation

HBAI uses net disposable weekly household income, after adjusting for the household size and composition, as an assessment for material living standards - the level of consumption of goods and services that people could attain given the net income of the household in which they live. To allow comparisons of the living standards of different types of households, income is adjusted to consider variations in the size and composition of the households in a process known as equivalisation. HBAI assumes that all individuals in the household benefit equally from the combined income of the household. Thus, all members of any one household will appear at the same point in the income distribution.

The unit of analysis is the individual, so the populations and percentages in the tables are numbers and percentages of individuals – both adults and children.

Equivalence scales conventionally take an adult couple without children as the reference point, with an equivalence value of one. The process then increases relatively the income of single person households (since their incomes are divided by a value of less than one) and reduces relatively the incomes of households with three or more persons, which have an equivalence value of greater than one. The infographic below illustrates the process of equivalisation, Before Housing Costs.

Figure 1

Consider a single person, a couple with no children, and a couple with two children aged twelve and ten, all having unadjusted weekly household incomes of £300 (BHC). The process of equivalisation, as conducted in HBAI, gives an equivalised income of £448 to the single person, £300 to the couple with no children, but only £214 to the couple with children.

Figure 1 shows the process of how income undergoes the process of equivalisation for three different example household types – all of which have a weekly net income before equivalisation of £300, but after equivalisation have different weekly net incomes:

Example 1: Couple without children – have individual equivalisation weights of 0.67 (first adult) and 0.33 (second adult) which sum to 1. For this household their weekly net income before equivalisation is £300 and their weekly net income after equivalisation is £300 divided by 1, so also £300. A couple with no children is the reference point.

Example 2: Couple with 2 children under 14 years have equivalisation weights of 0.67 (first adult), 0.33 (second adult), 0.2 (first child under 14 years) and 0.2 (second child under 14 years) – these sum to 1.4. For this household their weekly net income before equivalisation is £300, and their net weekly income after equivalisation is £300 divided by 1.4, so £214. Compared to the reference point, income has decreased as a couple with children need a higher income to enjoy the same living standard.

Example 3: Single adult household has equivalisation weight of 0.67. For this household their weekly net income before equivalisation is £300 and their weekly net income after equivalisation is £300 divided by 0.67, so £448. Compared to the reference point, income has increased as a single person needs a lower income to enjoy the same living standard.

The main equivalence scales now used in HBAI are the modified OECD scales, which take the values shown in Table 3. The equivalent values used by the McClements equivalence scales are also shown for comparison alongside modified OECD values. The McClements scales were used by HBAI to adjust income up to the FYE 2005 HBAI publication.

In the modified OECD and McClements versions, two separate scales are used, one for income BHC and one for income AHC. The construction of household equivalence values from these scales is quite straightforward. For example, the BHC equivalence value for a household containing a couple with a fourteen-year-old and a ten-year-old child together with one other adult would be 1.86 from the sum of the scale values:

0.67 + 0.33 + 0.33 + 0.33 + 0.20 = 1.86

This is made up of 0.67 for the first adult, 0.33 for their spouse, the other adult and the fourteen-year-old child and 0.20 for the ten-year-old child. The total income for the household would then be divided by 1.86 to arrive at the measure of equivalised household income used in HBAI analysis.

Table 3: Comparison of modified OECD and McClements equivalence scales

	OECD rescaled to couple without children=11	OECD ‘Companion’Scale to equivalise AHC results	McClements BHC	McClements AHC
First Adult	0.67	0.58	0.61	0.55
Spouse	0.33	0.42	0.39	0.45
Other Second Adult2	0.33	0.42	0.46	0.45
Third Adult	0.33	0.42	0.42	0.45
Subsequent Adults	0.33	0.42	0.36	0.40
Children aged under 14yrs3	0.20	0.20	0.20	0.20
Children aged under 14 and over3	0.33	0.42	0.32	0.34

Notes:

1. Presented here to two decimal places

2. For the McClements scale, the weight for ‘Other second adult’ is used in place of the weight for ‘Spouse’ when two adults living in a household are sharing accommodation, but are not living as a couple.  ‘Third adult’ and ‘Subsequent adult’ weights are used for the remaining adults in the household as appropriate.  In contrast to the McClements scales, apart from the first adult, the OECD scales do not differentiate for subsequent adults.

3. The McClements scale varies by age within these groups; appropriate averages are shown in the table.

Income Definition

The income measure used in HBAI is weekly net (disposable) equivalised household income. This comprises total income from all sources of all household members including dependants.

Income is adjusted for household size and composition by means of equivalence scales, which reflect the extent to which households of different size and composition require a different level of income to achieve the same standard of living. This adjusted income is referred to as equivalised income.

In detail, income includes:

• usual net earnings from employment;
• profit or loss from self-employment (losses are treated as a negative income);
• income received from dividends (from FYE 2022);
• state support - all benefits and tax credits;
• income from occupational and private pensions;
• investment income;
• maintenance payments;
• income from educational grants and scholarships (including, for students, student loans and parental contributions); and
• the cash value of certain forms of income in kind (free school meals, free school breakfast, free school milk, free school fruit and vegetables, Healthy Start vouchers and free TV licences for those aged 75 and over who receive Pension Credit

Income is net of the following items:

• income tax payments;
• National Insurance contributions;
• domestic rates / council tax;
• contributions to occupational pension schemes (including all additional voluntary contributions (AVCs) to occupational pension schemes, and any contributions to stakeholder and personal pensions);
• all maintenance and child support payments, which are deducted from the income of the person making the payment;
• parental contributions to students living away from home; and
• student loan repayments

Income After Housing Costs (AHC) is derived by deducting a measure of housing costs from the above income measure.

Housing costs

These include the following:

• rent (gross of housing benefit);
• water rates, community water charges and council water charges;
• mortgage interest payments;
• structural insurance premiums (for owner occupiers); and
• ground rent and service charges.

For Northern Ireland households, water provision is funded from taxation and there are no direct water charges. Therefore, it is already considered in the Before Housing Costs measure.

In the FYE 1996 and subsequent datasets, a refinement was made to the calculation of mortgage interest payments to disregard additional loans which had been taken out for purposes other than house purchase.

Negative incomes

Negative incomes BHC are reset to zero, but negative AHC incomes calculated from the adjusted BHC incomes are possible. Where incomes have been adjusted to zero BHC, income AHC is derived from the adjusted BHC income.

State support

The Government pays money to individuals to support them financially under various circumstances. Most of these benefits are administered by DWP. The exceptions are Housing Benefit and Council Tax Reduction, which are administered by local authorities. Tax Credits are not treated as benefits, but both Tax Credits and benefits are included in the term State Support. Further information on UK state support and specific benefits for devolved administrations is available under ‘Benefits’ in the Glossary section of the FRS Background Information and Methodology

Treatment of coronavirus (COVID-19) pandemic related support schemes in the HBAI income estimates for FYE 2021 and FYE 2022

During FYE 2021 and FYE 2022 many households experienced variation in their earnings from employment and self-employment.  Further information on the treatment of coronavirus (COVID-19) pandemic related support schemes in HBAI income estimates for FYE 2021 and FYE 2022 are available in both the Households below average income series: quality and methodology information report FYE 2023 and the FRS Background Information and Methodology.

Treatment of cost of living and wider support schemes in the HBAI income estimates for FYE 2024

As was the case in last year, in FYE 2024 the UK Government implemented multiple schemes to support households with the increased cost of living. These payments helped to offset the falls in household income.  Eligible low-income households may have received the following payments depending on their circumstances on specific dates or during a particular period.

These were:

• an income-related benefit Cost of Living Payment for households on a qualifying low-income benefit (for example, Universal Credit) or tax credits. This consisted of a payment of £900 which was paid in 3 instalments.  Those instalments were £301, £300 and £299, paid in the spring, autumn and winter respectively, to households already in receipt of one of the eligible benefits. This payment was made on top of any benefit payments received by the claimants.
• a Disability Cost of Living Payment for households on a qualifying disability benefit consisting of a lump sum payment of £150. This was paid automatically between 20 June 2023 and 4 July 2023, to those already in receipt of eligible benefits. To be eligible for the payment, households must have received a payment (or later receive a payment) of one of the qualifying benefits before 1 April 2023.
• a Pensioner Cost of Living Payment for households entitled to a Winter Fuel Payment for FYE 2024. This consisted of an extra £150 or £300 paid with the eligible household’s normal Winter Fuel Payment from November 2023.  This was in addition to any other Cost of Living Payment received.
• Households in receipt of the Guarantee Credit element of Pension Credit or were on a low income and have high energy costs also received a one-off discount on their energy bill under the Warm Home Discount scheme. The rebate was £150 and was discounted automatically from bills.

Additionally, for FYE 2024, the Scottish Winter Heating payment has been imputed on the FRS for those that are eligible, and these benefit payments are included in HBAI income.

Review of the imputation methodology for Scottish Child Payment

The FRS began collecting data on Scottish Child Payment (SCP) in FYE 2021, following introduction of the benefit in February 2021. The FRS caseload as collected via the survey has remained substantially below official caseloads published by Scottish Government (SG). To reduce under-reporting, receipt of SCP was imputed (for eligible benefit units) for FYE 2023 survey year and has been further revised for FYE 2024, in consultation with SG analysts, to provide more accurate estimates of state support income in the FRS dataset. Further details can be found in the FRS Background Information and Methodology document.

Income from these sources is primarily categorised as state support in the FYE 2024 estimates, apart from the Warm Home Discount and the Scottish Winter Heating Payment schemes. These are classified as miscellaneous income.

Interpreting low-income measures

Relative low income sets the threshold as a proportion of the average income and moves each year as average income moves. It is used to measure the number and proportion of individuals who have incomes a certain proportion below the average.

The percentage of individuals in relative low income will increase if:

• the average income stays the same, or rises, and individuals with the lowest incomes see their income fall, or rise less, than average income; or
• the average income falls and individuals with the lowest incomes see their income fall more than the average income.

The percentage of individuals in relative low income will decrease if:

• the average income stays the same, or rises, and individuals with the lowest incomes see their income rise more than average income; or
• the average income falls and individuals with the lowest incomes see their income rise, or fall less, than average income, or see no change in their income.

Absolute low income sets the low-income line with a given year, then adjusts it each year with inflation as measured by variants of the CPI. This measures the proportion of individuals who are below a certain standard of living in the UK (as measured by income).

• The percentage of individuals in absolute low income will increase if individuals with the lowest incomes see their income fall or rise less than inflation.
• The percentage of individuals in absolute low income will decrease if individuals with the lowest incomes see their incomes rise more than inflation.

Income inequality, measured by the Gini Coefficient, shows how incomes are distributed across all individuals, and provides an indicator of how high and low-income individuals compare to one another. It ranges from zero (when everybody has identical incomes) to 100 per cent (when all income goes to only one person). The 90:10 ratio is the average (median) income of the top 20 per cent (quintile 5) divided by the average income of the bottom 20 per cent (quintile 1). The higher the number, the greater the gap between those with the highest incomes and those with the lowest incomes.

Figure 2

Figure 2 illustrates how the median household income is used to find the number of people in low-income households and also explains key low-income definitions used in HBAI.

Relative vs Absolute low income: Relative low income is the comparison to the median of the current year; absolute low income is comparison to the median of the 2010/11 year which allows comparisons over time.

Threshold: A threshold for low income is used for comparing sections of the income distribution over time.

Why not the mean average? Mean is the sum of all incomes divided by the number of people whose incomes were included. The median income is the amount which divides the income distribution into two equal groups, half having income above that amount and half having income below that amount. In unequal distributions, the mean is likely to be influenced by high values, so it does not reflect the experience of most individuals. The median is not affected by a few very high values.

Before Housing Costs (BHC) measures allow an assessment of the relative standard of living of those individuals who were benefitting from a better quality of housing by paying more for better accommodation, and income growth over time incorporates improvements in living standards where higher costs reflected improvements in the quality of housing.

After Housing Costs (AHC) measures allow an assessment of living standards of individuals whose housing costs are high relative to the quality of their accommodation. Income growth over time may also overstate improvements in living standards for low-income groups, as a rise in Housing Benefit to offset higher rents (for a given quality of accommodation) would be counted as an income rise.

Therefore, HBAI provides analyses of disposable income on both a BHC and AHC basis. This is principally to consider variations in housing costs that themselves do not correspond to comparable variations in the quality of housing.

Updated Material Deprivation measures for FYE 2024

Material Deprivation is a direct measure of poverty derived from the lack of items deemed to be necessary for a minimum acceptable standard of living. Respondents to the FRS are asked a series of questions about access to goods and services and reasons why they do not have those goods and services if that is the case. HBAI uses answers to these questions and reasons given to produce material deprivation measures and report on these estimates alongside other low-income and poverty measures. 

Updated material deprivation questions were included from FRS FYE 2024 and an updated methodology was informed by recommendations from the LSE Review, evidence from analysis of HBAI FYE 2024 and back-series data, as well as broader conceptual perspectives.  A full technical report outlining the background to the material deprivation changes and the analysis and decisions underpinning the updated measures has been published alongside this years’ HBAI statistics release.

Material deprivation estimates for FYE 2024 are based on updated measures and therefore are not directly comparable to previous estimates. On charts we have shown this as a break in the series with a dotted vertical line. We advise users not to make a direct comparison of changes in material deprivation estimates between FYE 2023 and FYE 2024.

For FYE 2024 FRS, the survey was designed to ask 75% of households the updated questions and 25% of households the old questions to assess the break in the series. Given the target split and the sample sizes of NatCen, ONS, and NISRA, it was logical for NatCen (as the holder of the largest sample) to divide its sample, with half retaining the old questions. ONS and NISRA would move to asking the updated questions only. This meant that no households in Northern Ireland were asked the old questions by NISRA.

Given the split of questions in FYE 2024 between old and updated and that the full FRS sample were not asked the updated questions, imputation has been carried out as part of FRS data processing to impute data for the minority of the sample not asked the updated questions. This means all households will have records equivalent to the updated questions. FRS FYE 2025 will only contain the updated material deprivation questions.

The 29 updated material deprivation questions consist of three groups of questions:

• Children questions: 11 child items and 11 household items
• Working-age adult questions: 10 working-age adult items and 11 household items
• Pensioner questions: 8 pensioner items and 11 household items

with the same household items captured across all groups.

As well as updates to material deprivation questions, there have been a number of methodological and presentational changes to material deprivation estimates in FYE 2024. In summary, these are:

• a simple count approach is used for counting the number of items lacked – if the items is lacked, the item is given a value of 1.  Values for all items are added together to provide a count of items lacked for children, for working-age adults and for pensioners. This simple count approach gives each item an equal weight and replaces a more complex prevalence-weighted score approach which underpinned the material deprivation estimates prior to FYE 2024.

• a simple absence definition is used to define if an item is lacked for a small number of questions: the item is defined as lacked if the response is ‘No’ to having the item and no further reasons are asked:
  • Enough clothes that they feel comfortable to wear (children question)
  • Enough bedrooms for children 10+ years (children question)
  • Money worries at the end of the month (working-age adult and pensioner questions)
  • Able to pay bills without cutting back on essentials (household question)
  • Able to put money aside for unexpected expenses (household question)
  • Home adequately warm in cold weather (household)
  • Home damp-free (household question)
  • Heating/electrics/plumbing in good working order (household question)

• for remaining questions which are not simple absence definitions, a financial constrained lack definition is used - an item is defined as lacked if the response is ‘No’ to having the item and gives follow-up reasons for not having the item as ‘We/I do not have the money for this’ or ‘This is not a priority on my/our current income’. This is a change for the Pensioner Material Deprivation measure which previously used a wider constrained lack definition that also included some additional follow-up reasons such as restrictions due to health or disability, too much trouble or too tiring, no one to do the activity with or to help or other reasons

• A threshold has been set at which an individual is defined as in Material Deprivation.  An individual is defined to be in material deprivation if the number of items lacked are:
  • Children questions: 4 or more items
  • Working-age adult questions: 5 or more items
  • Pensioner questions: 4 or more items
• In the main HBAI report and publication tables for FYE 2024, additional estimates are published for:
  • Child Material Deprivation measure
  • Working-age Adult Material Deprivation measure
  • Combined Low Income and Child Material Deprivation measures After Housing Costs -Combined Low Income and Working-age Adult Material Deprivation measures After Housing Costs

Note, the Pensioner Material Deprivation estimates are already published as a standalone measure and combined low income and pensioner material deprivation estimates are not used in HBAI analysis.

Note that single year material deprivation estimates are not published in the UK HBAI Statistics by region and ethnicity due to volatility in sample sizes and coverage. Historically, a three-year average has been applied (with a change to three-year averages based on 2 data points to exclude 2020/21 in more recent years). As FYE 2024 is the first year of estimates based on the updated measures, estimates are not published in the HBAI FYE 2024 release. Further information on material deprivation-based estimates published by country following the update can be found in the publications for Wales, Scotland and Northern Ireland.

Further information on the changes to the material deprivation questions and measures can be found in the FRS Background Information and Methodology report and separate HBAI technical report that is published alongside this release.

Impact of the coronavirus (COVID-19) pandemic on the material deprivation measures

Estimates for the coronavirus (COVID-19) pandemic period (FYE 2021 and FYE 2022) continue to be presented as individual data points. We advise users not to make a direct comparison of changes in material deprivation estimates over this period with those published prior to the pandemic and estimates published after FYE 2022.  Further information on the impact of the coronavirus (COVID-19) pandemic can be found in the Households below average income series: quality and methodology information report FYE 2023.

Combined low income and child material deprivation

A suite of questions designed to capture the material deprivation experienced by families with children has been included in the FRS since FYE 2005. Respondents are asked whether they have a number of different goods and services, including child, adult and household items. Together, these questions form the best discriminator between those families that are deprived and those that are not. If they do not have a good or service, they are asked reasons why (e.g. they do not want or cannot afford).

The original list of items was identified by independent academic analysis. See McKay, S. and Collard, S. (2004). Developing deprivation questions for the Family Resources Survey, Department for Work and Pensions Working Paper Number 13. The questions are kept under review and for the FYE 2011 Family Resources Survey, information on four additional material deprivation goods and services was collected and from FYE 2012 four questions from the original suite were removed.

Further information on the material deprivation questions asked between FYE 2011 and FYE 2023 can be found in Annex 1 of the HBAI technical report available via the HBAI homepage (and referred to as the old material deprivation questions for children and working age adults given the changes in FYE 2024) or in the HBAI release for FYE 2023. See Appendix 3 of the FYE 2011 HBAI publication for a discussion of the implications of changing the items.

In FYE 2024 there was a further review of material deprivation questions resulting in:

• updated material deprivation questions for children now consisting of 22 questions, of which 11 are child items and 11 are household items The household items are consistent across children, working-age adults and pensioners (previously there were 21 child material deprivation questions);
• a change in the approach to counting the number of items to move to a simple count approach from the previous, more complex prevalence-weighted count approach;
• a change in the approach to defining a lacked item – to a simple absence definition for a small number of questions and a financial constrained lack definition for remaining questions;
• an update to the threshold at which a child is defined as in material deprivation – from a previous prevalence-weighted score of 25 or more to lacking 4 or more items under a simple count approach;
• additional published estimates for material deprivation. For children, those additional estimates are:
  • Child Material Deprivation measure and
  • Combined Low Income and Child Material Deprivation measures After Housing Costs

Further information on the material deprivation updates for FYE 2024 can be found in the Technical report: Update to measures using material deprivation for households below average income FYE 2024 which is available via the HBAI homepage

The trends table 4.5tr available in the Data Tables on the HBAI homepage shows figures using the original suite of questions up to and including FYE 2011, the suite of questions from FYE 2011 to FYE 2023 and the suite of questions from FYE 2024. FYE 2011 data is presented on both bases as figures from the old and new suite of questions are not comparable. FYE 2024 data is presented on just the updated measures as only a small sample were asked the old suite of questions in the 2023 to 2024 FRS survey year. Further information can be found in the Technical report: Update to measures using material deprivation for households below average income FYE 2024 which is available via the HBAI homepage.

From FYE 2024, combined low income and child material deprivation estimates are published on both a Before and After Housing Cost basis.

From FYE 2024, a child is in combined low income and child material deprivation if they live in a family with an equivalised household income below 50/60/70 per cent of relative/absolute median income and lack 4 or more items.

Combined low income and working-age adult material deprivation

From FYE 2022, the HBAI publication included statistics on combined low income and working-age adult material deprivation, with a back series of the data available to FYE 2011. From FYE 2022 the measures follow a similar methodology as for children, with the nine questions for adults detailed in Annex 1 of the HBAI technical report (available via the HBAI hompage) forming the basis of the material deprivation measure for all working-age adults (and referred to as the old material deprivation questions for children and working age adults given the changes in FYE 2024). Working-age adults without children were also asked these questions.

As with children, in FYE 2024 there was a further review of material deprivation questions for working-age adults resulting in:

• updated material deprivation questions for working age now consisting of 21 questions, of which 10 are working-age adult items and 11 are household items. The household items are consistent across children, working-age adults and pensioners (previously there were 9 working-age material deprivation questions);
• a change in the approach to counting the number of items to move to a simple count approach from the previous, more complex prevalence-weighted count approach;
• a change in the approach to defining a lacked item – to a simple absence definition for a small number of questions and a financial constrained lack definition for remaining questions;
• an update to the threshold at which a working-age adult is defined as in material deprivation – from a previous prevalence weighted score of 25 or more to lacking 5 or more items under a simple count approach;
• additional published estimates for material deprivation. For working-age adults, those additional estimates are:
  • Working-age Adult Material Deprivation measure and
  • Combined Low Income and Working-age Material Deprivation measures After Housing Costs

Further information on the material deprivation updates for FYE 2024 can be found in the Technical report: Update to measures using material deprivation for households below average income FYE 2024 which is available via the HBAI homepage.

For FYE 2024, combined low income and working-age adult material deprivation estimates are published on both a Before and After Housing Cost basis.

From FYE 2024, a working-age adult is in combined low income and material deprivation if they have an equivalised household income below the 50/60/70 percent of relative/absolute median income and lack 5 or more items.

Material deprivation for pensioners

A suite of questions designed to capture the material deprivation experienced by pensioner families has been included in the Family Resources Survey since May 2008. Up until FYE 2023 respondents were asked whether they have access to 15 goods and services. Note that the old measure for pensioner material deprivation was for adults aged 65 and over. This meant that before FYE 2019, female pensioners aged under 65 were not included. Since the equalisation of State Pension Age from FYE 2019, all pensioners were included in the measure.

The list of items was identified by independent academic analysis. See Legard, R., Gray, M. and Blake, M. (2008), Cognitive testing: older people and the FRS material deprivation questions, Department for Work and Pensions Working Paper Number 55 and McKay, S. (2008), Measuring material deprivation among older people: Methodological study to revise the Family Resources Survey questions, Department for Work and Pensions Working Paper Number 54. Together, these questions form the best discriminator between those pensioner families that are deprived and those that are not.

Annex 1 of the HBAI technical report which is available via the HBAI homepage details the material deprivation questions used for pensioners up until FYE 2024 (and referred to as the old material deprivation questions for pensioners given the changes in FYE 2024). Pensioners were counted as materially deprived for an item if they responded ‘no’ to the initial question and gave reasons due to not have the money for this, not a priority on their current income, health or disability, too much trouble or too tiring, no one to do the activity with or to help or other reasons.

As with children and working-age adults, in FYE 2024 there was a further review of material deprivation questions resulting in:

• updated material deprivation questions for pensioners now consisting of 19 questions, of which 8 are pensioner items and 11 are household items. The household items are consistent across children, working-age adults and pensioners (previously there were 15 pensioner material deprivation questions);
• a change in the approach to counting the number of items to move to a simple count approach from the previous, more complex prevalence-weighted count approach;
• a change in the approach to defining a lacked item – to a simple absence definition for a small number of questions and a financial constrained lack definition for remaining questions. This is a change for the Pensioner Material Deprivation measure which previously used a wider constrained lack definition that also included some additional follow-up reasons such as restrictions due to health or disability, too much trouble or too tiring, no one to do the activity with or to help or other reasons;
• an update to the threshold at which a pensioner is defined as in material deprivation – from a previous prevalence-weighted score of 20 or more to lacking 4 or more items under a simple count approach

A pensioner is in material deprivation if they lack 4 or more items.

Unlike children and working-age adults, pensioner material deprivation estimates are already published and combined low income and pensioner material deprivation estimates are not used in HBAI analysis, so no additional estimates are published for FYE 2024.

Household food security

In FYE 2020 measures of combined low income and household food security were added to the publication. To measure household food security, questions are asked of the person in the household who knows the most about buying and preparing food. In common with the rest of the FRS, the focus is on the period of 30 days leading up to interview. The questions are comparable to those used by other public bodies in the UK, and internationally. From the questions, a ten-point household score is generated, and the household is given a food security status:

• High food security (score=0): The household has no problem, or anxiety about, consistently accessing adequate food

• Marginal food security (score= 1 or 2): The household had problems at times, or anxiety about, accessing adequate food, but the quality, variety, and quantity of their food intake were not substantially reduced

• Low food security (score = 3 to 5): The household reduced the quality, variety, and desirability of their diets, but the quantity of food intake and normal eating patterns were not substantially disrupted

• Very low food security (score = 6 to 10): At times during the last 30 days, eating patterns of one or more household members were disrupted and food intake reduced because the household lacked money and other resources for food.

Households with high or marginal food security are “food secure”. Food secure households are considered to have sufficient, varied food to facilitate an active and healthy lifestyle. Households with low or very low food security are “food insecure”. Food insecure households have a risk of, or lack of access to, sufficient, varied food.

Food bank usage

A new series of questions was added to the FRS for FYE 2022 on the topic of food bank usage. Food bank usage questions are asked of the person in the household who knows the most about food purchasing and preparation. This means that the questions do not directly ask about the food bank usage needs of children, and it cannot be determined which individual or individuals the food parcels are for. Food bank usage in the FRS refers only to visits to a food bank when emergency food supplies (food parcels) were obtained. This excludes visits to the food bank made only for other support (e.g. financial advice or mental health support).

The FRS asks food bank usage questions relating to two time periods: 12 months prior to interview, and in the 30 days prior to interview. This means that caution may be needed when making direct comparisons between the FRS results and other research on this subject.                                                                           

For details on household food security measurement and food bank questions please see the FRS Background Information and Methodology.

Ethnicity categories

The ethnicity questions used in the FRS adopt the UK harmonised standards for use in major Government social surveys; that is, they adopt the standard way of collecting information on the ways in which people describe their ethnic identity. The latest harmonised standards were published in August 2011 and cover the ethnic group question in England, Wales, Scotland and Northern Ireland. They also cover harmonised data presentation for ethnic group outputs. The standards were updated in February 2013 detailing how Gypsy, Traveller and Irish Traveller should be recorded in the outputs, due to differences across the UK.

The FRS adopted these latest harmonised standards for England, Wales and Northern Ireland for the FYE 2012 survey questionnaire, and the standards for Scotland were adopted for the FYE 2013 survey questionnaire. The FYE 2012 publication therefore adopted the latest harmonised output standards for ethnic groups for the UK. The most significant changes to previous publications are that the ‘Chinese’ category has moved from the ‘Chinese or other ethnic group’ section to the ‘Asian/Asian British’ section; and ‘Irish Traveller’ is included under ‘Other ethnic group’ for respondents in Northern Ireland and ‘Gypsy or Irish Traveller’ is included under the ‘White’ section for respondents in Great Britain, therefore UK figures have been allocated accordingly.

Disability definition

The means of identifying people with a disability has changed over time. Data are not available for FYE 1995. Up until FYE 2002 all those who reported having a long-standing limiting illness were identified as having a disability. From FYE 2003, statistics are based on responses to questions about difficulties across several areas of life. Figures for FYE 2003 and FYE 2004 are based on those reporting substantial difficulties across eight areas of life and figures from FYE 2005 to FYE 2012 are based on those reporting substantial difficulties across nine areas of life. From FYE 2013 the FRS disability questions were revised to reflect new harmonised standards. Disabled people are identified as those who report any physical or mental health condition(s) or illness(es) that last or are expected to last 12 months or more, and which limit their ability to carry out day-to-day activities a little, or a lot.

FRS questions FYE 2005 to FYE 2012

The FRS/HBAI definition for an adult with a disability is if they answered yes to the ‘Health’ question and yes to any of the difficulties listed in ‘DisDif’.

Health

Do you have any long-standing illness, disability or infirmity? By ‘long-standing’ I mean anything that has troubled you over a period of at least 12 months or that is likely to affect you over a period of at least 12 months.

If ‘yes’ to Health.

Health Problem Limit Activities (HProb)

Does this physical or mental illness or disability (Do any of these physical or mental illnesses or disabilities) limit your activities in any way?

If ‘yes’ to Health.

Health Problems cause Difficulties (DisDif)

SHOW CARD E1

Does this/Do these health problem(s) or disability(ies) mean that you have substantial difficulties with any of these areas of your life? Please read out the numbers from the card next to the ones which apply to you.

PROBE: Which others?

1. Mobility (moving about)

2. Lifting, carrying or moving objects

3. Manual dexterity (using your hands to carry out everyday tasks)

4. Continence (bladder and bowel control)

5. Communication (speech, hearing or eyesight)

6. Memory or ability to concentrate, learn or understand

7. Recognising when you are in physical danger

8. Your physical co-ordination (e.g.: balance)

9. Other health problem or disability

10. None of these

FRS questions FYE 2013 onwards

The FRS/HBAI definition for an adult with a disability is if they answered yes to the ‘Health1’ and yes, a lot or yes, a little to the ‘Condition’ question.

If ‘yes’ to Health1.

Health Problems cause Difficulties (Dis1)

SHOW CARD E1

Do any of these conditions or illnesses affect you in any of the following areas?

1. Vision (for example blindness or partial sight)

2. Hearing (for example deafness or partial hearing)

3. Mobility (for example walking short distances or climbing stairs)

4. Dexterity (for example lifting and carrying objects, using a keyboard)

5. Learning or understanding or concentrating

6. Memory

7. Mental Health

8. Stamina or breathing or fatigue

9. Socially or behaviourally (for example associated with autism, attention deficit disorder or Asperger’s syndrome)

10. Other

11. Refusal (spontaneous)

Ask if Health1=Yes

Limiting longstanding illness (Condition)

Does your condition or illness/do any of your conditions or illnesses reduce your ability to carry-out day-to-day activities?

1. Yes, a lot

2. Yes, a little

3. Not at all

INTERVIEWER: Day to day activities include washing and dressing, household cleaning, cooking, shopping for essentials, using public or private transport, remembering to pay bills, lifting objects from the ground or lifting objects from a work surface in the kitchen.

Comparisons over time

Compared to FYE 2012 the number of individuals in disabled families went up by 0.2m in FYE 2013 (similar to those in non-disabled families).

However, while the number of pensioners in non-disabled families increased by 0.4m, the number in disabled families decreased by 0.3m.

The reverse was true for the number of children in disabled families, which increased by 0.3m, while those in non-disabled families fell by 0.2m.

These figures could be affected by the change in the disability questions. Individuals might have different interpretations of particular health conditions or question wording meaning that changes to the disability question may have had a different effect on certain groups. Therefore, comparisons over time should be made with caution, as they may be affected by the change in the definition of disability.

Comparison with EU low-income statistics

The UK’s cross-Europe-comparable low-income statistics have previously been derived from the ONS Survey of Living Conditions (SILC), a different survey source than the HBAI, meaning that there will be some differences due to the different data source. In addition to this, the figures will differ for several further reasons:

• Time period: The figures are presented on different timescales. The HBAI figures are presented for the financial year, while the EU comparable figures are presented for the calendar year.
• Population groups: The European low-income statistics are presented in different age groups than the HBAI figures:
  • Children: the EU figures relate to those under 18 – HBAI figures are based on individuals aged under 16, in addition a person will also be defined as a child if they are 16 to 19 years old and they are not married nor in a Civil Partnership nor living with a partner; are living with parents; and are in full-time non-advanced education or in unwaged government training;
  • Pensioners: EU figures relate to the 65+ population. The data in this report were collected throughout FYE 2024, during which the State Pension age for both men and women was 66 years.
• Preferred measures: The European low-income estimates are usually presented on a Before Housing Costs basis, while this is consistent with the most commonly used measure for working-age adults and children, we choose to look at pensioners’ incomes after deducting housing costs as this better reflects pensioner living standards compared to others and over time.
• Income derivation: The definition of income in the European figures differs from the official UK figures:
  • Pension contributions are not deducted from income in the European comparable methodology;
  • The European definition of income includes the value of non-cash employee income from company cars as employee income, which will raise the average income of people in work.
• High income adjustment: For the HBAI figures an adjustment is made to sample cases at the top of the income distribution to correct for volatility in the highest incomes captured in the survey. This adjustment is not applied to the European figures.
• In year deflation: The HBAI estimates make an in year adjustment to individuals’ incomes to ensure that respondents income collected across the financial year are comparable. This adjustment is not applied to the European figures.
• Sample cases: The HBAI figures exclude cases containing a married adult whose spouse is temporarily absent whereas these are included in the European figures, however this has a minimal effect on the figures.
• Income tax and national insurance: The European income tax and national insurance figures are calculated using a model of taxation, whilst the HBAI estimates are mostly calculated on the amount of tax and national insurance reported as being paid.

After the UK’s exit from the EU in 2020, some EU-SILC outputs were still delivered by ONS to Eurostat during the transition period in 2020, but all planned deliveries from 2021 onwards ceased. Data for the UK up to and including the 2018 calendar year remain available on Eurostat’s EU-SILC database.

Glossary

Adult

All those individuals who are aged 16 and over, unless defined as a dependent child (see Child); all adults in the household are interviewed as part of the Family Resources Survey (FRS).

Benefit units or Family

A single adult or a married or cohabiting couple and any dependent children; since January 2006 same-sex partners (civil partners and cohabitees) have been included in the same benefit unit. Where a total value for a benefit unit is presented, such as total benefit unit income, this includes both income from adults and income from children.

Bills in arrears

The number of bills in arrears is presented at a benefit unit level. Bills considered are electricity, gas, other fuel, Council Tax, insurance, telephone, television / video rental, hire purchase, water rates, rent, mortgage payments and other loans. From FYE 2013 onwards, the analysis of income by whether people are behind with household bills has been extended to include rent, mortgage payments and other loans, so the figures are not comparable with those presented in previous reports.

Child

A dependent child is defined as an individual aged under 16. A person will also be defined as a child if they are 16 to 19-years old and they are:

• not married nor in a civil partnership nor living with a partner; and
• living with parents/a responsible adult; and
• in full-time non-advanced education or in unwaged government training.

Confidence interval

A measure of sampling error. A confidence interval is a range around an estimate which states how likely it is that the real value that the survey is trying to measure lies within that range. A wider confidence interval indicates a greater uncertainty around the estimate. Generally, a smaller sample size will lead to estimates that have a wider confidence interval than estimates from larger sample sizes. This is because a smaller sample is less likely than a larger sample to reflect the characteristics of the total population and therefore there will be more uncertainty around the estimate derived from the sample. Note that a confidence interval ignores any systematic errors which may be present in the survey and analysis processes.

Contemporary median income

The average income for the period covered by the survey. Household incomes are adjusted from the date of interview to an average of survey-year prices.

Deciles and Quintiles

These are income values which divide the whole population, when ranked by household income, into equal-sized groups. This helps to compare different groups of the population.

Decile and quintile are often used as a standard shorthand term for decile/quintile group.

Deciles groups

Deciles groups are ten equal-sized groups - the lowest decile describes individuals with incomes in the bottom 10 per cent of the income distribution.

Quintiles groups

Quintiles groups are five equal-sized groups - the lowest quintile describes individuals with incomes in the bottom 20 per cent of the income distribution.

Disability

From FYE 2013 onwards, the definition of disability used is consistent with the core definition of disability under the Equality Act 2010. A person is considered to have a disability if they “have a physical or mental impairment that has a ‘substantial’ and ‘long-term’ negative effect on their ability to do normal daily activities”. Whereby ‘substantial’ is meant by more than minor or trivial, and long-term is meant by 12 months or more. However, some individuals classified as disabled and having rights under the Equality Act 2010 are not captured by this definition:

• People with a long-standing illness or disability who would experience substantial difficulties without medication or treatment
• People who have been diagnosed with cancer, HIV infection or multiple sclerosis and who are not currently experiencing difficulties with their day to day activities
• People with progressive conditions, where the effect of the impairment does not yet impede their lives

People who were disabled in the past and are no longer limited in their daily lives are still covered by the Act.

Economic status of the family

The economic status of the family classification is in line with the International Labour Organisation economic status classification. This means that no economic status data is available for FYE 1995 and FYE 1996 as the relevant information was not collected in the Family Resources Survey for these years. This also means the economic status of the family and economic status of the household classifications are aligned.

The ‘Workless, other inactive’ group consists of families in which all adults are economically inactive (i.e. where no adult is in work or unemployed). This includes working-age adults in receipt of sickness and disability benefits, who may have living standards lower than those implied by the results presented because of additional costs associated with their disability (for which no adjustment has been made here).

Families are allocated to the first applicable category:

• One or more full-time self-employed - Benefit units where at least one adult usually works as self-employed in their main job where the respondent regards themselves as working full-time. Those respondents not working in the last seven days but doing unpaid work in their own business are considered as full-time self-employed.
• Single or couple, all in full-time work - Benefit units where all adults regard themselves as working full-time. Those respondents not working in the last seven days doing unpaid work in a business that a relative owns are considered as in full-time work, as are those in training.
• Couple, one in full-time work, one in part-time work - Benefit units headed by a couple where one partner considers themselves to be working full-time, and the other partner considers themselves to be working part-time. Those respondents not working in the last seven days but doing an odd job are considered as working part-time.
• Couple, one in full-time work, one not working - Benefit units headed by a couple, where one partner considers themselves to be working full-time, and the other partner does not work.
• No-one in full-time work, one or more in part-time work - Benefit units where at least one adult works but considers themselves to be working part-time.
• Workless, one or more aged 60 or over - Benefit units where at least one adult is aged 60 or over.
• Workless, one or more unemployed - Benefit units where at least one adult is unemployed.
• Workless, other inactive - Benefit units not classified above (this group includes the long-term sick, disabled people and non-working single parents).

Economic status groups for children

Estimates for dependent children use an amended economic status classification closely related to the definitions used above. Children are grouped according to family type and the economic status of their parent(s) as defined in the previous section. As with the main economic status groups, individuals are allocated to the first category that applies in the following order:

• Lone parent - In full-time work (includes full-time self-employed);
• Lone parent - In part-time work; and
• Lone parent - Not working (unemployed or inactive);
• Couple with children - One or more full-time self-employed;
• Couple with children - Both in full-time work;
• Couple with children - One in full-time work, one in part-time work;
• Couple with children - One in full-time work, one not working;
• Couple with children - Neither in full-time work, one or more in part-time work; and
• Couple with children - Both workless (unemployed or inactive).

Economic status of household

For the analysis of working and workless households, households are classified according to whether they contain a working-age adult or pensioner who works, but the status of non-working pensioners is not considered, except in the case of those households where children live only with pensioners, in which case the status of all adults is included.

Individuals are assigned to one of three categories:

• All adults in work - A household where all working-age adults are in employment or are self-employed, or if there are no working-age adults in the household, at least one working pensioner.
• At least one, but not all adults in work - A household where at least one working-age adult is in employment or is self-employed, or where a pensioner is in work if none of the working-age adults in the household are in work.
• Workless household - A household where no adult members are in employment or are self-employed. Within households, pensioners are excluded from the classifications if they are not working and are included if they are working. So, for example, a household with a pensioner in work, but a working-age person not in work, would be in the ‘At least one adult in work, but not all’ category. A household with all working-age adults in work and a pensioner not in work would be categorised as ‘All adults in work’.

Educational attainment

This looks at the highest level of educational attainment for each working-age adult. Information for students should be treated with some caution because they are often dependent on irregular flows of income. Only student loans are counted as income in HBAI, any other loans taken out are not. The figures are also not necessarily representative of all students because HBAI only covers private households, and this excludes halls of residence.

Comparisons between the numbers with no qualifications in the FRS, LFS and the Census indicate that the FRS figures have historically overstated the numbers of working-age adults with no qualifications. As a result of the FRS mode change in FYE 2021 and FYE 2022, the raw FRS sample contained a much higher proportion of working-age adults than in the years prior to the COVID-19 pandemic, and much lower numbers with no qualifications. We therefore introduced additional grossing controls in FYE 2021 and FYE 2022 to weight the sample by level of educational attainment. This boosted numbers with education levels below degree level in younger age groups. We did this using historical proportions from the FRS and calibrated growth over the two years to growth in levels recorded in the Annual Population Survey (APS), derived from the LFS. This maintained the previous relationship between the two sources while ensuring that grossed FRS proportions were more in line with expectations. Following the reintroduction of FRS face-to-face interviewing for FYE 2023, this additional weighting was no longer required, and the grossing returned to the FYE 2020 position.

In HBAI FYE 2023, an issue with the FRS variable EDUCQUAL was identified. This has now been corrected and re-instated for HBAI FYE 2024. For more details see earlier in this report.

Equivalisation

Income measures used in HBAI take account of variations in the size and composition of the households in which people live. This process is called equivalisation.

Equivalisation reflects the fact that a family of several people need a higher income than a single individual to achieve a comparable standard of living.

Equivalence scales conventionally take a couple with no children as the reference point. Consider a single person, a couple with no children, and a couple with two children aged twelve and ten, all having unadjusted weekly household incomes of £300 (BHC). The process of equivalisation, as conducted in HBAI, gives an equivalised income of £448 to the single person, £300 to the couple with no children, but only £214 to the couple with children.

Ethnicity

Ethnicity in HBAI reflect the harmonised standards included from the FYE 2012 publication onwards. The harmonised standards for Scotland were adopted in the FYE 2013 FRS questionnaire; however, there has been no change to the HBAI outputs as the harmonised output standards were previously adopted.

Individuals have been classified according to the ethnic group of the household reference person (see Household reference person) which means that information about households of multiple ethnicities is lost.

Smaller ethnic minority groups exhibit year-on-year variation which limits comparisons over time. For this reason, analysis by ethnicity is usually presented as three-year averages. Please note that following the decision to not publish breakdowns of the FYE 2021 estimates, all three-year averages calculated and published for any period including FYE 2021 are be based on two data points only.

Families/ family unit

The terms ‘families’ and ‘family units’ are used interchangeably with benefit units. See Benefit unit definition.

Family type

For some analyses, individuals are classified into family type or economic status groups. Individuals are classified according to the status of the benefit unit in which they live. All individuals in a benefit unit (adults and children) will therefore be given the same classification. The classifications are defined below:

• Pensioner couple - a couple where one or more of the adults are State Pension age or over. However, in the HBAI tables relating specifically to pensioners results for individuals who are in pensioner couples do not count anyone who is not a pensioner.
• Single male pensioner - single male adult of State Pension age or over.
• Single female pensioner - single female adult of State Pension age or over.
• Couple with children - a non-pensioner couple with dependent children.
• Single with children - a non-pensioner single adult with dependent children.
• Couple without children - a non-pensioner couple with no dependent children.
• Single male without children - a non-pensioner single adult male with no dependent children.
• Single female without children - a non-pensioner single adult female with no dependent children.

Full-time work

The respondent regards themselves as working full-time, either as an employee or self-employed.

Gender

In any analysis of gender, it must be remembered that HBAI attempts to measure the living standards of an individual as determined by household income. This assumes that both partners in a couple benefit equally from the household’s income and will therefore appear at the same position in the income distribution. Any difference in figures can only be driven by gender differences for single adults, which will themselves be diluted by the figures for couples. The lower level gender disaggregation in the family type classification is therefore likely to be more informative.

Research has suggested that, particularly in low-income households, the above assumption regarding income sharing is not always valid as men sometimes benefit at the expense of women from shared household income. This means that it is possible that HBAI results broken down by gender could understate differences between the two groups. See, for instance, Goode, J., Callender, C. and Lister, R. (1998) Purse or Wallet? Gender Inequalities and the Distribution of Income in Families on Benefits. JRF/Policy Studies Institute.

Gini coefficient

A widely-used, international standard summary measure of inequality. It can take values from zero to 100, where a value of zero would indicate total equality, with each household having an equal share of income, while higher values indicate greater inequality.

Head of benefit unit

The head of the first benefit unit will be the same as the household reference person. For second and subsequent benefit units, the head will be the first adult to be interviewed.

High Income

Results for the top 10 per cent are particularly susceptible to sampling errors and income measurement problems.

Household

One person living alone or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room or sitting room or dining area. A household will consist of one or more benefit units. Where a total value for a household is presented, such as total household income, this includes both income from adults and income from children.

Household food bank usage

Household food bank usage in the FRS refers only to visits to a food bank when emergency food supplies (food parcels) were obtained. This excludes visits to the food bank made only for other support (e.g. financial advice or mental health support).

The FRS asks food bank usage questions relating to two time periods:

• usage within the 12 months prior to interview
• usage within the 30 days prior to interview

Only households that report using a food bank in the last 12 month are asked about 30-day usage.

Household food security

“Food security” as a concept is defined as “access by all people at all times to enough food for an active, healthy life”. Questions relate to the household’s experience in the 30 days immediately before the interview.

The questions are put to the person in each household who is best placed to answer about food shopping and preparation. These respondents are asked the first three questions, on whether they are concerned about:

• food running out before they had enough money to buy more
• the food they had bought not lasting, and not having money to buy more
• not being able to afford balanced meals.

The possible answers are ‘often, ‘sometimes’ or ‘never’ true. If respondents say that all three statements are never true, they will not be asked further questions on food security. If respondents answer that any of these statements are sometimes or often true, they will be asked further questions on the extent of their food security. Taking the responses together, a household ‘score’ for food security is then derived. This is a measure of whether households have sufficient food to facilitate active and healthy lifestyles.

This measure has four classifications:

• High food security (score=0): The household has no problem, or anxiety about, consistently accessing adequate food.
• Marginal food security (score= 1 or 2): The household had problems at times, or anxiety about, accessing adequate food, but the quality, variety, and quantity of their food intake were not substantially reduced.
• Low food security (score = 3 to 5): The household reduced the quality, variety, and desirability of their diets, but the quantity of food intake and normal eating patterns were not substantially disrupted.
• Very low food security (score = 6 to 10): At times during the last 30 days, eating patterns of one or more household members were disrupted and food intake reduced because the household lacked money and other resources for food.

High and marginal food security households are considered to be “food secure”. Food secure households are considered to have sufficient, varied food to facilitate an active and healthy lifestyle. Conversely, low and very low food security households are considered to be “food insecure”. Food insecure households are where there is risk of, or lack of access to, sufficient, varied food.

The broad structure and sequence of the questions is the same as those used internationally. They are used within the UK (Food Standards Agency) and are also used by other countries, including the United States Department of Agriculture, enabling broad international comparability of the results.

Household reference person (used from FYE 2002 onwards)

The household reference person (HRP) is usually the highest income householder. Note:

• In a single-adult household, the HRP is simply the sole householder (i.e. the person in whose name the accommodation is owned or rented).
• If there are two or more householders, the HRP is the householder with the highest personal income, taking all sources of income into account.
• If there are two or more householders who have the same income, the HRP is the elder.

The Head of benefit unit will not necessarily be the HRP.

Housing costs

Housing costs are made up of rent (gross of housing benefit); water rates, community water charges and council water charges; mortgage interest payments (net of tax relief); structural insurance premiums (for owner occupiers); and ground rent and service charges.

Income

The income measure used in HBAI is weekly net (disposable) equivalised household income. This comprises total income from all sources of all household members including dependants. For BHC, housing costs are not deducted from income, while for AHC they are.

Households receive income from a variety of sources. The main ones are earnings, self-employment, state support (i.e. benefits and tax credits), interest on investments and occupational pensions.

In detail, income includes:

• usual net earnings from employment;
• profit or loss from self-employment (losses are treated as a negative income);
• income received from dividends (from FYE 2022);
• state support - all benefits and tax credits;
• income from occupational and private pensions;
• investment income;
• maintenance payments;
• income from educational grants and scholarships (including, for students, student loans and parental contributions); and
• the cash value of certain forms of income in kind (free school meals, free school breakfast, free school milk, free school fruit and vegetables, Healthy Start vouchers and free TV licence for people 75 and over who receive Pension Credit).

Income is net of the following items:

• income tax payments;
• National Insurance contributions;
• domestic rates / council tax;
• contributions to occupational pension schemes (including all additional voluntary contributions (AVCs) to occupational pension schemes, and any contributions to stakeholder and personal pensions);
• all maintenance and child support payments, which are deducted from the income of the person making the payment;
• parental contributions to students living away from home; and
• student loan repayments

Income distribution

The spread of incomes across the population.

Income growth in real terms

For some years, income growth in the HBAI-based series appears slightly lower than the National Accounts estimates. The implication of this is that absolute real income growth could be understated in the HBAI series. Comparisons over a longer time period are believed to be more robust.

Income inequality

The extent of disparity between high income and low-income households, commonly measured using either the Gini coefficient or 90:10 ratio. The Gini coefficient is a widely-used, international standard summary measure of inequality. It can take values from zero to 100, where a value of zero would indicate total equality, with each household having an equal share of income, while higher values indicate greater inequality. The 90:10 ratio is the average (median) income of the top 20 per cent (quintile 5), divided by the average income of the bottom 20 per cent (quintile 1). The higher the number, the greater the gap between those with the highest incomes and those with the lowest incomes.

Low income

‘Low income’ is defined using thresholds derived from percentages of median income for the whole population. Households reporting the lowest incomes may not have the lowest living standards. Therefore, the bottom 10 per cent of the income distribution should not be interpreted as having the lowest living standards. Results for the bottom 10 per cent are also particularly vulnerable to sampling errors and income measurement problems.

• Individuals are said to be in relative low income if they live in a household with an equivalised income below a percentage of contemporary median income BHC or AHC. Relative low-income statistics fall if income growth at the lower end of the income distribution is greater than overall income growth.
• Individuals are said to be in absolute low income if they live in a household with an equivalised income below a threshold of median income (for example 60 per cent of median income) in a specific year adjusted for inflation BHC or AHC. The FYE 2011 median is used in this report, in order to measure absolute low income as referenced in the Welfare Reform and Work Act 2016, and to keep the absolute measure more in line with contemporary living standards. Absolute low-income statistics fall if low-income households are seeing their incomes rise faster than inflation.

Material deprivation for children

A suite of questions designed to capture the material deprivation experienced by families with children has been included in the FRS since FYE 2005. The suite of questions for children were updated in FYE 2011 and FYE 2024. From FYE 2024 there were also methodological changes to material deprivation measures.  

Respondents are asked whether they have 22 goods and services - 11 child items and 11 household items. If they do not have them, for most items, follow-up questions ask the reason why and those reasons are then used to determine if an item is counted as lacked for the purposes of defining if a child is in material deprivation.  For the majority of questions, an item is counted as lacked if it is lacked for a financial reason - do not have the money for this or is not a priority on their current income - and for a remaining small number of questions an item is counted if it is lacked if the response is ‘No’ to having the item.

A simple count approach is then used to add up the total number of items lacked and if that total is 4 or more then that child has met the threshold to be defined as in material deprivation.

These questions are used as an additional way of measuring living standards for children.

Combined low income and child material deprivation

Before FYE 2024, using a prevalence-weighted score approach a child was in combined low income and child material deprivation if they live in a family that has a  an equivalised household income below the 50/60/70 percent of relative/absolute median income and a prevalence-weighted score of 25 or more. 

From FYE 2024, an updated suite of questions and methodology was introduced and using a simple count approach a child is in combined low income and material deprivation if they live in a family with an equivalised household income below 50/60/70 per cent of relative/absolute median income and lack 4 or more items.

Material deprivation for working-age adults

Measures of combined low income and working-age adult material deprivation are available since FYE 2011 and were first published in HBAI in FYE 2022. The suite of questions for working-age adults were updated in FYE 2024 and there were also methodological changes to material deprivation measures from this year. 

Working-age adults are asked whether they have access to 21 goods and services - 10 working-age adult items and 11 household items. If they do not have them, for most items, follow-up questions ask for the reason why and those reasons are then used to determine if an item is counted as lacked for the purposes of defining if a working-age adult is in material deprivation.  For the majority of questions, an item is counted as lacked if it is lacked for a financial reason  - do not have the money for this or is not a priority on their current income - and for a remaining small number of questions an item is counted if it is lacked for any reason.

A simple count approach is then used to add up the total number of items lacked and if that total is 5 or more then that working-age adult has met the threshold to be defined as in material deprivation.

Combined low income and working-age adult material deprivation

Before FYE 2024, using a prevalence-weighted score approach a working-age adult was in combined low income and working-age adult material deprivation if they had  an equivalised household income below the 50/60/70 percent of relative/absolute median income and a prevalence weighted score of 25 or more. 

From FYE 2024, an updated suite of questions and methodology was introduced and using a simple count approach a working-age adult is in combined low income and material deprivation have an equivalised household income below 50/60/70 per cent of relative/absolute median income and lack 5 or more items.

Material deprivation for pensioners

A suite of questions designed to capture the material deprivation experienced by pensioners has been included in the Family Resources Survey since May 2008. The suite of questions for pensioners were updated in FYE 2024 and there were also methodological changes made to material deprivation measures from this year. 

These questions are used as an additional way of measuring living standards for pensioners. Respondents are asked whether they have access to 19 goods, services and experiences – 8 pensioner items and 11 household items. For the majority of questions, an item is counted as lacked if it is lacked for a financial reason  - do not have the money for this or is not a priority on their current income - and for a remaining small number of questions an item is counted  if the response is ‘No’ to having the item.
A simple count approach is then used to add up the total number of  items lacked.

Before FYE 2024, using a prevalence-weighted score approach a pensioner was in material deprivation if they had a final material deprivation score of 20 or more.

From FYE 2024, an updated suite of questions and methodology was introduced and using a simple count approach a pensioner is in material deprivation if they lack 4 or more items.

Mean

Mean equivalised household income of individuals is found by adding up equivalised household incomes for each individual in a population and dividing the result by the number of people.

Median

Median household income divides the population, when ranked by equivalised household income, into two equal-sized groups. Contemporary median income refers to the median income in the survey year being considered.

Part-time work

The respondent regards themselves as working part-time, either as an employee or self-employed.

Pensioner

Pensioners are defined as all those adults at or above State Pension age (SPa).

For women born on or before 5th April 1950, SPa is 60. Since 6 April 2010, the State Pension age for women increased until it matched men’s SPa of 65 in November 2018. The State Pension age for men and women then increased together, reaching 66 by October 2020.

State pension age timetables are available.

Pensioner classifications

In HBAI tables relating to ‘all individuals’, the classification pensioner couple includes individuals in a family unit where one member is above State Pension age, and one is below. This differs from results in HBAI tables relating specifically to ‘pensioners’, where only individuals above State Pension age are included. Thus, if a pensioner above State Pension age has a working-age partner, they will both be included under results for pensioner couple in ‘all individuals’ tables, but in ‘pensioner’ tables the working-age partner will be excluded as they will appear in the ‘working-age population’ tables.

Prevalence weighting

Prevalence weighting is a technique of scoring deprivation before FYE 2024, in which more weight in the deprivation measure is given to families lacking those items that most families already have. This means a greater importance, when an item is lacked, is assigned to those items that are more commonly owned in the population. From FYE 2024 a simple count method is used for scoring deprivation.  More information on prevalence weighting can be found in HBAI releases pre-FYE 2024.

Region and country

Regional classifications are based on the standard statistical geography of the former Government Office Regions: nine in England, and a single country for each of Scotland, Wales and Northern Ireland. These regions are built up of complete counties or unitary authorities. Tables also include statistics for England as a whole, and detailed breakdown tables split London into Inner and Outer London to aid comparison with other Family Resources Survey-based publications. For more information see ONS’s webpage on UK Geographies.

Disaggregation by geographical regions is usually presented as three-year averages. This presentation has been used as single-year regional estimates are considered too volatile. Please note that following the decision to not publish breakdowns of the FYE 2021 estimates, all three-year averages calculated and published for any period including FYE 2021 are based on two data points only.

Estimates for the UK are shown as single-year estimates for the latest available year.

Although the FRS sample is large enough to allow some analysis to be performed at a regional level, it should be noted that no adjustment has been made for regional cost of living differences, as the necessary data are not available. In the analysis here it is therefore assumed that there is no difference in the cost of living between regions, although the AHC measure will partly take into take account of differences in housing costs.

Sampling error

The uncertainty in the estimates which arises from taking a random sample of the household population. The likely size of this error for a particular statistic can be identified and expressed as a confidence interval.

Savings and investments

The total value of all liquid assets, including fixed term investments. Figures are taken from responses to questions on the value of assets or estimated from the interest on the savings when these questions are not asked. Note that banded savings do not include assets held by children in the benefit unit/household. The derivation of total savings used in the tables means that “no savings” specifically relates to cases where the respondent said that they had no accounts/investments, refused to answer, didn’t know, or some accounts/investments were recorded but none of them yielded any interest/dividends.

The data relating to investments and savings should be treated with caution. Questions relating to investments are a sensitive section of the questionnaire and have a low response rate. A high proportion of respondents do not know the interest received on their investments. It is likely that there is some under-reporting of capital by respondents, in terms of both the actual values of the savings and the investment income.

The level of savings and investments, for some families (benefit units) and households was estimated using a slightly different methodology from FYE 2020 than in previous years. The new method more accurately estimates savings in current accounts and basic bank accounts. It should be noted that savings and investments breakdowns from FYE 2020 are not directly comparable with those for previous years.

Simple Count approach

A simple count approach is used for scoring deprivation from FYE 2024. This approach gives each item that is lacked an equal weight.

Skewness

Skewness measures the degree to which a statistical distribution is asymmetrical or lopsided. A perfectly symmetrical distribution is not skewed. A distribution with a long tail to the right, such as the UK income distribution, is positively skewed.

Sources of income

Households receive income from a variety of sources. The main ones are earnings, state support (i.e. benefits and tax credits), interest on investments and occupational pensions.

It should be noted that comparisons with National Accounts data would suggest that surveys such as the FRS understate investment income. It is also the case that the FRS underestimates receipt of most types of State Support.

State support

The Government pays money to individuals to support them financially under various circumstances. Most of these benefits are administered by DWP. The exceptions are Housing Benefit and Council Tax Reduction, which are administered by local authorities. Tax Credits are not treated as benefits, but both Tax Credits and benefits are included in the term State Support. Further information on UK state support and specific benefits for devolved administrations is available under ‘Benefits’ in the Glossary section of the FRS Background Information and Methodology

Threshold

An equivalised income value used for comparing sections of an income distribution over time or for comparing proportions of groups over time, for example: fractions of FYE 2011 median income or fractions of contemporary medians. A relative threshold is relative to the contemporary median for each year’s survey. A fixed threshold uses the median from an ‘anchor’ year which is then uprated for inflation as appropriate. For example, the absolute threshold ‘60 per cent of the FYE 2011 median income’ in FYE 2011 is the same as the relative threshold, but the corresponding value in the latest survey year has been up-rated by inflation from the FYE 2011 level over the intervening period.

Working-age

Working-age adults are defined as all adults below State Pension age.

Annex 1: Benefit and tax reform in FYE 2024

This Annex summarises some of the major benefit and tax reforms which came into effect in FYE 2024. It is not intended to represent an exhaustive list.

Council Tax

The Department for Levelling Up, Housing and Communities (renamed the Ministry of Housing, Communities and Local Government in July 2024) estimated that the average Band D Council Tax set by local authorities in England for 2023 to 2024 had increased by 5.1% from 2022 to 2023 levels.

In Wales, the average Band D Council Tax for 2023 to 2024 represented an increase of 5.8% from 2022 to 2023 levels. 

In Scotland, the average Band D Council Tax for 2023 to 2024 represented an increase of 5% from 2022 to 2023 levels.

In Northern Ireland, the rates (poundage) for 2023 to 2024 represented an increase of 6% from 2022 to 2023 levels. 

Income Tax

How much Income Tax a person pays in each tax year depends on how much of their income is above their Personal Allowance and how much of their income falls within each tax band.  

The annual personal allowance (£12,570) and its related income limit (£100,000) remained the same as in the previous, 2022 to 2023 tax year. 

The rates for Basic, Higher and Additional income tax were also held at their 2022 to 2023 levels in England, Wales and Northern Ireland. The band for the Basic rate also remained the same as in 2022 to 2023, although the maximum income values for the Higher rate band decreased from £150,000 to £125,140, meaning that the Additional rate band applied from over £125,140 in 2023 to 2024, whereas it had been from over £150,000 in 2022 to 2023.

Tax rate	Income band for 2022 to 2023	Income band for 2023 to 2024
Basic rate 20% - People with the standard Personal Allowance started paying this rate on income over £12,570.	£12,570 to £50,270	£12,570 to £50,270
Higher rate 40% - People with the standard Personal Allowance started paying this rate on income over £50,270.	£50,271 to £150,000	£50,271 to £125,140
Additional rate 45% - People who earn over this figure do not have a Personal Allowance.	Over £150,000	Over £125,140

In Scotland, the Higher rate, for incomes of £31,093 above the personal allowance was increased from 41% to 42%; the Top rate for incomes more than £125,140 (previously £150,000 in 2022 to 2023) was increased from 46% to 47%. 

The dividend allowance was reduced from £2,000 in 2022 to 2023, to £1,000 in 2023 to 2024. This measure reduced the tax-free allowance for dividend income, meaning that individuals would be taxed on dividend incomes over £1,000. In 2023 to 2024, the rates of tax paid on dividends remained the same as in 2022 to 2023. 

National Insurance Contributions (NICs)

For employees, the 12% rate for Class 1 NICs decreased by 2 percentage points in January 2024 to 10%. 

For the self-employed, the rate for Class 2 NICs increased from £3.15 per week to £3.45 per week from 6 April 2023. The Small Profits Threshold amount remained at £6,725 per year. 

Also, for the self-employed, the applicable rates for Class 4 NICs (payable on profits, above set thresholds) decreased: from 9.73% to 9% for the ‘Rate between Lower Profits Limit to the Upper Profits Limit’; and from 2.73% to 2% for the ‘Rate above Upper Profits Limit’. There was also an increase in the Lower Profits Limit (the floor for these contributions, below which NICs were not payable) which had been £11,908 per year in 2022 to 2023, to £12,570 per year in 2023 to 2024. The Upper Profits Limit remained at £50,270 per year.

National Living Wage

On 1 April 2023, the National Living Wage increased from £9.50 to £10.42 per hour for employees aged 23 years and above. 

Employees aged under 23 years continued to receive the National Minimum Wage. On 1 April 2023, the National Minimum Wage increased: 

• from £9.18 to £10.18 per hour for those aged 21 to 22 years inclusive.
• from £6.83 to £7.49 per hour for those aged 18 to 20 years inclusive.
• from £4.81 to £5.28 per hour for those aged below 18 years (but over compulsory school leaving age).

Additionally, the National Minimum Wage rose from £4.81 to £5.28 per hour for apprentices, both those aged below 19 years and those aged 19 years and above who were in the first year of their apprenticeship.  

Uprating

In April 2023:  

• inflation-linked benefits and tax credits rose by 10.1% in line with the Consumer Prices Index (CPI), as of September 2022.

• the Basic State Pension and New State Pension increased by 10.1%. This was in line with CPI inflation, following the ‘triple lock’ policy. The ‘triple lock’ ensured that the Basic and New State Pension increased by the highest of the increase in earnings, price inflation as measured by the CPI, or 2.5%. The Basic State Pension increased from £141.85 per week in 2022 to 2023 to £156.20 per week in 2023 to 2024, a cash increase of £14.35 per week. The New State Pension increased from £185.15 per week in 2022 to 2023 to £203.85 per week in 2023 to 2024, a cash increase of £18.70 per week.

• the Standard Minimum Guarantee in Pension Credit increased by 10.1%. For those who were single, this increased from £182.60 per week in 2022 to 2023 to £201.05 per week in 2023 to 2024, a cash increase of £18.45 per week. For couples, this increased from £278.70 per week in 2022 to 2023 to £306.85 per week in 2023 to 2024, a cash increase of £28.15 per week.

• both the lower and higher Universal Credit Work Allowances rose broadly in line with CPI inflation. The lower rate increased by 10.2% to £379 per month in 2023 to 2024, and the higher rate increased by 10.1% to £631 per month in 2023 to 2024.

Household Support Fund

The Household Support Fund (HSF) has been running since 6 October 2021, with the latest iteration, HSF4, running for a year from 1 April 2023 to 31 March 2024 with £1bn of funding, including funding from the Barnett formula to the devolved administrations. The aim of the HSF is to support vulnerable households across England most in need by helping them to meet their daily needs such as food, clothing, energy, and other essential living needs.

Cost of Living Payments 

Eligible households on income-related benefits, including Universal Credit, Pension Credit and Tax Credits, received payments to help with the cost of living in 2023 to 2024, through three different schemes. These payments were generally made automatically between 25 April 2023 and 22 February 2024, although mop-up payments were paid to some claimants not covered by the automatic runs e.g. where they had made a claim but were not yet in payment on the eligibility date. Households may have received the following payments, depending on their circumstances on specific dates or during a particular period: 

• an income-related benefit Cost of Living Payment for households on a qualifying low-income benefit or tax credits. A payment of £900 was paid in 3 lump sums of £301, £300 and £299, in the spring, autumn and winter respectively, to households already in receipt of the eligible benefits. This payment was made on top of any benefit payments received by the claimants.
• a Disability Cost of Living Payment for households on a qualifying disability benefit. A lump sum payment of £150 was paid automatically between 20 June 2023 and 4 July 2023, to those already in receipt of the eligible benefits. To be eligible for the payment, households must have received a payment (or later receive a payment) of one of the qualifying benefits before 1 April 2023.
• a Pensioner Cost of Living Payment for households entitled to a Winter Fuel Payment for winter 2023 to 2024. An extra £150 or £300 was paid with the eligible household’s normal Winter Fuel Payment from November 2023. This was in addition to any other Cost of Living Payment received.

Warm Home Discount 

Between October 2023 and March 2024, eligible households began to receive a one-off discount on their energy bills under the Warm Home Discount scheme. The rebate was set at £150. It was automatically discounted from energy bills for households in England and Wales who were eligible if they were either in receipt of the Guarantee Credit element of Pension Credit or were on a low income and had high energy costs. 

In Scotland, households were eligible if they were either in receipt of the Guarantee Credit element of Pension Credit or were on a low income and met their energy supplier’s criteria for the scheme. The discount was not automatic; an application to the energy supplier was required.

The scheme was not available in Northern Ireland. 

Scottish Winter Heating Payment 

Households in Scotland may be able to get a single payment during winter called the Winter Heating Payment if they were in receipt of eligible benefits. This was available in winter 2023/24 and was £55.05.  From FYE 2024 this has been imputed on the FRS and therefore included in HBAI incomes.

Cold weather payments, worth £25 a week, are a similar winter payment available in England, Wales and Northern Ireland and were available for eligible households between 1 November 2023 and 31 March 2024. However, these are not able to be imputed on the FRS and therefore not included in HBAI incomes.

Annex 2: Other relevant statistics

The HBAI report and statistics are released alongside several other statistics focused on income and low-income statistics across Government.

In February 2015 the United Kingdom Statistics Authority (UKSA) published a report on the outcome of a monitoring review into the Coherence and Accessibility of Official Statistics on Income and Earnings. A progress report was published in January 2016, with a further update in December 2018.

This review considered the way in which official statistics about income and earnings across Government are presented and includes summary details of the official statistics within the Review’s scope; discussion of the conceptual issues faced by users and advice needed when attempting to analyse official statistics; and makes recommendations around potential solutions to concerns identified and for the longer-term development of income and earnings statistics.

The Office for Statistics Regulation (OSR) published a further review of income-based poverty statistics on 19 May 2021. This included background information on why the review was commissioned as well as the findings and recommendations for statistics producers. Recommendations focussed on key areas including accessibility and guidance, understanding poverty, data gaps, data quality, and trustworthiness. Several of the recommendations were taken account of in the FYE 2021 and FYE 2022 HBAI publications. For example, reporting of material deprivation measures was extended to include working age adults, and a section on the strengths and limitations of the HBAI was added to the main statistical report.

In the FYE 2024 HBAI release DWP has specifically addressed further data gap recommendations on material deprivation statistics. 

Firstly, DWP, in partnership with researchers at the London School of Economics and Political Science (LSE), conducted a review of the Material Deprivation measures and the associated FRS questions. The LSE Review was published in March 2024. Updated questions were added from the FYE 2024 FRS and an updated methodology to measure Material Deprivation has been developed by DWP. FYE 2024 HBAI estimates use the updated measures. The decisions underpinning the methodology for the updated Material Deprivation measures were informed by recommendations from the LSE Review, evidence from analysis of HBAI FYE 2024 and back-series data, as well as broader conceptual perspectives. A technical report has been published alongside the FYE 2024 HBAI release detailing the development of the updated measures.

Secondly, the FYE 2024 HBAI report addresses the recommendations around improving the comparisons of material deprivation across groups and increasing the consistency of reporting material deprivation measures.  The main HBAI FYE 2024 report and publication tables have been extended to report on child material deprivation and working-age material deprivation, in addition to the combined low income and material deprivation measures. This allows material deprivation to be easily compared across groups. In addition, all combined measures are now published on a before and after housing costs basis for all thresholds which further increases the consistency of the way material deprivation is reported.

Below Average Resources: a new poverty measure

DWP are developing a new additional poverty measure named ‘Below Average Resources’ (BAR) based on the approach proposed by the Social Metrics Commission (SMC). The BAR approach provides a more expansive view of available resources (both savings and inescapable costs) than the income measurement adopted under HBAI, and includes some methodological changes proposed by the SMC.

The Office for Statistics Regulation (OSR) Review of Income-Based Poverty Statistics recommended that the DWP assess how the SMC’s proposals can be implemented to enhance the public value of our statistics. The OSR recognised that a basket of main poverty measures is required to meet varying user needs, but that signposting and coherence between different statistics could be improved to help users navigate the varying measures. Once fully developed, the BAR measure will add to the understanding of poverty in the UK alongside HBAI.

The second Official Statistics in Development publication in the series was published on 23 January 2025.

DWP sought user feedback on the new poverty measure through an analytical consultation. The consultation response has now been published.

Integration of administrative data into the FRS and HBAI estimates

As outlined in the DWP Statistical Work Programme (section 2.4), the department is committed to transforming its surveys through the integration of administrative data. This is in the wider context of the UK Statistics Authority’s strategy for data linking and OSR recommendations in their 2021 review of income-based poverty statistics, that DWP should explore the feasibility and potential of social survey and administrative data integration.

A technical report on FRS transformation, with illustrative results for DWP benefits, was published in March 2024 alongside the FYE 2023 FRS publication.

Please see the DWP Statistical Work Programme and the Family Resources Survey: release strategy - GOV.UK for updates on the status of these projects and planned future releases.

Income and earnings statistics interactive tool

Work was taken forward by the Government Statistical Service (GSS) Coherence Team at the Office for National Statistics (ONS), who carried out a review of signposting across income and earnings statistics and made several recommendations for improvement. The ONS also developed a new interactive tool which can be used to identify sources of statistics on income and earnings, and their key features.

The statistics highlighted below represent several statistical releases which might be considered alongside results from HBAI to give a more complete picture. This is not intended to be an exhaustive list and should be considered alongside details from the reviews highlighted, as well as ONS guidance on sources of data on earnings and income, with additional details at on important questions also available.

Poverty and income inequality in Scotland

In-depth analysis of HBAI data for Scotland.

Poverty statistics for Wales

In-depth analysis of relative income poverty in Wales can be found on the relative income poverty page of the Welsh Government website, which has links to material deprivation and persistent poverty analysis.

Households Below Average Income Report for Northern Ireland

In-depth analysis of HBAI data for Northern Ireland.

EU comparisons

After the UK’s exit from the EU in 2020, some EU-SILC outputs were still delivered by ONS to Eurostat during the transition period in 2020, but all planned deliveries from 2021 onwards ceased. Data for the UK up to and including the 2018 calendar year remain available on Eurostat’s EU-SILC database.

Details of the differences between the EU and HBAI methodology are given in the main body of this report.

OECD international comparisons

The OECD income distribution database provides international comparisons on trends and levels in Gini coefficients before and after taxes and transfers, average household disposable incomes, relative poverty rates and poverty gaps, before and after taxes and transfers.

The effects of taxes and benefits on household income

The UK has two main, official data sources of household income statistics: the Family Resources Survey (FRS) run by the Department for Work and Pensions (DWP) and the Household Finances Survey (HFS) run by the Office for National Statistics (ONS).

The FRS estimates underpin DWP’s Households Below Average Income (HBAI) series, which is the UK’s primary source of poverty estimates. With a larger sample size, it is also the main source on household incomes. HFS data are used to produce ONS’s Average household income, UK - Office for National Statistics series, and are the main source for considering the overall financial well-being of households.

The two sources of data are complimentary but there are some important methodological differences between them which means that their income estimates can be different. For example, the FRS focuses on respondents’ weekly incomes at the time of interview, whereas HFS focuses more on annual income. The treatment of pension contributions also differs, with ONS’ estimate of Gross Household Income being calculated before pension contributions. Further details are available in the income and earnings statistics guide. 

Pensioners’ Incomes

The Pensioners’ Income (PI) publication gives more a more detailed analysis of pensioners’ incomes.

Family Resources Survey

The Family Resources Survey (FRS) publication gives some further results of FRS data analysis.

Income Dynamics

Income Dynamics (ID) is a publication based on longitudinal data, containing analysis of income movements and the persistence of low income for various population groups.

It supersedes Low-Income Dynamics, which was last published in September 2010.

Personal Incomes statistics

The Personal Incomes Statistics publication gives summary information about UK taxpayers, their income and the Income Tax to which they are liable.

Wealth in Great Britain

Household total wealth in Great Britain - Office for National Statistics  is based on the Wealth and Asset Survey (WAS), a large-scale longitudinal survey with eight rounds currently published. Round 8 (2020 to 2022) had a sample of around 15,000 private households or 32,300 individuals in Great Britain. It is conducted by the Office for National Statistics (ONS). The WAS dataset holds information about the economic status of households and individuals including their physical and financial assets, debts, and pension provision. WAS data are also used to understand how wealth is distributed and the factors which may affect financial planning, as well as a respondents’ attitudes and behaviours towards saving. The Pension Wealth tables in WAS provides estimates of the types of private (non-state) pension wealth, split by a wide range of socio-demographic and economic breakdowns

Measuring National Well-being

The Measures of National Well-being Dashboard: Quality of Life in the UK brings together the latest national well-being data from the Office for National Statistics (ONS) and other sources to give an overview of how the UK is doing across the 10 areas of life that the UK public told us matter most.

Estimates of income and low-income levels for small areas

HBAI data cannot be broken down below the level of region, due to sample size and coverage issues. However, there are some data sources that present information at smaller geographies:

Children in Low-Income Families Local Area Statistics

Children in Low Income Families provides estimates of the number and proportion of children living in low-income families, Before Housing Costs (BHC), across the United Kingdom by local area.  There have been some methodological changes to the Children in Low Income Families release for FYE 2024 which includes a change to how those statistics are calibrated to HBAI.  Further information is available in  Children in low income families: local area statistics: background information and methodology - GOV.UK.  This document includes a table for users advising on scenarios on when you might use which statistics.

Small area model-based income estimates for England and Wales

ONS produce model-based estimates of income at Middle Layer Super Output Area (MSOA) level for FYE 2020.

Admin-based income statistics, England and Wales

ONS also produce experimental estimates of gross and net income based on data from the Pay As You Earn and benefits systems.

English Indices of Deprivation

The English Indices of Deprivation, produced by the Ministry of Housing, Communities and Local Government is a measure of relative levels of deprivation in small areas of England called Lower Layer Super Output Areas.

Welsh Index of Multiple Deprivation

The Welsh Index of Multiple Deprivation (WIMD) is the official measure of deprivation in small areas in Wales. It is a relative measure of concentrations of deprivation at the small area level.

Scottish Index of Multiple Deprivation

The Scottish Index of Multiple Deprivation (SIMD) is the Scottish Government’s official tool for identifying those places in Scotland suffering from deprivation.

Northern Ireland Multiple Deprivation Measure

The Northern Ireland Multiple Deprivation Measure (NIMDM) is the official measure of spatial deprivation in Northern Ireland.

Annex 3: Uses and users of HBAI statistics

HBAI is a key source for data and information about household income. Users include policy and analytical teams within the DWP, the Devolved Administrations and other government departments, local authorities, parliament, academics, journalists, and the voluntary sector.

HBAI is a key data source for the Child Poverty Strategy. Tackling Child Poverty: Developing Our Strategy (HTML) - GOV.UK outlines that relative poverty after housing costs will be a headline measure, with further work to also consider measurement of the most severe and acute forms of poverty. The Child Poverty Taskforce is working with Devolved Governments, partner organisations and individuals to develop the Child Poverty Strategy.

Researchers and analysts outside government use the statistics and data to examine topics such as income inequality, the distributional impacts of fiscal policies and understanding the income profile of vulnerable groups. Examples of published reports using HBAI data include:

• “Living standards, poverty and inequality in the UK: 2023”: Ray-Chaudhuri, Waters, Wernham, Xu, Institute for Fiscal Studies, 2023;
• “UK Poverty 2024”: Cebula, Earwaker, Elliott, Johnson-Hunter, Matejic, Milne,Taylor, Thompson and Wenham, Joseph Rowntree Foundation, 2024;
• “The Living Standards Outlook 2023”: Brewer, Fry, Try, Resolution Foundation, 2023;
• “Falling Behind, Getting Ahead: The Changing Structure of Inequality in the UK, 2007-2013”: Hills, Cunliffe, Obolenskaya and Karagiannaki, Centre for Analysis of Social Exclusion, 2015.

Within government the statistics and data are used:

• to inform policy development and monitoring, and for international comparisons;
• for three of the four income-related measures in the Welfare Reform and Work Act 2016 where the HBAI report presents data for the income-related measures related to relative low income, combined low income and child material deprivation, and absolute low income;
• in the DWP’s Policy Simulation Model (PSM) used extensively by analysts in DWP and the Department for Communities in Northern Ireland, for policy evaluation and costing of policy options;
• HM Treasury’s Inter-Governmental Tax Benefit Model (IGOTM) used to model possible tax and benefit changes before policy changes are decided and announced;
• to provide further equality information in compliance with the specific duties under the Equality Act 2010, as well as to the Ethnicity Facts and Figures (formerly the Race Disparity Audit). The data is also referenced as a key source in the Equalities Data Audit, published by the Office for National Statistics; and
• as one of the financial indicator domain measures in the National Wellbeing Dashboard, published by the Office for National Statistics (ONS) to measure quality of life in the UK.

The Scottish Government uses the HBAI data:

• to support users to understand inequalities of concern in Scotland in relation to income;
• to help to inform policy action, and to measure and evaluate the impact of changes or interventions;
• to report against three of the four income-related measures in the Child Poverty (Scotland) Act 2017 (relative low income, combined low income and child material deprivation, and absolute low income);
• supporting the independent Poverty and Inequality Commission;
• as evidence for the Scottish Government’s National Performance Framework, specifically for the National Performance indicators on relative low income, income inequality and combined low income and child material deprivation; and;
• to inform the Scottish Government’s policies about Equality and rights.

The Welsh Government uses the HBAI data:

• to support users to understand issues relating to poverty in Wales, and to help inform policy in this area;

• to measure progress on the National Indicators for Wales; and;

• to monitor progress of the Welsh Government’s Child Poverty Strategy (2024).

The Department for Communities in Northern Ireland uses HBAI data to produce the Northern Ireland Poverty and Income Inequality Report – the primary source for data and information about poverty and income inequality in Northern Ireland.

Annex 4: Communicating uncertainty

Introduction

The figures in this publication come from the Family Resources Survey. This is a survey of just under 17,000 households across the UK for FYE 2024. Like all surveys, it gathers information from a sample rather than from the whole population. The size of the sample and the way in which the sample is selected are both carefully designed to ensure that it is representative of the UK as whole, whilst bearing in mind practical considerations such as time and cost constraints. Survey results are always estimates, not precise figures. This means that they are subject to a level of uncertainty which can affect how changes, especially over the short term, should be interpreted.

Estimating and reporting uncertainty

Two different random samples from one population, for example the UK, are unlikely to give the same survey results and are likely to differ again from the results that would be obtained if the whole population was surveyed. The level of uncertainty around a survey estimate can be calculated and is commonly referred to as sampling error. In addition to sampling error the HBAI estimates can also be affected by non-sampling error such as non-response and a tendency to under-report benefit receipt.

We can calculate the level of uncertainty around a survey estimate by exploring how that estimate would change if we were to draw many survey samples for the same period instead of just one. This allows us to define a range around the estimate (known as a “confidence interval”) and to state how likely it is that the real value that the survey is trying to measure lies within that range. Confidence intervals are typically set up so that we can be 95% sure that the true value lies within the range – in which case this range is referred to as a “95% confidence interval”.

Measuring the size of sampling error

Accuracy of the statistics: Confidence intervals are used as a guide to the size of sampling error. A confidence interval is a range around an estimate which states how likely it is that the real value the survey is trying to measure lies within that range. A wider confidence interval indicates a greater uncertainty around the estimate. Generally, a smaller sample size will lead to estimates that have a wider confidence interval than estimates from larger sample sizes. This is because a smaller sample is less likely than a larger sample to reflect the characteristics of the total population and therefore there will be more uncertainty around the estimate derived from the sample.

Statistical significance: Some changes in estimates from one year to the next will be the result of different samples being chosen, whilst other changes will reflect underlying changes in income across the population. Confidence intervals can be used to identify changes in the data that are statistically significant; that is, they are unlikely to have occurred by chance due to a particular sample being chosen.

Confidence intervals can give a range around the difference in a result from one year to the next. If the range does not include zero it indicates this change is unlikely to be the result of chance. The examples below give more detail on how confidence intervals can be interpreted.

In the summary tables presented in this report, estimates of the percentage in low income that are statistically significant from the previous year are shown with the notation [s], with further information in the Uncertainty and Commentary Tables pages. Estimates of the number in low income that are statistically significant from the previous year are also shown with the notation [s]. Conversely, estimates that are not statistically significant are shown with the notation [ns].  The HBAI estimates that are presented are the best estimate of the real value that the survey is trying to measure.

Non-sampling error: In addition to sampling error, non-sampling error is another area of uncertainty and is present in all surveys as well as in censuses. Non-sampling error encompasses all error other than sampling error. Types of non-sampling error include coverage error, non-response error, measurement error and processing error. These errors are minimised in this survey by rigorous procedures; however, it is not possible to eliminate it completely and it cannot be quantified. It is important to bear in mind that confidence intervals are only a guide for the size of sampling error and cannot tell us anything about non-sampling error.

Working with uncertain estimates: Some changes between years will be small in relation to sampling variation and other sources of error and may not be statistically significant. This is relevant for particular sub-groups, as these will have smaller sample sizes than the overall survey sample size. For these sub-groups it is important to look at long-term trends.

Calculating uncertainty in the HBAI report

As the FRS is a sample from the UK population, any statistics derived from it are only estimates of the true numbers for the overall population. Prior to the FYE 2013 publication, confidence intervals for HBAI estimates were calculated using an estimating function approach. Since then, DWP has used bootstrapping techniques to measure how different a HBAI estimate might have looked if different FRS samples had been drawn.

The bootstrapping methodology used for the FYE 2013, FYE 2014 and FYE 2015 publications applied the original HBAI grossing factors to simple random resamples of the HBAI dataset to calculate confidence intervals for HBAI estimates.

The Institute for Fiscal Studies (IFS) were commissioned to develop the DWP methodology further to account as fully as possible for the specific features of the FRS sampling design for Great Britain (GB) and Northern Ireland (NI) and HBAI grossing process.

The new methodology, introduced from the FYE 2016 publication onwards, produces:

• GB resamples simulating the FRS stratified, cluster sampling of GB households.
• NI resamples simulating the FRS stratified sampling of NI households.
• A unique set of grossing factors for each GB and NI resample, replicating the original HBAI grossing process, to produce lower and upper confidence intervals.

accounting for:

• Cluster sampling – this widens confidence intervals for most estimates, reflecting that this feature makes survey estimates less precise.
• Post-sample grossing to population totals – this narrows confidence intervals for estimates sensitive to incomes towards the very top of the income distribution, as specific control totals are set for high income individuals.

Further details on methodological work undertaken by IFS, together with illustrative details of the impact of different aspects of the new methodology on key HBAI estimates for FYE 2014, are available in the published IFS report.

The following diagrams present:

• Figure A4a: Summary of the New Bootstrapping Methodology
• Figure A4b: GB FRS Sampling and Bootstrapping Resampling Process
• Figure A4c: NI FRS Sampling and Bootstrapping Resampling Process
• Figure A4d: HBAI Grossing and Bootstrapping Grossing Process

Further development work has been carried out on the derivation of the confidence intervals for HBAI estimates in the FYE 2017 publication, meaning results published in reports before this date may have changed slightly. The resample grossing factor datasets from FYE 1995 to the latest published year have been deposited at the UK Data Archive, along with user guidance on creating confidence intervals.

Figure A.4a: Summary of the New Bootstrapping Methodology

Figure A.4a illustrates the new bootstrapping methodology. The bootstrapping methodology consists of four stages shown in diagram form in Figure A.4a and those stages are as follows: 

1. Resample GB and NI HBAI households separately 500 times using the FRS sampling method and produce new grossing factors for each resample, then combine to create a UK resample. You end up with GB and NI resamples from 1 to 500. 

2. Calculate the estimate for each UK resample using the resample grossing factors. So you end up with 500 estimates, e.g. estimate A (1) to estimate A (500). 

3. Calculate confidence intervals based on the resample estimates. Confidence intervals are the 2.5th and 97.5th percentile, which are refined to correct for any bias or asymmetry in the resamples. 

4. Combine lower and upper bounds with original HBAI central estimate to present uncertainty.

Confidence intervals are the 2.5th and 97.5th percentile, which are refined to correct for any bias or asymmetry in the resamples.

Figure A.4b: Great Britain FRS Sampling and Bootstrapping Resampling Process

Figure A.4b illustrates the Great Britain FRS Sampling and Bootstrapping Resampling process in diagram form. The bootstrapping resampling is shown as six stages labelled A to F and the GB FRS sampling process is shown as six stages 1-6.  Those stages are as follows: 

Bootstrapping Resampling Process: 

A. Identify regions 1 to 27. 

B. Identify PSUs in each region (PSU (1) up to PSU (23)). 

C. Create Pseudostrata: 1 (PSU(1), PSU(2)), 2 (PSU(3), PSU(4)) up to 11 (PSU(21), PSU(22), PSU(23)). These groups are split into minor strata (clusters). The HBAI dataset only contains information on the selected GB households within selected PSUs in the FRS. Therefore, it is not possible to fully replicate the ranking of all PSUs by socio-economic characteristics and sampling from all of them. To overcome this, it is assumed that adjacent PSUs in a region have similar socio-economic characteristics, so they are paired together to create ‘pseudostrata’.  

D. Randomly select PSUs. One of the PSUs is randomly selected from each minor stratum (e.g. from the first group PSU (1) might be selected and from the second group PSU (3) might be selected). If the total number of PSUs is an odd number, then the final three adjacent PSUs are combined and two PSUs are randomly selected with replacement (e.g. in group 11, PSU(22) and PSU(23) might be selected). 

E. Randomly select (n-1) households in each PSU.  

F. Combine with resampled households from other regions to create the GB resample. 

GB FRS Sampling Process: 

1. FRS Primary Sampling Units (PSUs - postcode sectors) are split (stratified) into the 27 GB regions (major strata).  

2. Within each stratum, the PSUs are ranked by socio-economic characteristics into 16 groups. 

3. These groups are split into minor strata (clusters). 

4. One PSU is randomly selected from each minor strata. 

5. Eligible private households are randomly sampled in the selected PSU. 

6. The FRS GB sample is created.

Figure A.4c: Northern Ireland FRS Sampling and Bootstrapping Resampling Process

Figure A.4c illustrates the Northern Ireland FRS Sampling and Bootstrapping Resampling Process in diagram form. The bootstrapping resampling is shown as three stages labelled A to C and the GB FRS sampling process is shown as three stages 1-3.  Those stages are as follows: 

Bootstrapping Resampling Process: 

A. Identify District Councils.  

B. Randomly Select (x-1) Households.  

C. Combine to create NI resample.  

NI FRS Sampling Process: 

1. All eligible private households are ranked in a list based on the District Council areas and electoral wards they belong to. The list above is then split (stratified) into the three regions in Northern Ireland and the proportion of households in each region calculated. 

2. The number of households drawn is proportional to the number of households in each region. Starting from a random point in the list, every nth household is selected (where 1/n is the proportion of eligible households that will be sampled). 

3. The FRS NI sample is created. 

Due to the small NI FRS sample size, the systematic sampling is replaced with simple random sampling with replacement. However, the initial stratification into the districts is replicated.

Figure A.4d: HBAI Grossing and Bootstrapping Grossing Process

Figure A.4d illustrates the HBAI Grossing and Bootstrapping Grossing Process in diagram form. The bootstrapping grossing process is shown as three stages labelled A to C and the HBAI grossing process is shown as three stages labelled 1 to 3. Those stages are as follows: 

Bootstrapping Grossing Process: 

A. Recalculate the initial design weights, accounting for the weighted number of households at the address that are resampled, the small sample correction and the number of times the household was resampled. As only around half the PSUs in the HBAI dataset are selected for the FRS GB resample and the FRS NI sample is already small, small sample corrections are required - otherwise, the bootstrapping will tend to underestimate the true degree of sampling variability.  

B. Add the new weights to the HBAI input dataset, retaining only the resampled households.  

C. Feed the resample households input datasets, original control totals and widened tolerances into CALMAR to create GB and NI grossing factors. The tolerances for the resamples are set wider than those used for the original HBAI dataset so that the alignment to control totals isn’t artificially constrained (As the households in the resample are different to those in the original sample, some under-represented UK households will need a much higher ratio of weights to align to the control totals and some over-represented UK households will need a much lower ratio of weights to align to the control totals). A resample grossing factor is set to zero if a household was not selected in the resample 

HBAI Grossing Process: 

1. Identify the initial design weights from the FRS data. Adjust the weights for the number of households by location over the HBAI weighted sample of households by location. 

2. The adjusted design weights are added to the GB and NI HBAI input datasets.

95 per cent confidence intervals

Confidence intervals are typically set up so that we can be 95 per cent sure that the true value lies within a certain range – in which case this range is referred to as a “95 per cent confidence interval”.

Example 1: Interpreting confidence intervals

17 per cent of individuals are estimated to be living in relative low income BHC. This figure has a stated confidence interval of 16 to 19 per cent (Table 8b). This means that we can be 95 per cent sure that between 16 and 19 per cent of individuals are in relative low income. Our best estimate is 17 per cent of individuals.

As well as calculating confidence intervals around the results obtained from one year of the survey, confidence intervals can also be calculated for the changes in results across survey years.

Example 2: Statistical significance

The estimated change in the percentage of individuals living in absolute low income BHC from FYE 2023 to FYE 2024 is an increase of 1 percentage points (Table 8b). The confidence interval around this figure is -1 to 3 percentage points. This means that we can be 95 per cent sure that the actual change in the percentage of people living in absolute low income is between a decrease of 1 percentage points and an increase of 3 percentage points, with the best estimate being an increase of 1 percentage points. As the confidence interval includes zero this change is not statistically significant, which indicates that there is at least a 5 per cent probability that the change in the percentage of individuals in absolute low income is the result of chance.

If the confidence interval did not include zero, we would conclude that the change is statistically significant i.e. the change is unlikely to be the result of chance.