Official Statistics

Income Dynamics: Income movements and the persistence of low income, 2010 to 2023

Published 27 March 2025

1. Main stories

The main stories are:

• in the most recent four-wave period (from 2019 and 2020 to 2022 and 2023), 10% of all individuals were in persistent low income before housing costs (BHC). This figure had increased from 9% in all previous four-wave periods
• in the most recent four-wave period, 12% of individuals were in persistent low income after housing costs (AHC). This rate was unchanged on the previous four-wave period
• before housing costs, pensioners and children (both 12%) were more likely to be in persistent low income than working-age adults (8%)
• after housing costs, children had higher rates of persistent low income AHC (18%) than working-age adults and pensioners (both 11%)
• individuals at the top and bottom of the income distribution in 2015 and 2016 were those most likely to be in the same position in the distribution in 2022 and 2023
• similar numbers of individuals moved into and out of low income over the most recent two-wave period. Pensioners tended to be less likely to enter into and exit from low income than children and working-age adults
• changes in earnings and benefit income, and in the amount of paid work in a household, were closely linked to low income entries and exits

2. What you need to know

This is the ninth annual Income Dynamics (ID) publication. It provides information on rates of persistent low income for children, working-age adults, and pensioners in the UK. Individuals are in persistent low income if they are in relative low income for at least three out of four consecutive annual interviews. ID meets DWP’s statutory obligation to publish a measure of persistent low income for children, as set out under Section 4 of the Welfare Reform and Work Act 2016.

ID also includes analysis of movements across the income distribution, including low income entry and exit rates, and statistics on how various socio-economic factors are linked to low income entry and exit.

The data source

ID estimates are based on Understanding Society, a longitudinal survey run by the University of Essex, which follows sampled individuals over time. Members of the survey are interviewed once during each survey wave. Each survey wave spans two calendar years. The most recent wave is Wave 14, covering the calendar years 2022 and 2023. For most of the longitudinal analysis included in ID, the starting point is Wave 2 (2010 and 2011).

The Wave 14 longitudinal sample included over 23,000 individuals. For the purposes of the longitudinal analysis presented here, individuals are classified according to characteristics reported at the first wave of any analytical period. For example, where analysis covers the period from 2019 and 2020 to 2022 and 2023, working-age adults are adults who were below State Pension age and over 16, not in further education and not classed as a dependent child, when they were interviewed for the 2019 and 2020 wave. Similarly, other breakdowns such as employment status or tenure also reflect individual status at the start of any longitudinal period.

Use of survey data means that the statistics in this report are estimates, and as such are subject to a degree of uncertainty. Care should therefore be taken in interpreting apparent change over time or differences between sub-groups, which may reflect sampling error rather than real differences. This holds particularly true over the short term, for groups with smaller sample sizes, and where percentage point differences are small.

Percentages are rounded to the nearest percentage point independently. Where categories are summed for descriptive purposes, rounding is implemented after summing.

Income measures

ID uses a disposable household income measure, adjusted for household size and composition, to calculate a proxy – or ‘equivalised’ – measure of income available to each individual in the sample. The statistical adjustments made to ID income measures are in line with international best practice, and allow us to make comparisons over time and across household compositions on a consistent basis. They do mean however, that the measures may not always be directly relatable to the amounts understood by individuals on a day-to-day basis.

An individual is said to be in relative low income if their household equivalised income is below 60% of median income. ID statistics are routinely reported both before and after housing costs.

Revisions to the data

This ID publication contains longitudinal statistics covering the period from 2010 to 2023 (data from Waves 2 to 14 of Understanding Society). Each annual Understanding Society release provides data for all previous waves of the survey, and will contain revisions. Revisions are made to improve data quality. For this reason, statistics derived for a certain time period in this ID publication may differ from those derived for the same time period in a previous ID publication. It is therefore always best to refer to the most recent ID publication. Please see the Understanding Society user guide, as well as information on revisions.

Changes for ID 2010 to 2023

There have been two changes to this year’s publication:

Firstly, Wave 14 (calendar years 2022 and 2023) saw the introduction of a boost sample in the Understanding Society survey. All longitudinal panel surveys are prone to attrition over time, as individuals and/or households stop participating in the survey. This reduces sample sizes and, in turn, confidence in estimates. The boost sample introduced in 2022 aimed to address the effects of this, and resulted in an additional 5,761 household interviews. For further information on the boost sample, please refer to the Wave 14 survey boost technical report.

Members of the boost sample have been included in the most recent single wave (2022 and 2023) estimates presented in ID tables M8 and M9, but because they have only just joined the survey, they cannot yet be included in the longitudinal analysis used to produce estimates of low income movements or persistent low income. For further information about this development, please refer to the Background information and methodology note.

Secondly, a new age category of individuals aged between 65-74 has been added to analysis of persistent low income among working-age adults. This follows a rise in the State Pension Age, which means that there are now working-age adults who are aged over 65.

The coronavirus (COVID-19) pandemic

Given the longitudinal nature of ID analysis, the coronavirus pandemic and associated policies continue to be relevant. The four most recent survey waves were all affected in some way. The most recent wave included in these statistics is Wave 14 (calendar years 2022 and 2023): policies associated with the pandemic affected fieldwork and data collection during the first quarter of 2022. An assessment of the implications for ID statistics can be found in Section 11.

Data tables

Data tables have been published alongside this release. Relevant table references are provided within the text. Please also refer to the ID Tables Guide for details of the statistics included in the various ID tables files.

Further information

For further information on the way in which ID statistics are produced, please refer to Section 12, the ID Quick Guide, and the Background information and methodology report which are published alongside this report.

3. An overview of persistent low income

From 2019 and 2020 to 2022 and 2023, the rate of persistent low income for all individuals was 10% before housing costs (BHC) and 12% after housing costs (AHC). For all individuals, the rate of BHC persistent low income has been 9% in all previous four-wave periods (since 2010 and 2011). The AHC rate remained unchanged on the previous four-wave period, at 12%.

Persistent low income is considered separately for three main population groups: children, working-age adults, and pensioners. Over time, the rate for children (AHC) has been consistently higher than all other rates. The rate for working-age adults (BHC) has been consistently lower than all other rates.

Figure 1. Persistent low income for children, working-age adults, and pensioners: the most recent four-wave period compared to the previous four-wave period (BHC and AHC)

Source: Table 1, Persistent low income trends

Over the most recent four-wave period, the lowest rate of persistent low income was for working-age adults BHC, at 8%. This rate was unchanged on the previous four-wave period. Working-age adults have had the lowest rate of BHC persistent low income over time. BHC rates for children and pensioners have been similar over time and were both 12% in the most recent four-wave period. The BHC rate for both pensioners and children increased from 11% in the previous four-wave period, to 12%.

The highest rate of persistent low income was for children AHC (18%). The persistent low income rate for children AHC has always been higher than the AHC rate for working-age adults and pensioners, which was 11% for both groups in the most recent four-wave period. The AHC rate of persistent low income for pensioners increased from 10% in the previous four-wave period, to 11%, while the AHC rate was unchanged for children and working-age adults.

Rates of persistent low income varied across the countries and regions of the UK

There was variation in rates of persistent low income across the countries and regions of the UK.

Figure 2. Persistent low income across the UK (BHC and AHC)

Source: Tables 2.2p and 2.8p, Individuals in persistent low income

There was a small amount of variation in BHC rates of persistent low income across the countries of the UK, with the highest rate in Scotland at 11%, followed by England and Wales at 10% and Northern Ireland at 9% (Table 2.2p). AHC rates mirrored this pattern, and were highest in Scotland at 14%, followed by England and Wales at 12% and Northern Ireland at 10% (Table 2.8p).

Across the English regions, the North East (13%) and Yorkshire and the Humber (12%) had the highest rates of persistent low income BHC, followed by the East and West Midlands (both 11%). The South West (7%), London and the South East (both 8%) had the lowest rates. This pattern reflected the longer-term trend of higher rates of persistent low income BHC in the north of England and the midlands, and lower rates in the south and east of England.

While London had one of the lowest rates of persistent low income BHC, it was the region with the highest rate of persistent low income AHC, at 16%. Over time, London has typically had the highest rate of AHC persistent low income, reflecting the cost of housing in the capital. The lowest rates of persistent low income AHC were in the South East and South West (both 10%), while AHC rates in all other regions varied between 12% and 14%.

Families headed by couples had lower rates of persistent low income than those headed by single adults

Families headed by couples had lower rates of persistent low income, both BHC and AHC, than families headed by single adults. Before housing costs, single adults with children and single pensioners had the highest rates of persistent low income. After housing costs single adults with children were much more likely than all other groups to be in persistent low income.

Figure 3. Persistent low income by family type (BHC and AHC)

Source: Tables 2.1p and 2.7p, Individuals in persistent low income

Couples without children had the lowest rate of persistent low income BHC (4%), while pensioner couples and couples with children had slightly higher rates (8% and 9% respectively). Single female pensioners and single adults with children had the highest rates of persistent low income BHC (both 19%), followed by single male pensioners (17%). Single males without children and single females without children both had a BHC rate of persistent low income of 11%. Single adults with children and single female pensioners have consistently had the highest rates of persistent low income BHC.

After housing costs were considered, couples without children and pensioner couples were again least likely to be in persistent low income AHC (5% and 7%, respectively). The AHC income distribution resulted in higher rates of persistent low income for families with children compared to BHC rates: 12% for couples with children, and 32% for single adults with children (AHC). As was the case with BHC rates, single female pensioners were slightly more likely than single male pensioners to be in persistent low income AHC: rates were 18% and 16% respectively.

Persistent low income varied by ethnicity: individuals with an Asian/Asian British head of household were most likely to be in persistent low income, both BHC and AHC

Individuals with an Asian/Asian British head of household were most likely to be in persistent low income both BHC and AHC.

Figure 4. Persistent low income by ethnicity of head of household (BHC and AHC)

Source: Tables 2.1p and 2.7p, Individuals in persistent low income

Please note: the four-wave sample sizes of individuals with a head of household of Mixed ethnicity or from an Other ethnic group are relatively small. This means that statistics based on these sub-groups can fluctuate. They are included in the tables file, but not discussed here.

Individuals with an Asian/Asian British head of household were more likely to be in persistent low income BHC (19%) than those with a White head of household (10%) or with a Black/African/Caribbean/Black British head of household (9% BHC). The rate of persistent low income BHC for individuals with an Asian/Asian British head of household was unchanged on the previous four-wave period, while the rate for those with a White head of household had increased slightly, from 9% in the previous four-wave period. In contrast, the rate of persistent low income for individuals with a Black/African/Caribbean/Black British head of household was much lower than it had been in all previous four-wave periods, falling from 15% in the most recent one, to 9%.

When looking at AHC rates of persistent low income, those with an Asian/Asian British head of household again had the highest rate, at 26%. Individuals with a Black/African/Caribbean/Black British head of household had a persistent low income rate of 22% (AHC), while those with a White head of household were least likely to be in persistent low income (12% AHC). Again, AHC rates for individuals with Asian/Asian British or White heads of household were comparable to rates in the previous four-wave period, while the rate of 22% for those with a Black/African/Caribbean/Black British head of household was somewhat lower than the previous four-wave period, when it was 28%.

It is unclear why persistent low income rates for people with Black/African/Caribbean/Black British heads of household have fallen to this extent since the previous four-wave period. Large percentage point changes often accompany decreasing sample sizes, and it is possible that estimates for this group are being affected in the same way as those for individuals with Mixed/multiple ethnic group heads of household and heads of household from an Other ethnic group. Caution should used when interpreting these figures.  

See Tables 2.1p and 2.7p, Individuals in persistent low income, for more information

Individuals living in the social rented sector were most likely to be in persistent low income, both BHC and AHC

Rates of persistent low income were highest for those living in the social rented sector and lowest for those in homes which were being bought with a mortgage. This was true both before and after housing costs.

Figure 5. Persistent low income by tenure (BHC and AHC)

Source: Tables 2.2p and 2.8p, Individuals in persistent low income

Among tenure types, the highest rate of persistent low income BHC was in the social rented sector (18%). This was followed by the private rented sector (14%), then by individuals who owned their home outright (11%). Those living in households which were buying their homes with a mortgage were considerably less likely to be in persistent low income (4%).

After housing costs were considered, individuals who were renting were much more likely to be in persistent low income than those who were living in a home that was owned outright or being bought with a mortgage: 30% of individuals living in the social rented sector and 27% of those living in privately rented homes were in persistent low income AHC. These high rates meant that renters (in either the social rented or private rented sector) were over-represented among those in persistent low income: while they were 30% of the sample population, they accounted for 48% of those in persistent low income BHC, and 69% of those in persistent low income AHC.

Individuals in homes that were being bought with a mortgage were only slightly more likely to be in persistent low income AHC (5%) than they were BHC (4%).Those living in homes which were owned outright were the only group who were less likely to be in persistent low income after housing costs were considered (6% AHC compared to 11% BHC), reflecting the lower housing costs associated with this tenure.

See Tables 2.2p, 2.8p, 2.2c, 2.8c and 2.14c in the Individuals in persistent low income file for more information.

4. Children in persistent low income

Over the period 2019 and 2020 to 2022 and 2023, 12% of children were in persistent low income BHC, as were 18% of children AHC. While the AHC rate was unchanged on the previous four-wave period, the BHC rate increased from 11%.

Persistent low income among children varied across the countries and regions of the UK

Rates of persistent low income among children differed across the countries and regions of the UK, both BHC and AHC. The effect of housing costs on rates of persistent low income for children meant that for all areas, AHC rates were greater than BHC rates.

Figure 6. Persistent low income among children, by country and region (BHC and AHC)

Source: Tables 3.2p and 3.8p, Children in persistent low income

Across the countries of the UK, children in Wales and Scotland had a greater risk of being in persistent low income BHC (15% and 14% respectively), followed by children in England (11%) and Northern Ireland (10%). AHC rates were higher than BHC rates for all four countries. Scotland had the highest rate of AHC persistent low income, at 23%, noticeably higher than rates in England (18%), Wales (16%), and Northern Ireland (14%).

As noted in the previous ID publication, rates of persistent low income for children across the devolved countries of the UK have fluctuated over time, both BHC and AHC. While persistent low income levels are affected by factors which may vary from area to area, such as rates of entry into and exit from low income, declining sample sizes are likely to be contributing to some of this variation.

Context may be provided by considering rates of persistent low income measured using 70% of the median alongside those based on the 60% median threshold used throughout this report. Tables 3.5p and 3.11p show that trends in the rate of persistent low income among children in Scotland, for example, have been smoother when measured at 70% of median income. One possible interpretation of this is that there may be a relatively large share of children in Scotland with incomes close to 60% of median income. This would mean that relatively small movements in the low income threshold may result in relatively large changes in the percentage who are below it.

Across the English regions, rates of persistent low income BHC varied from 5% in the South West to 15% in the North East. Housing costs have a notable effect on rates of persistent low income for children, and for all regions, rates of persistent low income AHC were higher than BHC rates. Children in the East and London were most likely to be in persistent low income (22% in both regions). AHC rates in other regions ranged from 15% in the South West and in Yorkshire and the Humber, to 18% in both the North East and West Midlands.

As with the countries of the UK, trends in regional rates of persistent low income have shown some unexpected fluctuations. These may be linked to decreasing sample sizes.

Children in workless families were most likely to be in persistent low income

Rates of persistent low income among children were strongly linked to family work status, with those in workless families experiencing the highest risk. Children in families with some work fared better than children in workless families, but worse than those in families where all adults were in work.

Figure 7. Persistent low income among children, by family work status (BHC and AHC)

Source: Tables 3.1p and 3.7p, Children in persistent low income

Children who lived in workless families were much more likely to be in persistent low income both BHC (38%) and AHC (57%) than those in families where all adults were in work (5% BHC and 9% AHC). Children who lived in families where at least one adult was in work but not all, were less likely to be in persistent low income than those in workless families, but more likely than those where all adults were in work, with rates of 21% BHC and 29% AHC.

Children living in social rented accommodation were more likely to be in persistent low income than those in other tenures

Compared to other tenures, children living in social rented accommodation were most likely to be in persistent low income both before and after housing costs.

Figure 8. Persistent low income among children, by tenure (BHC and AHC)

Source: Tables 3.2p and 3.8p, Children in persistent low income

Children living in social rented homes were more likely to be in persistent low income BHC than children in other tenures: 23% of children living in the social rented sector were in persistent low income, compared to 17% of children living in privately rented homes and 14% in owner-occupied homes. Children living in homes bought with a mortgage were least likely to be in persistent low income BHC (6%).

After housing costs were considered, many more children living in the social rented sector were in persistent low income (39%). The same was true for children in privately rented homes, where the percentage of children in persistent low income AHC was 34%. In contrast, housing costs made little difference to rates of persistent low income among children in homes being bought with a mortgage (7% AHC) or those whose homes were owned outright (12% AHC). This pattern is likely to reflect both the income levels and housing costs of households living in rented homes compared to other tenures.

Children in lone parent families were more likely to be in persistent low income than children in families headed by a couple

Children living in lone parent families were more likely to be in persistent low income than those living in families headed by a couple, and the difference in rates between these two groups was greater AHC than BHC.

Figure 9. Persistent low income among children, by family status (BHC and AHC)

Source: Tables 3.1p and 3.7p, Children in persistent low income

Children living in a family headed by a couple were much less likely to be in persistent low income than those living in a lone parent family. This was true both BHC, where 10% of children living in a couple family were in persistent low income compared to 19% of children in lone parent families, and AHC, where the difference between the two groups was greater: rates of persistent low income were 14% and 33%, respectively.

Children in families with three or more children were more likely to be in persistent low income than those in families with fewer children

Rates of persistent low income were similar for children in families with one or two children. In contrast, children living in families with three or more children were much more likely to be in persistent low income.

Figure 10. Persistent low income among children, by family size (BHC and AHC)

Source: Tables 3.1p and 3.7p, Children in persistent low income

Children in families with one or two children had similar rates of persistent low income, both BHC (9% and 8% respectively), and AHC (12% and 14% respectively). Children in families with three or more children were much more likely to be living in persistent low income (21% BHC and 32% AHC).

5. Working-age adults in persistent low income

Over the period 2019 and 2020 to 2022 and 2023, the rate of persistent low income for working-age adults was 8% BHC and 11% AHC. These rates have varied little over time.

Persistent low income among working-age adults across countries and regions of the UK

Rates of persistent low income for working-age adults BHC were slightly higher in Scotland than in other countries of the UK, while AHC rates were similar across the four countries.

Figure 11. Persistent low income among working-age adults, by region and country (BHC and AHC)

Source: Tables 4.2p and 4.8p, Working-age adults in persistent low income

The rate of persistent low income BHC for working-age adults was slightly higher in Scotland (10%) than in England, Northern Ireland, and Wales (all 8%). Rates of AHC persistent low income for working-age adults were similar across the four countries, at 10% in Northern Ireland and 11% in England, Scotland, and Wales.

Within the English regions, working-age adults in the North East and West Midlands were most likely to be in persistent low income BHC (11%). The North West and Yorkshire and the Humber had similar rates (10% BHC), while lower rates were seen in the South West (5%), and the East and South East (both 7% BHC).

Working-age adults in all English regions were more likely to be in persistent low income AHC than BHC. Those in London and the West Midlands had the highest rate of persistent low income: both 14% AHC. The lowest rates of persistent low income among working-age adults were in the South West and South East (both 8% AHC).

Working-age adults in workless families were more likely to be in persistent low income than those in families where someone was in work

Levels of persistent low income among working-age adults reflected family employment status, with those living in families where all adults were in work facing the lowest risk, and those in workless families facing the highest risk.

Figure 12. Persistent low income among working-age adults, by employment status of family (BHC and AHC)

Source: Tables 4.1p and 4.7p, Working-age adults in persistent low income

The majority (68%) of working-age adults in the sample were living in families where all adults were in work (Table 4.13c). Rates of persistent low income for these adults were low, at 4% BHC and 6% AHC. In contrast, working-age adults in workless families had much higher rates of persistent low income: 22% BHC and 28% AHC. Persistent low income rates for working-age adults in families, where at least one adult was in work but not all, lay between these two groups, at 12% BHC and 13% AHC.

Working-age adults who rented their homes had higher rates of persistent low income, both BHC and AHC

Working-age adults living in the social rented sector faced the highest persistent low income rates, while those buying with a mortgage had the lowest rates. Taking housing costs into account resulted in a large increase in persistent low income among private and social renters.

Figure 13. Persistent low income among working-age adults, by tenure (BHC and AHC)

Source: Tables 4.2p and 4.8p, Working-age adults in persistent low income

Working-age adults living in the social rented sector had the highest rate of persistent low income BHC (17%). Rates for private renters and working-age adults who owned their homes outright were similar: 11% and 9%, respectively. In contrast, 4% of those buying their homes with a mortgage were in persistent low income BHC.

Taking housing costs into account resulted in large increases in the rate of persistent low income for both social and private sector renters: 27% of working-age adults in the social rented sector were in persistent low income AHC, while the rate for private renters was double the BHC rate, at 22%. In contrast, the rate of persistent low income for working-age adults who owned their homes outright was 6%, slightly lower than the BHC rate for this group, while for working-age adults who were buying their homes with a mortgage, the rate was unchanged, at 4%.

Although 32% of working-age adults in our sample population lived in the private or social rented sector, they were over-represented among working-age adults in persistent low income, accounting for 54% of this group BHC, and 70% AHC (Tables 4.2c, 4.8c and 4.14c).

Working-age adults with lower levels of educational qualifications were more likely to be in persistent low income, BHC and AHC

Rates of persistent low income were highest for working-age adults with no qualifications and lowest for those with a degree or above.

Figure 14. Persistent low income among working-age adults, by education (BHC and AHC)

Source: Tables 4.2p and 4.8p, Working-age adults in persistent low income

Among working-age adults, the likelihood of being in persistent low income increased as level of educational qualification decreased. Working-age adults with no qualifications had the highest rates: 26% BHC and 34% AHC, although it is worth noting that those with no qualifications only accounted for 4% of working-age adults in our sample population (Table 4.14c). Working-age adults with at least a degree-level qualification were least likely to be in persistent low income: 5% BHC and 6% AHC. This group accounted for 33% of working-age adults in the sample population (Table 4.14c).

6. Pensioners in persistent low income

Across the period 2019 and 2020 to 2022 and 2023, the rate of persistent low income for pensioners was 12% BHC and 11% AHC. Both the BHC and AHC rates were 1 percentage point higher than in the previous four-wave period. Prior to this, the BHC rate had remained at 11% since the four-wave period 2011 to 2012 and 2014 to 2015, while the AHC rate had been unchanged at 10% since the four-wave period from 2014 and 2015 to 2017 and 2018.

Rates of persistent low income for pensioners across countries and regions of the UK

Across the four countries of the UK, BHC rates of persistent low income among pensioners were the same, while accounting for housing costs resulted in some variation. Within England, pensioners in Yorkshire and the Humber were more likely to be in persistent low income both BHC and AHC, than pensioners in other regions.

Figure 15. Rates of persistent low income among pensioners by region and country

Source: Table 5.2p, 5.8p, Pensioners in persistent low income

Rates of persistent low income BHC for pensioners were consistent across England, Northern Ireland, Scotland, and Wales, all at 12%. AHC rates were similar in England and Scotland (both 11%) and Wales (12%). A lower rate was seen in Northern Ireland (6%), reflecting a longer-term trend of lower AHC rates in this country.

Within England, pensioners in Yorkshire and the Humber had the highest rate of persistent low income BHC (20%), followed by pensioners in the North East at 15%, the East Midlands and South West (both 14%), and the East (13%). Rates of BHC persistent low income among pensioners have been consistently high in Yorkshire and the Humber relative to other regions. Pensioners in London continued to be those least likely to be in persistent low income BHC, at 6%. The South East (9%), North West and West Midlands (both 10%), had relatively low rates.

The highest regional rate of persistent low income AHC among pensioners was also in Yorkshire and the Humber, at 18%. Rates were similar in the East, East Midlands and North East (all 12%), and London (11%). Lower rates were observed in the West Midlands (7%), the North West and South East (both 8%), and the South West (9%).

Rates of persistent low income among pensioners varied more by tenure AHC than BHC

Pensioners living in privately rented homes faced the highest persistent low income rate BHC, while those buying their homes with a mortgage had the lowest rate. Taking housing costs into account resulted in much higher levels of persistent low income for pensioners who were private and social renters.

Figure 16. Rates of persistent low income among pensioners by tenure

Source: Table 5.2p, 5.8p, Pensioners in persistent low income

Pensioners buying their homes with a mortgage had relatively low rates of persistent low income (8% BHC), while rates among those owning their home outright were 11% BHC. After housing costs were considered, the risk of being in persistent low income was lower for both of these two groups (6% and 5% respectively).

The picture was different for pensioners who were renting their homes. While 13% of pensioners in the social rented sector were in persistent low income BHC, this rose to 30% of them AHC. Pensioners who were renting their homes in the private rented sector were much more likely than other pensioners to be in persistent low income BHC, at 24% and, once housing costs were taken into account, their risk of being in persistent low income was considerably higher, at 43%. While 19% of pensioners in our sample population lived in a rented home, these high rates of AHC persistent low income among them meant that they accounted for 58% of all pensioners who were in persistent low income AHC (Tables 5.8c and 5.14c).

7. Long-standing illness or disability and persistent low income

The way in which information on long-standing illness or disability was gathered by the Understanding Society survey changed between Waves 7 and 9. This is explained in the Background information and methodology report. The most important point to note is that while the presence (or not) of a limiting health problem or disability is only reported on for those individuals who said they had a long-standing illness or disability, any such limiting health problem or disability was not necessarily linked to that long-standing condition.

Over half of pensioners (55%) in our sample had a long-standing illness or disability, compared to a third (33%) of working-age adults. Pensioners who reported a long-standing illness or disability were also more likely to have a limiting health problem or disability: 38% compared to 21% of working-age adults (Tables 5.13c and 4.13c).

Rates of persistent low income for pensioners generally varied little according to reported health and disability

Figure 17: Persistent low income among pensioners, by health and disability (BHC and AHC)

Source: Tables 5.1p and 5.7p, Pensioners in persistent low income

Pensioners without a long-standing illness or disability were more likely to be in persistent low income BHC (14%) than pensioners with a long-standing illness or disability (11%). Where pensioners reported a long-standing illness or disability, 12% of those with a non-limiting health problem or disability were in persistent low income BHC, while 11% of those with a limiting health problem or disability were in persistent low income BHC. Rates of persistent low income AHC were similar for pensioners regardless of whether they had a long-standing illness or disability or not (11% for both groups). For those who did have a long-standing illness or disability, whether they had a limiting or non-limiting health problem or disability made little difference: 10% of pensioners with a non-limiting health problem or disability were in persistent low income AHC, as were 11% of those with a limiting health problem or disability.

Rates of persistent low income among working-age adults varied according to reported health and disability

Working-age adults were more likely to be in persistent low income BHC if they had a limiting health problem or disability in addition to a long-standing illness or disability (11%), compared to if they reported a non-limiting health problem or disability in addition to a long-standing illness or disability, or no long-standing illness or disability (both 8%).

Figure 18: Persistent low income among working-age adults, by health and disability (BHC and AHC)

Source: Tables 4.1p and 4.7p, Working-age adults in persistent low income

Housing costs increased the likelihood of persistent low income for all working-age adults regardless of health status, but was most pronounced for those who reported a limiting health problem or disability in addition to a long-standing illness or disability, whose risk increased to 16%. The likelihood of being in persistent low income for working-age adults with no long-standing illness or disability was 11% AHC, while for those with a non-limiting health problem or disability in addition to a long-standing illness or disability, the AHC rate was 10%.

See Tables 4.1p, 4.7p, and 4.13c in the Working-age adults in persistent low income file and 5.1p, 5.7p and 5.13c in the Pensioners in persistent low income file for more information.

8. Movement between income quintiles

The data used in ID is longitudinal, meaning that it follows individuals over time. This enables us to analyse income mobility, which we do here using income quintiles. Income quintiles divide the population, when ranked by household income, into five equally sized groups. Quintile 1 (Q1) represents the fifth of the population with the lowest household incomes. Quintile 5 (Q5) represents the fifth of the population with the highest household incomes.

The starting point for this analysis is 2015 and 2016. This allows individuals from Understanding Society’s Immigrant and Ethnic Minority Boost (IEMB) sample to be included. For further information on the IEMB, please refer to the Background information and methodology report accompanying this publication.

Firstly, we compare where individuals were in the income distribution in 2022 and 2023 (the latest wave), to where they were in the income distribution in 2015 and 2016 (the first wave included here), both before and after housing costs. Note that this does not look at where individuals were in the income distribution in the intervening years.

Individuals in the highest income quintile in 2015 and 2016 were those most likely to be in the same quintile in 2022 and 2023, both BHC and AHC

Figure 19. Quintile movements from 2015 and 2016 to 2022 and 2023 (BHC)

Figure 20. Quintile movements from 2015 and 2016 to 2022 and 2023 (AHC)

Source: Table 6.3ahc, Movement between quintiles

Individuals in the highest income quintile (quintile 5) in the first wave (2015 and 2016) were those most likely to be in the same income quintile in the latest wave (2022 and 2023): just over half of them (52% BHC and 53% AHC) were also in the highest income quintile in the latest wave.

Of individuals with the lowest incomes (those in quintile 1) in the first wave, 40% BHC and 38% AHC were in the same quintile in the latest wave.

Smaller percentages – ranging from 27% to 33% – of those in the second to fourth quintiles in the first wave were also in the same income quintile in the latest wave, BHC and AHC.

Individuals in the highest income quintile in 2015 and 2016 were more likely than those in other income quintiles to spend time in the same quintile

Individuals who were in the highest income quintile (quintile 5) in 2015 and 2016 were most likely to spend time in the same quintile in the following waves, followed by those in the lowest income quintile (quintile 1).

Figure 21. Percentage of individuals who spent all or most of the time in the same income quintile, all waves from 2015 and 2016 to 2022 and 2023 (BHC and AHC)

Source: Tables 7.1 and 7.2, Quintile movements over time

A closer look at income mobility over the period from 2015 and 2016 to 2022 and 2023 shows that many individuals experienced movement to other income quintiles. Those in the highest quintile in 2015 and 2016 were, however, most likely to spend all or most intervening years in the same quintile (52% both BHC and AHC), followed by those in the bottom quintile (38% BHC and 35% AHC).

Those in the third income quintile in 2015 and 2016 were least likely to spend all or most years in that same quintile (15% BHC and 16% AHC), with individuals in quintiles two and four being somewhat more likely to stay in the same income quintile as 2015 and 2016: between 18% and 21% did so (BHC and AHC).

For more information on income mobility, please see tables on Movements between Quintiles and Quintile movements over time.

9. Low income entries and exits

This section presents analysis on rates of entry into and exit from low income across consecutive waves. The first part of the section looks at rates of low income entry and exit for all individuals, children, working-age adults and pensioners, measured across the most recent two waves. It then discusses low income entry and exit rates by various characteristics. As with analysis of persistent low income, individuals are categorised according to their characteristics in the first wave of each longitudinal analytical period.

Analysis of entries and exits only includes ‘clear’ transitions. For an entry or exit to count, household incomes must cross the 60 per cent of median income threshold and be at least 10 per cent higher or lower than the equivalent threshold in the following wave. As individuals live in households and we assume that all members of the household benefit equally from the household’s income, they will be affected by changes at the household level.

The number of individuals who entered into and exited from low income across the period 2021 and 2022 to 2022 and 2023 were similar, both BHC and AHC. Rates of low income entry are lower than rates of low income exit, because they are based upon different sized populations. Because there were many more people not in low income in 2021 and 2022 than there were in low income, there was a much larger group of individuals who were eligible for low income entry. In contrast, rates of exit from low income are based on the much smaller number of individuals who were in low income in 2021 and 2022, and therefore eligible for a low income exit.

Pensioners were less likely to enter low income than children and working-age adults

Over the period from 2021 and 2022 to 2022 and 2023, the rate of entry into low income for all individuals was 7% BHC and 8% AHC. Pensioners had lower rates of entry into low income than children and working-age adults, both BHC and AHC.

Figure 22: Rates of entry into low income from 2021 and 2022 to 2022 and 2023 (BHC and AHC)

Source: Tables 8.1 and 8.9, Low income entry and exit rates

Children were most likely to enter low income over the period 2021 and 2022 to 2022 and 2023: 8% did so BHC and 11% AHC. Working-age adults had lower rates, at 7% BHC and 9% AHC, while pensioners had the lowest rates of entry into low income (5% both BHC and AHC). Rates of entry into low income have changed little over time, both BHC and AHC.

Working-age adults were more likely to exit from low income than children and pensioners, both BHC and AHC

As noted above, rates of exit from low income are higher than rates of entry even though roughly equivalent numbers of individuals enter and exit low income across each two-wave period. Over the most recent two waves, 39% of all individuals who were in BHC low income in the first wave, exited from it, as did 38% of all individuals who were in AHC low income in the first wave.

Figure 23: Rates of exit from low income from 2021 and 2022 to 2022 and 2023 (BHC and AHC)

Source: Tables 8.1 and 8.9, Low income entry and exit rates

Before housing costs, working-age adults were most likely to exit from low income (43%), followed by children (39%) and pensioners (31%). Working-age adults were also most likely to exit from low income AHC (42%). Pensioners and children had similar rates of exit from low income AHC (34% and 32% respectively).

Over time, pensioners have tended to have relatively low rates of exit, perhaps linked to income levels that are less likely to change.

See tables 8.1 and 8.9 in the Low income entry and exit rates file for headline rates of low income entry and exit.

Rates of low income entry and exit associated with other characteristics

ID also produces entry and exit statistics for other sub-groups using rates averaged over the three most recent two-wave periods (i.e. 2019 and 2020 to 2020 and 2021; 2020 and 2021 to 2021 and 2022; 2021 and 2022 to 2022 and 2023). The findings discussed below therefore span the period from 2019 through to 2023. As is the case elsewhere, individuals are classified according to their status in the first of each of the two-wave periods.

Ethnicity

Entry into low income, by ethnicity

Individuals with a head of household who was White or of Mixed/ multiple ethnic groups were least likely to enter low income, both BHC (both 7%) and AHC (8% and 9% respectively). Rates of entry into low income were higher for individuals with Asian/Asian British heads of household (12% BHC and 15% AHC), and for individuals with Black/African/Caribbean/ Black British heads of household (12% BHC and 17% AHC). Individuals with a head of household from the Other ethnic group category had the highest rate of entry into low income both BHC (16%) and AHC (18%).

Exits from low income, by ethnicity

Sample sizes are relatively small when considering the rate of low income exit for individuals with a head of household of Mixed/multiple ethnicity or from the Other ethnic group. These rates are included in ID tables but not considered here.

The rate of exit from low income BHC for individuals with a Black/African/Caribbean/Black British head of household was 43% over the most recent period, a higher rate than for those in households headed by a White or an Asian/ Asian British person (39% and 37% respectively).

Individuals in households with a White head of household were most likely to exit from low income AHC (38%), followed by individuals with a Black/African/Caribbean/Black British head of household (35%) and an Asian/ Asian British head of household (34%).

See tables 8.5 and 8.13 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by ethnicity.

Tenure

Entry into low income, by tenure

Individuals who were renting their homes were more likely to enter low income BHC than those who were buying their homes with a mortgage or who owned their homes outright. While 13% of individuals living in the social rented sector entered low income, and 9% of individuals living in the private rented sector did so, the rate of low income entry for individuals who were buying their home with a mortgage or who owned their home outright was 5%. The rate of entry into low income AHC was also 5% for those who owned their homes outright, while for those buying their home with a mortgage it was 6%. Social renters and private renters had higher rates of entry into low income AHC, at 19% and 16%, respectively.

Similar differences in rates of low income entry between tenants and homeowners have persisted over time.

Exits from low income, by tenure

Individuals buying their homes with a mortgage were most likely to exit from low income BHC (49%), followed by those renting their homes privately (40%), social renters (36%), and owner-occupiers, who were least likely to exit from low income BHC (35%).

The picture was different when considering exits from low income AHC, with social and private sector renters being less likely to exit from low income (31% and 32% respectively), than owner-occupiers (43%) and those buying with a mortgage (51%).

These variations in BHC and AHC exit rates by tenure have persisted over time.

See tables 8.3 and 8.11 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by tenure.

Qualifications (working-age adults only)

Entry and exit rates by educational qualification are considered for working-age adults only.

Individuals with no qualifications were most at risk of entering low income

There was a clear pattern across low income entry rates, both BHC and AHC, which has been consistent over time: those with fewest qualifications were at greatest risk of entering low income, and this risk decreased as educational level increased. Low income entry rates BHC ranged from 5% for those with at least a degree, to 15% for those with no qualifications. AHC rates ranged from 6% for those with a degree or above, to 16% for individuals who had no educational qualifications.

Individuals with higher qualifications were most likely to exit from low income

The likelihood of exiting from low income increased with the level of educational qualification. Across the most recent two-wave period, exit rates BHC ranged from 49% among those with degree level and above to 30% among those with no qualifications. AHC low income exit rates for these two groups were 48% and 27%, respectively.

See tables 8.6 and 8.14 in the Low income entry and exit rates file for rates of entry and exit for working-age adults with other levels of qualification.

Family type

Low income entry, by family type

Pensioner couples and couples without children were least likely to enter low income, both BHC (4% and 5% respectively), and AHC (4% and 6% respectively). Rates of entry into low income were highest for single adults with children, both BHC (14%) and AHC (21%).

Single men and women had the same rates of low income entry BHC, whether they were of working-age or pensioners (all 8%). While BHC rates were the same, corresponding AHC rates of entry into low income reflected the typically lower housing costs of pensioners, at 7% for single male pensioners and 8% for single female pensioners, compared to 10% for single men without children, and 11% for single women without children.

Similar differences in rates of low income entry across different family types have been evident over time.

Low income exit, by family type

Before housing costs, couples without children were most likely to exit from low income (50%). Rates were similar for single females without children (43%), couples with children (42%), and single males without children (40%). Pensioner couples and single adults with children had slightly lower rates of low income exit (37% and 35% in turn), and single pensioners were least likely to exit from low income BHC. This is likely to reflect relatively stable income levels among this group: rates were 24% and 28% for single male and female pensioners respectively.

When looking at rates of low income exit AHC, couples without children again had the highest exit rate (50%), followed by single women and men without children, couples with children, and pensioner couples, who all had exit rates between 38% and 40%. Single adults with children were less likely to exit from low income AHC (29%), a rate comparable to that of single pensioners (26% for single male pensioners, and 29% for single female pensioners).

These broad differences in low income exit rates across family type have persisted since the start of ID analysis.

See tables 8.2 and 8.10 in the Low income entry and exit rates file for rates of entry and exit for working-age adults by family type.

These are just some of the sub-groups covered in the entry and exit tables. For more breakdowns see tables 8.1 to 8.16 in the Low income entry and exit rates file.

10. Events associated with low income entries and exits

The associations between certain household events and movements into and out of low income are discussed in this section. We focus on the role of changes in income components and household employment, but also include certain demographic events. We also include changes and housing costs and tenure, but only in terms of their relationship with AHC low income entries and exits. For this reason and to manage the length of this section, only selected AHC findings over the most recent two waves are presented here. BHC tables and data from previous waves are also available, as are tables providing evidence on the role of other household changes: see the Events associated with low income entries and exits tables file.

For each event, we present three statistics. These are explained using the following example.

	Prevalence (%)	Entry rate (%)	Share of entries (%)
Fall in earnings	12	27	39

Source: Table 9.1n, Events associated with low income entries and exits

Prevalence – this tells us how common an event is among the population at risk of either entering or exiting low income. When considering the relationship between a fall in earnings and low income entry, the prevalence statistic tells us that 12% of those who were not in low income in 2021 and 2022 experienced a fall in earnings between then and 2022 and 2023.

Entry or exit rate (if experienced event) – in the above example, 27% of those who were not in low income in 2021 and 2022 and who experienced a decrease in earnings, entered low income in 2022 and 2023.

Share of entries – this tells us what percentage of all those who entered or exited low income experienced each event. In the above example, 39% of all those who entered low income across the two most recent waves, experienced a fall in earnings.

In defining the events in this analysis, attempts have been made to limit the effects of other important factors which might have a bearing on the event. For example, when looking at a change in earnings, there must be no change in the number of workers in the household. Please see the Background information and methodology note for further information on how the various events are defined.

Events associated with entering low income: from 2021 and 2022 to 2022 and 2023, AHC: selected findings^{[footnote 1]}

	Prevalence (%)	Entry rate (%)	Share of entries (%)[footnote 2]
Fall in earnings[footnote 3]	12	27	39
Fall in benefit income[footnote 3]	20	18	43
Fall in the number of workers in household – same household size	9	11	12
Fall in the number of full-time workers in household – same household size	10	19	22
Change from full-time to part-time work for at least one household member – same household size	5	24	13
Change from working to workless household – same household size	3	19	6
Increase in number of children	3	18	6

A fall in earnings was closely linked to low income entry AHC. While it was experienced by 12% of individuals not in low income in the first wave (2021 and 2022), 27% of them entered low income in the second wave (2022 and 2023). When considering all people who had entered low income across this period, a considerable number of them (39%) had experienced a fall in earnings. Since the start of ID analysis (2010 and 2011), while the prevalence of a fall in earnings among those not in low income has increased slightly (from 10% to 12%), the associated risk of entering low income has increased from 19% to 27% AHC. Individuals who have experienced a fall in household earnings have also represented a rising share of all of those who enter low income across this period, from 29% to 39% (Table 9.1n).

While a fall in benefit income was experienced by a higher percentage (20%) of those not in low income in the first wave, the risk of entering low income AHC was lower (18%) than for those who had had a fall in earnings. Of all those who entered low income over this period, 43% had experienced a fall in benefit income. Although all three of these statistics had increased compared to the previous two-wave period, the longer-term trend associated with these statistics is unclear (Table 9.2n).

Findings linked to different work-related events indicate that a move away from full-time work is more closely linked to low income entry than loss of work in itself. While 10% of individuals lived in households that experienced a fall in the number of full-time workers (household size remained the same), 19% of them entered low income AHC, and 22% of all low income entries experienced this event. Where at least one household member moved from full-time to part-time work, the risk of entering low income was 24%, although this event was less common (experienced by 5% of all those not in low income in the first wave) (Tables 9.7n and 9.8n).

Despite some recent fluctuations, there has been an overall upward trend in the statistics associated with these two events since 2010 and 2011. In the two-wave period commencing 2010 and 2011, 9% of individuals who were not in low income in the first wave lived in a household where there was a fall in the number of full-time workers. This was associated with a 13% chance of entering low income, and represented a 16% share of all low income entries. While this event was experienced by a similar percentage of individuals in the most recent two-wave period, it was associated with a higher risk of entry into low income and a greater share of all low income entries (Table 9.7n). Likewise, a move from full-time to part-time work was experienced by 3% of all those not in low income in 2010 and 2011 and was associated with a considerably smaller (8%) risk of entering low income. This event was experienced by just 4% of all low income entrants in 2010 and 2011, compared to 13% in the most recent two-wave period (Table 9.8n).

Becoming a workless household was uncommon (3%) among those who were not in low income in 2021 and 2022. It was associated with a 19% risk of entering low income, and was experienced by 6% of all those who entered low income AHC in 2022 and 2023. Over time, the prevalence of this event has remained low, and since the two-wave period 2018 and 2019 to 2019 and 2020, it has been associated with a decreasing share in the number of low income entries, from 10% to 6% (Table 9.9n). A decrease in the number of any workers in the household was more prevalent (9%) and was experienced by 12% of all those who entered low income. Of those whose household experienced this event, 11% entered low income in 2022 and 2023 (Table 9.6n).

Changing demographics of the household can also be associated with entering low income. An increase in the number of children in a household, for example, while experienced by just 3% of those not in low income in 2021 and 2022, was associated with an 18% chance of entering into low income in 2022 and 2023 (Table 9.16n).

Events associated with exiting low income from 2021 and 2022 to 2022 and 2023, AHC: selected findings^{[footnote 4]}

	Prevalence (%)	Exit rate (%)[footnote 5]	Share of exits (%)[footnote 6]
Rise in household earnings[footnote 7]	24	64	41
Rise in benefit income [footnote 7]	29	51	38
Rise in investment income[footnote 7]	12	63	20
Rise in occupational pension income[footnote 7]	6	67	10
Increase in number of workers in household - same household size	11	54	16
Increase in number of full-time workers in household - same household size	15	69	27
Change from part-time to full-time work for at least one household member - same household size	9	69	17
Change from workless to working household - same household size	4	43	5
Change in household type	14	43	16
Decrease in housing costs[footnote 7]	10	38	10

An increase in household earnings was closely associated with exiting from low income AHC: it was experienced by just under a quarter (24%) of individuals who were in low income in the first of the most recent two-wave period, 64% of whom exited from low income in the second wave. Of all individuals who exited from low income over this period, 41% were living in households that experienced an increase in earnings. The prevalence, risk and share statistics on the association between increases in earnings and AHC low income exits indicate that the relationship between earnings and low income exit is stronger now than it was in 2010 and 2011 (Table 9.1x).

An increase in benefit income was also closely associated with exiting from low income AHC, with this event affecting 29% of those in low income at the start of the most recent two-wave period. Of those individuals, half (51%) exited from low income, and the event was experienced by 38% of all low income exits over the two-wave period. Over time, the prevalence, risk and share statistics associated with an increase in benefit income have varied, but in no clear direction (Table 9.2x).

Increases in occupational pension income and investment income were associated with exiting low income to a lesser extent.

Increases in the amount of full-time work within a household were the work-related events most closely linked to the likelihood of exiting low income: 69% of individuals living in a household which saw an increase in the number of full-time workers, exited from low income, as did 69% where there was a change from part-time to full-time work. While 15% of individuals in low income lived in a household which saw an increase in the number of full-time workers, it was experienced by 27% of all those who exited from low income. A change from part-time to full-time work was less common (9%) and was experienced by 17% of all those who exited low income (Table 9.7x and 9.8x).

All of the statistics relating to an increase in the amount of full-time work had risen compared to the previous two-wave period. Events statistics based upon low income exits are slightly more variable than low income entry statistics in part because they are based upon a much smaller base (i.e. those in low income in the first wave of any two-wave period) (Tables 9.7x and 9.8x).

Just 4% of individuals who were in low income AHC in the first wave of the most recent two-wave period, lived in a household that changed from a workless one to one in which someone was in work, and this was associated with a 43% likelihood of exiting low income. This type of change was experienced by 5% of all those who exited from low income across the most recent two-wave period. Over time there have been overall decreases in the prevalence and share statistics associated with this event. An increase in the number of workers in the household was more prevalent (11%), and associated with 16% of all low income exits. Just over half (54%) of individuals whose household experienced this event exited from low income (Table 9.9x and Table 9.6x).

A change in household structure or demographics can also play a role in low income mobility: 14% of households in low income in the first wave experienced this event, and of them, 43% exited from low income. Overall, 16% of all households that exited from low income experienced a change in household type (Table 9.12x).

A decrease in housing costs was experienced by 10% of those in low income at the start of the most recent two-wave period. It was associated with a 38% likelihood of exiting from low income and was experienced by 10% of those who exited low income (Table 9.18x).

11. Policy context

The coronavirus (COVID-19) pandemic

The most recent wave included in this publication is Wave 14. The coronavirus (COVID-19) pandemic and the policies implemented in response to it affected fieldwork and incomes during Waves 11, 12 and 13, and the first part of Wave 14.

Fieldwork for Wave 14 was conducted mainly between January 2022 and December 2023. Government restrictions on social mixing in response to the pandemic were in place until April 2022. This resulted in some disruption to planned face-to-face interviewing, both for existing sample members as well as those surveyed as part of the Wave 14 boost sample. Further details can be found in Understanding Society Main Study changes due to the COVID-19 pandemic (Wave 14 release).

Government policies in response to the coronavirus pandemic also affected household incomes, as follows:

• the Coronavirus Job Retention Scheme (CJRS): provided income support for employees
• the Self-Employment Income Support Scheme (SEISS): provided income support for self-employed individuals
• Universal Credit and Working Tax Credit uplifts: additional allowances as well as one-off payments for recipients of these benefits

Help with the cost of living

Waves 13 (2021 and 2022) and 14 (2022 and 2023) have also seen Cost of Living Payments being made to households on certain income-based benefits:

• Cost of Living Payments for households on qualifying low-income benefits or tax credits
• Disability Cost of Living Payments for households on a qualifying disability benefit
• Pensioner Cost of Living Payments for households entitled to a Winter Fuel Payment

In addition, the Household Support Fund was also set up to ensure that vulnerable households can meet the cost of daily needs such as food, clothing, and utilities.

Implications for ID measures

All four waves included in the most recent persistent low income estimates were affected in some way by the pandemic, either directly, or indirectly via policy measures affecting employment, income and fieldwork. Persistent low income is based on a relative measure of low income, and as such is affected by changes in the income distribution. It is also affected by the amount of movement into and out of relative low income from year to year (entry and exit rates). Higher rates of low income entry and exit will exert a downward influence on the rate of persistent low income.

In terms of the measurement of low income entries and exits, and analysis of the events associated with them, ID sets out minimum requirements that must be met before an income or income component change is counted. The purpose of these thresholds is to stabilise the statistics by ensuring they only reflect meaningful changes. These requirements mean that low income entry and exit analysis will not fully reflect people’s experiences of income changes over any given period.

For example, changes to income-related support administered over the course of the pandemic will not have been fully captured by low income entry and exit analysis, nor analysis of events which look at changes in earnings or benefits. Changes due to joining or leaving the ‘furlough’ scheme implemented in response to the coronavirus pandemic will not have been fully captured by the event which considers a change in earnings, since this analysis requires at least a 20% fall in earnings to qualify as a real change (workers on furlough received at least 80% of their pre-pandemic income). Payment uplifts received by Universal Credit and Working Tax Credit recipients between April 2020 to October 2021 are also unlikely to have met the thresholds required for them to be counted as increases (and subsequent decreases) in benefit income.

When lump sum payments (such as Cost of Living payments) are reported via Understanding Society, these are adjusted so that monthly income calculations reflect the period that lump sums are intended to cover.

Please refer to the Background information and methodology note as well as Understanding Society documentation for further information.

Official Statistics

Income Dynamics statistics are Official Statistics.

Our statistical practice is regulated by the Office for Statistics Regulation (OSR).

OSR sets the standards of trustworthiness, quality, and value in the Code of Practice for Statistics that all producers of official statistics should adhere to.

You are welcome to email the ID team directly with any comments about how we meet these standards.

Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.

12. More information

ID uses data from Understanding Society to derive a measure of disposable household income. A household income measure implicitly assumes that all members of the household benefit equally from the combined income of the household, and so all members of a household will appear at the same position in the income distribution. Adjustments are made to account for the size and composition of households to make figures comparable – see section on equivalisation

Key information on the definitions and measures used in ID is provided here. Please also refer to the Background information and methodology note for more detail.

Definitions

Understanding Society

Understanding Society, led by the University of Essex, is a longitudinal survey of individuals in the United Kingdom which has been running since 2009. The Wave 14 sample (2022 and 2023) included over 23,000 individuals available for longitudinal analysis. Those not in private households at the start of the survey in 2009 are not included.

Income

This includes income from several sources:

• Labour income – usual pay and self-employment earnings. Includes income from second jobs. For Waves 11, 12 and 13, this included any income received from the government Coronavirus Job Retention Scheme. Self-employment income is reported for either the previous financial year or, if not, for the most recent 12 months. Income received by self-employed individuals from the Self-Employment Income Support Scheme (SEISS) during 2021 is therefore most likely to have been reported via existing questions on income from self-employment in the Wave 14 questionnaire.
• Miscellaneous income – educational grants, payments from family members and any other regular payments
• Private benefit income – includes trade union/friendly society payments, maintenance or alimony and sickness or accident insurance. Since Wave 12, this category has included income from Student Loans or Tuition Fee Loans
• Investment income – private pensions/annuities, rents received, income from savings and investments
• Pension income – occupational pensions income
• State support – tax credits and all state benefits including State Pension and Universal Credit. Also includes any lump sum payments adjusted for the time period they covered

Before Housing Costs (BHC) Income

Income which is net of income tax payments, National Insurance contributions, and council tax.

After Housing Costs (AHC) Income

Income which is derived by subtracting housing costs (mortgage interest and rent payments) from BHC income.

Equivalisation

An adjustment is made to household income to make the amount available to each individual comparable according to the size and composition of the household they belong to. For example, the process of equivalisation adjusts the income of a single person upwards, so their income can be compared directly to that of a couple. Equivalisation is explained below this section.

Relative Low Income

This is defined for this publication as an individual in a household with an equivalised household income of less than 60% of median income. An individual is in persistent low income if they are in low income for at least three of the last four survey periods.

Households and families

ID presents information on an individual’s household income by various household and family characteristics. There are important differences between households and families. Please see below this section.

Inflation

This concerns how goods and services increase in price (generally) over time. ID uses an adjustment based on the Consumer Prices Index (CPI), also used in the Households Below Average Incomes (HBAI) publication (see Related information and statistics, to compensate for the effects of inflation over time.

Sampling Error

Results from surveys are estimates and not precise figures – in general terms the smaller the sample size, the larger the uncertainty. We are unable to calculate sampling uncertainties for these statistics, but please note that small changes are unlikely to be statistically significant.

Non-sampling Error

Survey data represents the best data from respondents to the survey. If people give inaccurate responses or certain groups of people are less likely to respond, this can introduce bias and error. This non-sampling error can be minimised through effective and accurate sample and questionnaire design and extensive quality assurance of the data. However, it is not possible to eliminate it completely, nor can it be quantified.

Equivalisation explained

Figure 24. How household income is equivalised

Equivalisation allows comparisons of income levels to be made between individuals of different ages from different sized households.

Each household member is given a weighting which is summed together to provide a household weighting factor. Household weekly net income is divided by that factor to give equivalised income.

Weights are: first adult 0.67; other adult or child 14 years and over 0.33; child under 14 years 0.2. Given three different households with the same household income:

• a household of two adults with no children is the reference point, with an equivalisation factor of 1

• a household comprising two adults and two children has an equivalisation factor of 1.4. When household income is divided by the equivalisation factor, it is reduced

• a single adult household has an equivalisation factor of 0.67. When household income is divided by the equivalisation factor, it is increased

Household and families

Figure 25. Definitions of households and families

A household is one person living alone or a group of people (not necessarily related) who either share living accommodation OR who share one meal a day and who have the same address as their only or main residence. A household can comprise one or more families. A family is either a single adult or a married or cohabiting couple, together with any dependent children.

Related information and statistics

Reference tables and the ID Background information and methodology report, which provides further detail on how we estimate ID measures, are available for our most recent release, together with the ID Quick Guide and ID Tables Guide.

Analysis of Income Dynamics data from previous years can be found on the collection page.

Estimates of numbers and rates of low income in a single year are available from the annual Households Below Average Income (HBAI) publication. Rates of persistent low income are generally lower than single year rates published by HBAI because fewer people remain in low income for three years out of four than experience low income in any single year. ID does provide estimates of relative low income for each Understanding Society survey wave, although these are not directly comparable to HBAI single year estimates due to measurement differences. See Table M.9 and the Background information and methodology note for more detail.  

The following ONS publications provide information about alternative sources of data on earnings and income:

• a guide to sources of data on income and earnings
• an interactive tool which enables users to quickly locate information about key statistics on income and earnings
• explaining income and earnings: important questions answered

Please refer to the ID Background information and methodology note for more information on related statistics.

Contact information and feedback

DWP would like to hear your views on our statistical publications. If you use any of our statistics publications, we would be interested in hearing what you use them for and how well they meet your requirements.

Media enquiries should be directed to the DWP Press Office.

Enquiries about these statistics should be directed by email to the ID team.

Lead Analyst: Helen Smith

ISBN: 978-1-78659-826-4

1. Not all events are included here. Please refer to Tables 9.1n to 9.18n in Events associated with low income entries and exits for further information on events associated with low income entry. ↩

2. The share of entries column does not sum to 100% as individuals can experience more than one event. ↩

3. For a change in monthly income or housing costs to be considered an event, it must have risen or fallen by at least 20% and a minimum of £10. Certain demographic changes are controlled for when examining income events: changes in household earnings are only included if the number of workers stays the same. For all other income events, the number of people in the household must not change. ↩ ↩²

4. Not all events are included here. Please refer to Tables 9.1x to 9.18x in Events associated with low income entries and exits for findings on events associated with low income exit. ↩

5. Because those in low income are a smaller group than those who are not, and are generally closer to the low income threshold, they have a greater chance of exiting low income if they experience an income-boosting event than those not in low income have of entering low income if they experience a loss of income event. This explains why exit rates tend to be higher than entry rates. ↩

6. The share of exits column does not sum to 100% as individuals can experience more than one event. ↩

7. For a change in monthly income or housing costs to be considered an event, it must have risen or fallen by at least 20% and a minimum of £10. Certain demographic changes are controlled for when examining income events: changes in household earnings are only included if the number of workers stays the same. For all other income events, the number of people in the household must not change. ↩ ↩² ↩³ ↩⁴ ↩⁵