Small area model-based households in poverty estimates, England and Wales

1. Main points

In the financial year ending 2014, over three-quarters of small areas in England and Wales had less than 20% of households in poverty before housing costs (BHC), with an overall range from 4.9% to 53.6%.
In the financial year ending 2014, of all small areas in England and Wales 55% had less than 20% of households in poverty after housing costs (AHC), with an overall range from 6.7% to 63.7%.
The West Midlands region contained the highest proportion (86%) of small areas with a percentage of households in poverty (BHC) greater than the national median, closely followed by Wales (85%).
London contained the highest proportion (74%) of small areas with a percentage of households in poverty (AHC) greater than the national median.
Variation in the percentage of households in poverty (BHC) was greatest in the Yorkshire and The Humber region (based on the interquartile range).
Variation in the percentage of households in poverty (AHC) was greatest in London (based on the interquartile range).

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2. Things you need to know about this release

The small area model-based households in poverty estimates provide statistics on the estimates of the percentage of households in poverty at the middle layer super output area (MSOA) level in England and Wales for the financial year ending 2014 (April 2013 to March 2014). They are designated Experimental Statistics, which are calculated using a model-based method to produce two estimates of the percentage of households in poverty – before housing costs and after housing costs. There are 7,201 MSOAs in England and Wales, each containing around 3,000 households.

A household is deemed to be in poverty if the household’s income lies below 60% of the UK median income, where income is defined as net weekly equivalised income. Net weekly household income (equivalised) is composed of the same elements as net weekly household income but is subject to an equivalisation scale. Applying an equivalisation scale adjusts the household income values to take account of the number and composition of people in the household. Therefore, it represents the income level of every individual in the household.

The threshold values for the financial year ending 2014 are as published by the Department for Work and Pensions (DWP):

£272 per week that corresponds to 60% of UK median before housing costs equivalised net income (£453 per week)
£232 per week that corresponds to 60% of UK median after housing costs equivalised net income (£386 per week)

The households in poverty estimates are produced using Households Below Average Income (HBAI) datasets that come from the Family Resources Survey in combination with previously published data from the 2011 Census and a number of administrative data sources. The two different measures of poverty are:

percentage of households in poverty before housing costs (BHC)
percentage of households in poverty after housing costs (AHC)

These estimates can be used to provide an indication of differences in the proportion of households in poverty between small areas when taking into account the confidence intervals presented with them. If the confidence intervals of two areas do not overlap, then the areas can be regarded as significantly different. However, it is not possible to identify the size of the difference between two areas due to the confidence intervals around the individual estimates.

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3. What percentage of households were in poverty before housing costs?

For the financial year ending 2014, the median equivalised net income before housing costs (BHC) for the UK was £453 per week with the low income threshold at £272 per week. Therefore a household with a weekly income of less than £272 (BHC) is classed as a household in poverty.

In the financial year ending 2014, the estimated percentage of households in poverty BHC for middle layer super output areas (MSOAs) ranged from 4.9% (within the Westminster local authority district) to 53.6% (within the Bradford local authority district). The median percentage of households in poverty BHC in England and Wales overall was 15.6%, with over three-quarters of small areas in England and Wales having less than 20% of households in poverty BHC.

Figure 1 shows that the 9.8% to 14.6% poverty band contained the largest number of MSOAs, followed quite closely by the 14.7% to 19.4% band. It also shows that there are some areas with particularly high levels of household poverty, but a larger number of areas fall within the lower poverty bands.

Figure 1: Distribution of middle layer super output areas for percentage of households in poverty before housing costs

England and Wales, financial year ending 2014

Source: Office for National Statistics

Notes:

Class breaks for income based on rounded 10% increments of the range.

Download this chart Figure 1: Distribution of middle layer super output areas for percentage of households in poverty before housing costs

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The region that contains MSOAs with the most variable percentage of households in poverty (based on the interquartile range) was Yorkshire and The Humber. Figure 2 shows the percentage of households in poverty BHC for MSOAs in this region. This region also contained the MSOA with the largest proportion of households in poverty in the whole of England and Wales, at 53.6%.

Figure 2: Model-based percentage of households in poverty before housing costs by middle layer super output area

Yorkshire and The Humber, financial year ending 2014

Yorkshire and The Humber contains MSOAs with the most variable percentage of households in poverty before housing costs

Source: Office for National Statistics licensed under the Open Government Licence v.3.0. Contains Ordnance Survey data © Crown copyright 2017

Download this image Figure 2: Model-based percentage of households in poverty before housing costs by middle layer super output area

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The South East region had the least variability in the percentage of households in poverty BHC (based on the interquartile range). The map for percentage of households in poverty by MSOA for the South East is shown in Figure 3. This has a similar pattern to the estimates for the financial year ending 2012. The South East also had the lowest median percentage of households in poverty at 13.2%, although London was very similar with 13.3%. Wales had the highest median at 19.9%.

Figure 3: Model-based percentage of households in poverty before housing costs by middle layer super output area

South East, financial year ending 2014

The South East contains MSOAs with the least variable percentage of households in poverty before housing costs

Source: Office for National Statistics licensed under the Open Government Licence v.3.0. Contains Ordnance Survey data © Crown copyright 2017

Download this image Figure 3: Model-based percentage of households in poverty before housing costs by middle layer super output area

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MSOA level estimates allow the exploration of differences in poverty levels within local authority districts (LADs) to better understand inequality at the local level (City of London and Isles of Scilly LADs are excluded from the analysis of MSOA differences within LADs as they each comprise one MSOA).

The distribution of the percentage of households in poverty (BHC) varies across LADs within regions. This variation is highlighted by looking at the proportion of MSOAs within LADs that fall in:

the 20% with the overall highest poverty in England and Wales (highest quintile)
the 20% with the overall lowest poverty in England and Wales (lowest quintile)

In London, all of the MSOAs in Richmond upon Thames fall within the lowest quintile of poverty for England and Wales. Conversely, over 80% of the MSOAs in Newham fall in the 20% of MSOAs with the most poverty (highest quintile). The South East is the only other region where there are LADs with all MSOAs in the lowest poverty quintile for England and Wales (Epsom and Ewell, Spelthorne, Surrey Heath). Thanet was the only LAD with more than half of MSOAs within the highest quintile in the South East in the financial year ending 2014.

Blaenau Gwent in Wales was the only LAD with all MSOAs in the highest quintile for England and Wales, with all 9 MSOAs falling here. In the majority of LADs in Wales, there were no MSOAs that fell in the lowest poverty quintile. Bridgend had the highest proportion with 3 of its 19 MSOAs in the lowest quintile.

The estimates for MSOAs within a LAD can be described as significantly different if the confidence intervals for the estimates do not overlap. This provides an illustration of how these estimates can be used to identify areas of relative high household poverty within a LAD.

The MSOA with the highest poverty can be isolated to examine the proportion of the remaining MSOAs that are significantly different from it. The LAD with the highest such proportion was Calderdale in Yorkshire. Figure 4 shows the estimated percentage of households in poverty (with 95% confidence intervals) for the 27 MSOAs in the Calderdale LAD. In this case, all of the other 26 MSOAs had a significantly lower percentage of households in poverty than that of the highest.