OLI - Appendix 1 - Poverty definitions

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APPENDIX 1: Definitions of Poverty 
"There are basically three current definitions of poverty in common usage: absolute
poverty, relative poverty and social exclusion. 
Absolute poverty is defined as the lack of sufficient resources with which to keep
body and soul together. Relative poverty defines income or resources in relation to
the average. It is concerned with the absence of the material needs to participate
fully in accepted daily life. 
Social exclusion is a new term used by the Government. The Prime Minister
described social exclusion as "…a shorthand label for what can happen when
individuals or areas suffer from a combination of linked problems such as
unemployment, poor skills, low incomes, poor housing, high crime environments,
bad health and family breakdown"." 
The House of Commons Scottish Affairs Committee 
The Definition of Poverty
The usual definition of relative low income are households whose
equivalised income before housing costs is below 60% of the median (
i.e. midpoint) income in the U.K. in the same year.
Income is the income from all sources for all members of the household but after
deductions for income tax, National Insurance contributions, council tax, pension
contributions and maintenance payments.
Equivalisation allows for differences in the size and composition of households, and
recognises that a family of several people requires a higher income than a single
person in order for both households to have a similar standard of living. 
It is assumed that all individuals in the household benefit equally from the combined
equivalised income of the household.
For a couple with no children the U.K. median income before housing costs in 2006-
07 was £377 per week. The relative low income level was therefore £226 per week.
The Experience of Rural Poverty in Scotland (Scottish Government 2009) 
From the definitions above, it is clear that the worst cases of absolute poverty should
never occur in Oban, and the trustees will consequently be more likely to be concerned
with applicants experiencing gradations of “relative poverty” i.e. using equivalency to
the income levels determined above. 
Using the figures above as a guide, in general, those on mean tested benefits such as
jobseekers allowance (£146 per fortnight for a single person) will be likely to fall within
the definition of relative poverty.