Is poverty in Wales really reducing?  

Poverty Photo of money
Image by ScouserUK from Pixabay
ResourcesViewsMarch 23rd, 2023

The Bevan Foundation’s Head of Policy (Poverty), Steffan Evans, takes a look at the latest data on poverty and questions how much insight it provides 

For over a year the cost-of-living crisis has dominated the headlines. As living costs have surged, more and more people have found it difficult to make ends meet. Against this backdrop, the latest poverty data may come as a surprise to many. It shows relative income poverty in Wales declining, with 21% of people in Wales said to live in poverty, down from 24% the previous year. So is this good news or are there reasons to be cautious?  

What does the data show? 

Poverty statistics are published annually in Wales, but the data released are the average for the previous three years (2019-20 to 2021-22). This means that the latest figures cover the period from the year before the pandemic until just after Russia’s invasion of Ukraine, pre-dating the cost-of-living crisis.  

The data show that over this three-year period, just over a fifth – 21% – of people in Wales were living in poverty. This is the lowest level on record and is considerably down on the position in 2018-19 to 2020-21 when 24% of people were living in poverty. This decline has been the result of the proportion of working age adults and children living in poverty reducing and the proportion of pensioners living in poverty remaining unchanged.  

Reasons for caution  

There are some significant limitations to the latest poverty data that should be born in mind before celebrating the apparent progress.  

First, caution should be taken when comparing change between years. Annual fluctuations can be the result of rounding as well as all the data being subject to a margin of error. Given that the relative income poverty data is averaged over a three-year period in any case, these statistics are better used to track longer-term trends.  

Second, the restrictions that were in place at the time of the pandemic are likely to have exacerbated issues around the accuracy of the data. Last year a more limited range of data were published and while we can be more confident in the accuracy of the most recent data, there is still a need for caution.   

Third, there are some inherent limitations to the relative income measure of poverty that are likely to have been made worse in the current climate. A person is said to live in poverty if their household income is less than 60% of the median, adjusted for their household type and housing costs. Given that other outgoings such as energy and food are not taken into account, it is possible that headline poverty rates be on a downward trend even though more people face real hardship.  

Reasons for optimism  

Despite all the limitations, there are reasons to be hopeful that the historically low poverty levels mark a change in Wales’ fortunes. Throughout the pandemic there was significant extra financial support for low-income households. Universal Credit was temporarily increased by £20 a week whilst in Wales, most parents whose children received free school meals received £19.50 a week per child while schools were shut and in the holidays. The provision of this extra support undoubtedly increased the incomes of the poorest households in Wales and may well have played a part in the reduction in child poverty.  

Whether the good news in this year’s poverty figures is a blip or a welcome change of direction remains to be seen. What is clear however is that one in five people living in relative income poverty remains unacceptable.  

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