Absolute and relative poverty on an income distribution: the 60% of median line, why proportional growth cuts absolute but not relative poverty, who is poor in the UK and why, and the policies that reach each cause. Through the Households Below Average Income figures for 2024/25.
On 26 March 2026 the Department for Work and Pensions published its annual poverty figures for 2024/25. Median household income after housing costs was £623 a week, up 5% on the year. The relative poverty line, 60% of that, was £374. One in five people, 20%, lived below it, unchanged from the year before. Among children under 16 the rate after housing costs was 26%: 3.27 million. Two million children lived in households that had run short of food, down from 18% of children to 14%.
The UK’s poverty line moves every year with the median, which is why incomes can rise and poverty stay put. The government also publishes an absolute measure, fixed against a past year’s line, and this year changed how it is calculated.
What does it mean to be poor in a rich country, how is it measured, and why do the two measures tell different stories?
Source: DWP, Households Below Average Income FYE 2025, and Children in low income families: local area statistics FYE 2025, both 26 March 2026; written ministerial statement, 26 March 2026.
Absolute poverty is an income too low to meet basic needs: food, shelter, clothing, heat. The World Bank’s international line is $3.00 a day at purchasing power parity (2021 prices). Absolute poverty falls when incomes at the bottom rise, whatever happens to anyone else.
Relative poverty is an income too low to take part in the normal life of the society around you. The UK and EU measure it as household income below 60% of the median, after adjusting for household size (equivalisation) and usually after housing costs. Because the line moves with the median, relative poverty measures the gap between the bottom and the middle: it can stay unchanged while everyone grows richer, and fall in a recession if the middle loses more than the bottom.
The UK’s absolute low income measure uses a 60%-of-median line from a fixed base year, uprated only for inflation, so it behaves like an absolute measure. Persistent poverty is being below the line in three of the last four years. Material deprivation asks whether households can afford specific items.
Causes in the UK: low pay and few hours, unemployment and worklessness, high housing costs, disability and ill health, lone parenthood, and the level of benefits. Policies: a minimum wage, in-work benefits, childcare, housing supply, education and training, and the benefit system itself.
In 2024/25 one in five people in the UK, 20%, lived in relative poverty after housing costs: a household income below £374 a week.
Median household income rose 5% that year, to £623 a week after housing costs.
If every household’s income rose by exactly 5%, what would happen to the relative poverty rate?
Relative poverty is about distance from the middle, not about how much you have. If everyone gains the same percentage, the median rises, the line rises with it, and the share below it is unchanged. Absolute poverty, measured against a fixed line, would fall. That difference is the subject of this lesson.
The curve shows how households are spread by weekly income after housing costs. Most are bunched between £300 and £800; a long tail runs out to the right. The **median**, £623, splits them in half. Averages are pulled up by the tail, which is why poverty is measured against the median: it tells you what an ordinary household lives on.
Check: The relative poverty line is set at 60% of the median. If median income after housing costs is £623 a week, the line is:
0.6 × 623 = £373.80, rounded to £374. A household of two adults below that, after rent or mortgage, is counted as in relative poverty.
Draw the relative poverty line at 60% of the median: **£374**. The shaded area to its left is the 20% of people below it, 13 million or so. The line is not a fixed amount of money: it is a position in the distribution. Move everyone up by the same proportion and the line moves with them. Relative poverty is a measure of inequality at the bottom.
Check: In 2024/25, 20% of people lived below the relative line. If every household’s income rose by 10% the following year, the relative poverty rate would:
Relative poverty measures position, not level. Proportional growth leaves every household in the same place relative to the median.
Now suppose a decade of growth raises every income by 10%. The distribution shifts right. The median becomes £685, so the relative line moves to £411 and the share below it is still 20%. But an absolute line fixed at £374 stays where it was, and the shaded area to its left shrinks: absolute poverty falls. Same economy, two measures, two stories.
Check: An absolute poverty line is fixed in real terms at £374 (2024/25 prices). After 10% real income growth for all, absolute poverty:
The absolute line does not move with the median, so growth that reaches the bottom reduces the share below it.
The measure has quirks. In a recession the median falls, so the line falls, and households whose incomes did not change are counted out of poverty. In a boom that reaches the top more than the bottom, poverty rises while nobody is worse off. Neither is nonsense: the measure is asking how far the bottom is from the middle, and that is a real question. But it is not the same as asking whether people can eat.
Teacher tip: In an exam, name the measure before you quote the number. “Poverty rose” means nothing until you say relative or absolute, before or after housing costs. Child poverty after housing costs is the figure the government now targets.
Check: Between 2009 and 2012 UK median income fell while pensioner incomes were protected. Relative poverty among pensioners:
A falling median lowers the line. Households whose incomes held steady were lifted above it without becoming any better off: a known oddity of relative measures.
Who is poor in the UK? Most are in working households: low pay, few hours, high rents. Children: 26%, because large and lone-parent families need more and earn less. Disabled people and their carers. Private renters, for whom housing costs take the largest bite: measured before housing costs, child poverty is 19%; after, 26%. Pensioners are now less often poor than children.
Check: Which group had the highest relative poverty rate after housing costs in the UK in 2024/25?
Larger households need more income to reach the same standard, lone parents can work fewer hours, and child-related benefits have been limited. Child poverty is the government’s headline target.
Policies, matched to causes. For low pay: the minimum wage and in-work benefits such as Universal Credit. For worklessness: training, childcare, and a benefit system that makes work pay. For housing: supply, and help with rents. For children: child benefit and the two-child limit. For the long run: education, the one policy that moves people up the distribution rather than lifting the floor under them.
Check: A rise in the minimum wage is most likely to reduce poverty when:
A wage floor only reaches people in work, and only helps if they keep their jobs; most minimum-wage earners are not in the poorest households.
The relative line is left at £374 after the median rose to £685. A relative line is 60% of the current median, so it moves to £411. A line fixed at £374 is an absolute line and measures something different.
Explain the difference between absolute and relative poverty, and evaluate whether economic growth is the most effective way to reduce poverty in the UK.
Absolute poverty is an income too low to meet basic needs, measured against a line fixed in real terms. Relative poverty is an income too low to take part in normal life, measured in the UK as household income below 60% of the median, equivalised and usually after housing costs. In 2024/25 the median was £623 a week, the line £374, and 20% of people and 26% of children fell below it.
The two measures respond differently to growth. On a diagram of the income distribution, growth that raises every income by the same proportion shifts the whole curve right, raises the median and so raises the relative line by the same proportion: the share below it is unchanged. An absolute line stays put, so households just below it are lifted over and absolute poverty falls. Growth therefore cuts absolute poverty if it reaches the bottom, through more jobs, more hours and higher wages, and it funds the public services and benefits that poor households rely on. It cannot by itself cut relative poverty, which depends on the gap between the bottom and the middle.
For the UK the distinction matters because most poor households already contain someone in work, and housing costs push child poverty from 19% before housing costs to 26% after. Reducing relative poverty needs incomes at the bottom to grow faster than the median: a minimum wage, in-work benefits such as Universal Credit, childcare that lets parents work more hours, housing supply to cut rents, and education to move people up the distribution over the long run.
**However,** growth is necessary even if not sufficient: without it the redistribution that cuts relative poverty is unaffordable and politically harder. The 2010s showed the gap between the measures, with absolute child poverty falling while relative child poverty rose, and the two-child limit on benefits is the policy most studies link to that rise. Redistribution has its own costs in tax and incentives, and housing supply takes a decade. The most effective approach is growth that reaches low earners, through wages and employment, combined with targeted support for children and renters; growth alone will show up in the absolute figures and leave the relative ones unchanged.
Poverty figures: Department for Work and Pensions, Households Below Average Income, financial year ending 2025 (published 26 March 2026), and Children in low income families: local area statistics, FYE 2025. The income distribution curve on the diagram is a stylised shape, not survey data; the median and poverty-line values are the published ones. Diagrams drawn with Rough.js and perfect-freehand, both MIT licensed.