The Effects of Poverty on Life Chances in the UK

Table of Contents

Last Updated on August 4, 2023 by Karl Thompson

Being in poverty has a negative effect on an individual’s life chances. Being poor means you are more likely to…

struggle to pay the bills and be financially vulnerable.
have to rent rather than buying your own house, which is correlated with poverty.

have to rely on Free School Meals for your children, which is correlated with lower educational achievement.
suffer poor health throughout your life and lower life expectancy.
suffer mental health problems throughout your life.

end up getting stuck in a debt-cycle, where you pay more to service the debt.

This post explores some of the statistical evidence on the relationship between poverty and life chances, looking at a range of evidence collected by the office for national statistics and other agencies such as the Joseph Rowntree Foundation. The point of this post is simply to provide an overview of the statistics, and offer a critique of the limitations of these statistics. I’ll also provide some links to useful sources which students can then use to explore the data further.

What is Poverty?

There are different definitions and measurements of poverty, but one of the most widely used in the UK is relative poverty after housing costs (AHC). If household income is below 60% of the median household’s income, adjusted for family size and composition, they are in relative poverty.

The Joseph Rowntree Foundation uses this measure along with two other thresholds, tracking relative poverty using a total of three poverty thresholds.

Poverty threshold: 60% of median income
Deep poverty threshold: 50% of median income

Very deep poverty threshold: 40% of median income.

Relative poverty thresholds for 2020/2021

These are adjusted for household composition to reflect the different costs of living alone, compared to living in a couple, and with children.

	Weekly median income 2020/2021	Poverty threshold (60% of median)	Deep poverty threshold (50% of median)	Very deep poverty threshold (40% of median)
Single adult, no children	£274	£164	£137	£109
Couple two children	£472	£283	£236	£189
Lone parent, two children*	£566	£340	£283	£226
Couple two children*	£764	£458	£382	£306

*Assumes one child is aged under 14 and one 14 years or older.

According to this measurement there were 13.5 million people, or 20% of the U.K. population living in low-income households in 2020 /21.

Life chances

Life chances are your chances of achieving positive outcomes and avoiding negative outcomes throughout the course of your life – such as succeeding in education, being happy, or avoiding divorce, poor health and an early death.

Five ways poverty affects life chances

Poverty negatively affects people’s life chances. Being poor means…

You struggle to pay the bills (having to choose between heating or eating).
You have to pay rent rather than owning your own home.
You’re kids are more likely to fail their GCSEs.

You were more likely to die from Covid.
You’re more likely to suffer from poor mental health.

Poverty means you can’t pay the bills

Those earning lower incomes are more likely to struggle to pay their bills and suffer from other forms of financial vulnerability.

Someone earning £10 000 a year is twice as likely to report not being able to save or struggling to pay the energy bills compared to someone earning £50 000 a year, and four times more likely to report not being able to afford unexpected expenses.

56% of adults earning less than £10 000 a year reported that they found it difficult to afford energy bills compared to only 26% of adults earning more than £50 000 a year.

38% said they were unable to afford hidden expenses compared to 10% of the richest quintile.

Office for National Statistics (ONS), released 20 February 2023, ONS website, article, Impact of increased cost of living on adults across Great Britain: September 2022 to January 2023

Being poor means you have to pay rent

Social renters are 4 times more likely to be in poverty than owner-occupiers

42% of social renters are in poverty after housing costs compared to just 10% of those who own their houses outright, without a mortgage

Source: Joseph Rowntree Foundation: poverty rates and housing tenure.

Poverty leads to educational underachievement

Poor children are almost twice as likely to fail their GCSEs.

In 2021 only 29.9% of Free School Meal Pupils (FSM) achieved grade 5 or above English and Maths compared to 57% of non FSM pupils.

Source: Department for Education: GSCE English and Maths Results.

Poverty and Covid Deaths

The Covid mortality rate for the poorest quintile of regions in the UK was double that of the richest quintile.

Source: Joseph Rowntree Foundation: covid mortality rates and deprivation.

Poverty leads to poor mental health

Those with lower incomes are almost three times as likely to report being depressed compared to those with higher incomes.

6% of people in the lowest quintile of earners report being depressed compared to 2% of those in the highest quintile of earners.

Those in the lowest quintile are also more likely to report ‘lacking energy’ or ‘feeling worthless’, and more likely to report a number of conditions which correlate with poor mental health.

Source: Joseph Rowntree Foundation: Symptoms of anxiety in relation to household income.