DWP usage of income and wealth surveys

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DWP usage of income and wealth surveys
Maxine Willitts and Joanna Littlechild
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Family Resources Survey

• Background
• Households Below Average Income and measuring
  child poverty
• Other key annual publications
• Further information

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What is the FRS?

• A continuous, cross-sectional, voluntary survey
• 28,000 Private Households in U.K.
• Northern Ireland added to the Survey in 2002-03
• Fieldwork by Consortium

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FRS Key requirements

• To collect detailed information on the incomes
  and circumstances of private households
• To bring together topics of interest to DWP
• To have a sufficient sample size to facilitate
  small group analysis
• To gain control over information collected

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Whats on the FRS?

• Household characteristics
• Income (all sources)
• Receipt of state benefits and tax credits
• Tenure and Housing costs
• Childcare
• Assets and savings
• Health, Disability and Carers
• Occupation and employment
• Pension Provision

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FRS limitations

• Private households (eg. not care homes)
• Small sample size for some subgroups
• Self-reporting
• Level of analysis
• Assets and savings data
• No detailed debt information

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• Households Below Average Income and measuring
  child poverty..

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Households Below Average Income

• Main data source is Family Resources Survey
• Measurement of living standards as determined by
  the net disposable household income
• Incomes equivalised and analysed Before and
  After Housing Costs (BHC and AHC)
• HBAI uses household disposable incomes, after
  adjusting for household composition, as proxy for
  material living standards

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HBAI Equivalised Incomes

• Takes into account the size and composition of
  the household
• Equivalisation scales take a couple with no
  children as a reference point
• Use OECD scales, which are consistent with EU
• The factors are applied to the data

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HBAI - Income distribution (AHC) in 2005/06
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New long-term measure

• Announced December 2003, following extensive
  consultation
• Tiered approach
• Absolute low income (60 of median household
  income fixed at 98/99 level adjusted for
  inflation)
• Relative low income (60 of median household
  income)
• Material deprivation and relative low income (70
  of median household income) combined
• Basis for PSA target to halve child poverty by
  2010

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What has the new long-term measure meant for the
FRS?

• Data remains crucial to DWP and extremely high
  profile
• Since 2004, the inclusion of material deprivation
  and debt questions
• For all adults
• Additional questions for parents
• Has highlighted under-recording of tax credit
  receipt
• Key reason for data linking project

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Forthcoming analysis

• Time series analysis of the FRS
• Couples and employment due to be published this
  month (November 2007) in ELMR
• Informal caring over time to feed into the
  revised National Carers Strategy (due to be
  published in March 2008) and a review of caring
  being carried out at the PMSU

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Publications

• Family Resources Survey United Kingdom 2005-06
• http//www.dwp.gov.uk/asd/frs/
• Households Below Average Income An analysis of
  the income distribution 1994/95 to 2005/06
• http//www.dwp.gov.uk/asd/hbai.asp
• Income Related Benefits Estimates of Take-up in
  2005/06
• http//www.dwp.gov.uk/asd/irb.asp
• The Pensioners Income Series 2005/06
• http// www.dwp.gov.uk/asd/pensioners_income.asp

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For further help

• IFD IM1
• Maxine Willitts (Team Leader Family Resources
  Survey)
• Tel [phone] Email team.frs_at_dwp.gsi.gov.uk
  
• Jo Cockerham (Team leader Family Resources
  Survey,
• Data Linking)
• IFD IM3
• Peter Matejic (Team Leader Households Below
  Average Income)
• IFD IM2
• Carly Gray (Team Leader Take up)
• PASD PAID3
• Jo Semmence (Team leader Pensioners Income)

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Wealth and Assets Survey

• Background
• Development and progress so far
• Future plans potential DWP uses for the Wealth
  and Assets Survey

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Evidence gaps to fill

• To inform policy development
• To monitor the impact of planned reform
• So required comprehensive longitudinal
  information base on wider assets and savings,
  leading to
• more complete information on savings behaviour
  through time, and individual needs across the age
  spectrum, and
• a better understanding of lifetime earnings and
  savings decisions
• So developed Wealth and Assets Survey

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A new cross-departmental survey of wealth

• Key driver is the need for information on savings
  for retirement
• Most comprehensive data source on household
  assets and debts
• Panel design tracking changes in assets and
  debts, and reasons behind such changes
• Wider scope is the potential for a statistical
  system linking the survey to data from other
  sources (administrative data from HMRC, DWP)

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Progress so far

• Discussions with departments since 2003, and
  additional consultation with external
  stakeholders throughout development period
• Staged approach
• Feasibility (June 2005)
• Pilot Wave 1 (Jan/Feb 2006)
• Main stage fieldwork Wave 1 (started July 2006)
• Pilot Wave 2 (Jan/Feb 2008)
• Main stage fieldwork Wave 2 (July 2008)

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Publication

• Interim results, based on year 1 data, to be
  published
• 19 December 2007
• Full analytical report on wave 1 expected to be
  published Spring 2009 by ONS
• Full Wave 1 dataset will be archived

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Survey design questionnaire (1)

• Assets
• Accounts and investments
• Pension schemes
• Property, household goods, vehicles
• Business assets
• Trusts
• Childrens savings
• Debts
• Mortgages and loans secured on main residence
• Equity release
• Credit and store cards, hire purchase, loans
• Arrears on household bills and other payments

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Survey design questionnaire (2)

• Income
• Earnings, benefits, pensions, other regular
  income
• Inheritances, lifetime gifts, other lump sums
• Behaviours and attitudes
• Saving and borrowing
• Saving for retirement, pension sources
• Financial management, expectations
• Attitudes to risk
• Classificatory
• Household composition, ethnicity, tenure
• Economic activity and education
• Health and caring

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Survey design questionnaire (3)

• Developments for Wave 2. The questionnaire has
  been amended
• To capture flows in wealth and changes in saving
  attitudes and behaviours
• To reflect changes in pensions legislation such
  as A day changes
• To reflect the Governments ongoing Extending
  Working Lives agenda by asking employment
  questions to those above State Pension Age
• Contents of Wave 2 questionnaire to be finalised
  after pilot at start of 2008

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Survey design sample

• Two-stage sample of addresses
• Regional and census-based stratification at first
  stage
• Set sample of 26 addresses per Primary Sampling
  Unit
• Achieved 32,000 households at wave one
• Spread over two years July 2006 to June 2008
• Addresses likely to be wealthier sampled at
  higher rate
• All responding households re-interviewed at wave
  two after two-year gap
• 10 incentive
• Sub-sample of 1,600 households most in debt
  re-interviewed after one year

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DWP uses for the Wealth and Assets Survey (1)

• Predict expenditure and manage budget (c.50bn
  pensioner benefits) - target help at those who
  need it most
• Improve estimates of under savers and their
  characteristics
• When we reform the pension system we need to know
• What amount of risk people would be comfortable
  with
• Who they would trust to provide pensions for
  them/provide advice
• Important for us to know about all types of
  wealth as people choose to save in different ways
• Need to know why they are saving or not and the
  degree to which they expect to use other forms of
  wealth, eg housing, to fund their retirement

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DWP uses for the Wealth and Assets Survey (2)

• When, and why, do people start/stop saving?
• Panel data should be able to pick up changes in
  circumstances and how these affect (pension)
  saving
• Do savings increase over time, or are they short
  term and spent?
• Useful to get feel for large expenditures which
  might stop saving, or which might reduce at
  retirement
• The emphasis of the survey is on wealth, but we
  do have data to calculate income quintiles etc.

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• If you are interested in joining a user group to
  be established in the new year contact Elaine
  Chamberlain as soon as possible.
• Elaine.Chamberlain_at_ons.gsi.gov.uk
• Joanna.Littlechild_at_dwp.gsi.gov.uk

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Any Questions?

• ?