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In the UK, a household is in poverty if its income after tax is below 60% of the national median (a relative measure therefore). Usually, housing costs and housing benefits are deducted from income in order to calculate the poverty rate (source). Income is also adjusted for household size and composition because two people need a larger income than one person to enjoy the same standard of living (however, the adjustment isn’t simply a multiplication: two people do not need twice as much).
According to this measure, 22% of the UK population lived in poverty in 2009/2010:
(source, click image to enlarge)
The graph below shows that income levels for the poor have grown slower than average incomes:
In order to put UK poverty into an international perspective, consider this factoid: if income in India were distributed completely equally, the entire Indian nation would still be living on less than half the UK poverty line.
Income inequality has risen as well, especially during the Thatcher era:
London is by far the richest part of Britain and the engine of the national economy. Yet it also has the highest poverty rates. Although the poorest places in the capital are still in the eastern part of the city, there has been a significant increase of deprivation in the outer London boroughs. Poverty has gone down in the centre of London while it has increased in the suburbs.
Manchester and the London borough of Tower Hamlets have the highest child poverty rate, with 27%. More than 20% of children also experienced severe poverty in Birmingham and Liverpool. There are a total of 1.6 million severely poor children in the UK. Severe poverty in the UK means an income less than half the average income.
Here’s a more detailed map of London: