11 December 2013 Office for National Statistics | 1 Chapter 1: Overview Coverage: UK Date: 11 December 2013 Geographical Area: Region Theme: Economy Key Points This chapter presents the key findings of the 2012 Living Costs and Food Survey (LCF). The chapter provides an overview of household income and expenditure. The overview covers expenditure in 2012; trends in spending over time; expenditure in different areas of the UK; expenditure by income group; and ownership of home computers and access to the internet at home. These topics are explored in more depth in other parts of the publication. Links are provided to the sections of Family Spending that contain the detailed coverage: • Total average weekly household expenditure was £489.00 in 2012. • Housing (net), fuel and power became the category with the highest average spending in 2012, at £68.00 per week, ahead of transport. This category includes: housing rental payments, fuel and electricity for the home, and housing maintenance and repair. It does not include mortgage payments. “Net” rent refers to the amount spent on rent after removing housing benefit and related allowances. • This is the first year, since the current method for recording expenditure was introduced in 2001, that housing (net), fuel and power has been the highest spending category. • Average spending has decreased between 2006 and 2012 once the figures have been adjusted to allow for changes in prices (inflation). • Households in London spend the most, while those in the North East spend the least. • Expenditure in rural areas is higher than in urban areas. Spending is presented using Classification Of Individual COnsumption by Purpose (COICOP) 1 categories, unless stated otherwise. COICOP is an internationally-recognised classification system consistent with that used by UK National Accounts. Notes for Key Points 1. From 2001, the Classification Of Individual COnsumption by Purpose (COICOP) was introduced as a new coding frame for expenditure items. COICOP is the internationally agreed classification system for reporting household consumption expenditure. Total expenditure is made up from the total of the COICOP expenditure groups (1 to 12) plus ‘Other expenditure items (13)’. Other expenditure items are those items excluded from the narrower COICOP
Transcript
11 December 2013
Office for National Statistics | 1
Chapter 1: OverviewCoverage: UKDate: 11 December 2013Geographical Area: RegionTheme: Economy
Key Points
This chapter presents the key findings of the 2012 Living Costs and Food Survey (LCF). The chapterprovides an overview of household income and expenditure. The overview covers expenditure in2012; trends in spending over time; expenditure in different areas of the UK; expenditure by incomegroup; and ownership of home computers and access to the internet at home. These topics areexplored in more depth in other parts of the publication. Links are provided to the sections of FamilySpending that contain the detailed coverage:
• Total average weekly household expenditure was £489.00 in 2012.• Housing (net), fuel and power became the category with the highest average spending in 2012,
at £68.00 per week, ahead of transport. This category includes: housing rental payments, fueland electricity for the home, and housing maintenance and repair. It does not include mortgagepayments. “Net” rent refers to the amount spent on rent after removing housing benefit andrelated allowances.
• This is the first year, since the current method for recording expenditure was introduced in 2001,that housing (net), fuel and power has been the highest spending category.
• Average spending has decreased between 2006 and 2012 once the figures have been adjustedto allow for changes in prices (inflation).
• Households in London spend the most, while those in the North East spend the least.• Expenditure in rural areas is higher than in urban areas.
Spending is presented using Classification Of Individual COnsumption by Purpose (COICOP)1
categories, unless stated otherwise. COICOP is an internationally-recognised classification systemconsistent with that used by UK National Accounts.
Notes for Key Points
1. From 2001, the Classification Of Individual COnsumption by Purpose (COICOP) wasintroduced as a new coding frame for expenditure items. COICOP is the internationally agreedclassification system for reporting household consumption expenditure. Total expenditure ismade up from the total of the COICOP expenditure groups (1 to 12) plus ‘Other expenditureitems (13)’. Other expenditure items are those items excluded from the narrower COICOP
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classifications, such as mortgage interest payments, council tax, domestic rates, holidayspending, cash gifts and charitable donations.
Household Expenditure in 2012
Table 1.1 shows average weekly household expenditure in the United Kingdom (UK) by the 12COICOP categories. In 2012, average weekly household expenditure in the UK was £489.00.
Table 1.1 - Average household expenditure by COICOP category and total, 2012
COICOP category £ per week
Housing (net)1, fuel and power 68.00
Transport 64.10
Recreation and culture 61.50
Food and non-alcoholic drinks 56.80
Restaurants and hotels 40.50
Miscellaneous goods and services 38.40
Household goods and services 28.50
Clothing and footwear 23.40
Communication 13.80
Alcoholic drinks, tobacco and narcotics 12.60
Education 6.80
Health 6.40
Total COICOP expenditure 420.70
Other expenditure items 68.30
Total expenditure 489.00
Table source: Office for National Statistics
Table notes:1. Excluding mortgage interest payments, council tax and NI rates.2. Totals may not add up due to the independent rounding of component categories.
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As seen in Table 1.1 housing (net), fuel and power (excluding mortgages) was the highestexpenditure COICOP category, at £68.00 per week; this represents 14 per cent of total expenditure.The next two highest categories were transport (£64.10) and recreation and culture (£61.50).Average weekly expenditure on food and non-alcoholic drinks in 2012 was £56.80. A full breakdownof spending by detailed category can be found in Table A1 (186 Kb Excel sheet).
Average weekly household expenditure in the housing (net), fuel and power category in 2012 wasmade up of:
• net rent: £29.30 per week;• fuel and electricity: £23.20;• maintenance and repairs: £7.00;• water supply and miscellaneous charges (such as refuse collection): £8.40.
Note: unless otherwise stated, spending figures are averaged across all households. This means,for example, that average weekly expenditure on rent is averaged across all households, whether ornot they pay rent.
The COICOP category housing (net), fuel and power does not include all the different types ofhousing-related expenses, for example, mortgage payments are excluded. This is because COICOPis based on the concept of “consumption expenditure”, and mortgage payments are not consideredto fall within this definition. However, due to the high interest in the topic, Chapter 2 provides adetailed analysis of housing-related expenditure, including the items not included under COICOP.
Household expenditure on housing, including types of spending not included in the COICOPcategory, averaged £139.00 per week in 2012. This varies by the age of the household reference
person (HRP)1 with households tending to spend more when the HRP was under 50. Householdswhere the HRP is under 30 recorded spending on housing of £148.10 per week, and the figure washighest for the 30 – 49 age band at £195.80. Older age groups spent substantially less on housing.
The relatively high spending for households where the HRP is aged under 50 partly reflects thehigher mortgage payments for this age group. Spending on mortgages peaks for the 30-49 agegroup at £84.60 per week; spending on rent peaks for the under 30 age group at £84.80 per week,averaged over all households.
Considering only households that do pay mortgages, average weekly expenditure on mortgageswas £138.60, while spending on rent, only for households that rented their accommodation,averaged £136.00 per week. These are the only spending figures in Family Spending that are notaveraged across all households.
Figure 1.1: Transport expenditure by selected items, 2012United Kingdom
Source: Office for National Statistics
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Figure 1.1 shows that spending on petrol (£16.40), combined with diesel (£8.20) accounts for almosttwo fifths of the transport costs. Purchase of vehicles accounts for over a quarter of the weeklyhousehold transport expenditure (£17.20), with most of this going towards second-hand vehicles(£11.90). Transport spending also includes transport services such as rail fares, at £10.50 per week.
Source: Living Costs and Food Survey - Office for National Statistics
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Expenditure within the recreation and culture category represents a broad range of goods andservices. The recreational and cultural services sub category accounted for £19.80 per week, withthe breakdown reflecting the wide range of choice available in this area, including:
• sports admissions, subscriptions, leisure class fees and equipment hire (£5.80);• cinema, theatre and museums etc (£2.60);• TV subscriptions and licences (£6.70).
Expenditure on package holidays averaged £18.20 per week; this includes both domestic andforeign holidays.
Also within recreation and culture, an average of £4.60 per week was spent on pets and pet food,and £2.30 on games, toys and hobbies.
Notes
1. From 2001/02 the concept of household reference person was adopted on all governmentsurveys in place of head of household. It is defined on the basis of who owns the property; orwho has the highest income; or who is the eldest.
Trends in Spending Over Time
In Chapter 4 spending figures over time are adjusted to 2012 prices to allow for inflation, to take outthe effect of changing prices on expenditure and to enable comparisons to be made between yearson a like-for-like basis.
At 2012 prices, average weekly household expenditure fell from £526.40 in 2006 to £489 in 2012.This is consistent with some of the trends seen in the economy during this period.
Gross Domestic Product (GDP), a measure of the output of the country, fell by 7.2 per cent between
quarter 1 of 2008 and quarter 3 of 20091, and recovery was intermittent between 2009 and 20122.
The decrease in average household expenditure has occurred in most categories of spending.There has been a notable decrease in spending on transport, from £87.10 per week in 2001/02(adjusted to 2012 prices) to £64.10 in 2012. On this basis, the proportion of total expenditureallocated to transport has decreased from 17 per cent to 13 per cent.
A significant factor is likely to be spending on petrol and diesel. The prices for both types of motorfuel have increased over recent years, and there is evidence that households have taken steps
to reduce the amounts used. The 2011 Census3 showed that fewer people are driving to work,
compared with 2001, and more were using public transport, while the National Travel Survey4
reported a fall in the number of journeys taken by private transport between the mid 1990s and2012. Furthermore, fuel efficiency in car engines has improved, and there is evidence more people
are using diesel engine vehicles in an effort to reduce spending5.
Average household spending on housing (net), fuel and power (excluding mortgages) increased,against the overall trend for lower expenditure, from £59.20 in 2001/02 to £68.00 in 2012, usinginflation adjusted figures. This equates to an increase from 11 per cent of total expenditure to 14 percent. Prices of domestic energy, such as electricity and gas, have increased in the UK over recent
years6. Households may have had limited opportunity to reduce their usage of these fuels, leading tohigher expenditure over a period of price rises.
The proportion of households renting increased between 2006 and 2012. The figures in Table A50(71 Kb Excel sheet), compared with the corresponding table from 2006, show that the percentage ofhouseholds renting has increased from 29 per cent to 34 per cent during this period. This would in
turn increase the calculated average weekly amount spent on rent, because the average is based onthe population as a whole, not only those who rent.
Spending on transport and housing (net), fuel and power over the years 2001/02 to 2012 are shownin Figure 1.3. The figures are adjusted for inflation, and at 2012 prices. The chart shows the differenttrends in spending for these two categories over this period.
Figure 1.3 - Household expenditure on Housing (net), fuel & power and transport, 2001-02 to2012, at 2012 pricesUnited Kingdom
Source: Living Costs and Food Survey - Office for National Statistics
Notes:1. Figures have been deflated to 2012 prices using deflators specific to the COICOP category.2. In 2006, Family Spending changed to report for a calendar year instead of a financial year.3. From 2001-02 to 2005-06, figures shown are calculated from weighted data using non-response weights based on
the 1991 Census and population figures from the 1991 and 2001 Censuses. From 2006 onwards, figures shownare calculated from weighted data using non-response weights and population figures based on the 2001 Census.
1. Quarterly National Accounts Q2 2011 (243.6 Kb Pdf)
2. Quarterly National Accounts Q4 2012
3. 2011 Census Analysis - Method of Travel to Work in England and Wales Report
4. National Travel Survey report
5. RAC report on motoring costs
6. DECC report
Expenditure by Region
Three years’ data are combined when presenting spending figures broken down by region, to ensurethe sample size is large enough to provide robust figures when below-UK levels of geography areconsidered. Detailed expenditure by region is shown in Table A35 (130 Kb Excel sheet).
Figure 1.4: Household expenditure by region, 2010 to 2012United Kingdom
Source: Living Costs and Food Survey - Office for National Statistics
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Combined over the years 2010-12, the average weekly household expenditure in the UK was£482.10. Four regions showed expenditure higher than the UK average, in descending order:London (£571.60), the South East (£561.30), the East (£511.30) and the South West (£502.30). Atthe opposite end of the scale, are the North East (£408.70), Wales (£411.30) and Yorkshire and TheHumber (£422.70) with the lowest average spending. Spending by region is shown in Figure 1.4.
For the three-year period 2010-12, London was the highest spending region on housing (net), fueland power (excluding mortgage payments) by a considerable margin, at £97.50 per week; this wasa significant factor contributing to London households spending more than those in other parts of theUK. A major factor in this is the average expenditure on net rent (£59.10 per week), which was morethan twice the amount of the region that spent the second highest amount on rent; the South East(£27.50). Expenditure on rent is averaged across all households, including those that don’t pay rent,so the higher rent figures for London reflect both the higher costs of rent, and the high proportion ofhouseholders who rent their accommodation.
The South East is the highest spending region on transport, at £80.20 per week, compared with£66.10 in London. Spending on transport by London households is influenced by the high numbersof people who make use of public transport. Interestingly, London is the only region, other thanNorthern Ireland, where expenditure on transport services, such as travel fares, is higher thanon purchase of vehicles. For the UK as a whole, expenditure on the purchase of cars was almostdouble that on transport services, but in London, £22 per week on average was spent on transportservices compared with £16.30 on purchase of vehicles. Notably, while 75 per cent of households inthe UK owned a car or van in 2010-12 (see Table A48 (90 Kb Excel sheet)), the figure was only 63per cent for London households; 83 per cent of households in the South East owned a car or van.
Average weekly household expenditure was higher for households in rural areas (£531.20) thanurban areas (£476.50) in 2012, as shown in Table A36 (72.5 Kb Excel sheet). This difference wasreflected across categories, with the exception of housing (net), fuel and power; spending on thiscategory was higher in urban areas (£64.90) than rural areas (£62.10). The difference in spendingwas most notable in expenditure on transport, where expenditure by rural households averaged£81.60 per week compared with £60.10 for urban areas. This could be due to a number of factors,including the higher availability of public transport in urban areas, and the longer journeys that are
often required in rural areas to access services and amenities1.
Figure 1.5: Household expenditure by gross income decile group, 2012United Kingdom
Source: Living Costs and Food Survey - Office for National Statistics
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Figure 1.5 shows average household weekly expenditure, broken down by the gross income bandof the household. Households have been ranked in ascending order of income and divided into tenequally-sized bands. The lowest earning ten per cent of households spent an average of £189.30per week, while the highest earning ten per cent of households spent an average of £1065.60 perweek.
Looking at spending patterns by total gross household income doesn’t tell the whole story.Households of different sizes, and with different numbers of adults and children, need different levelsof income in order to maintain a comparable standard of living. Chapter 3 examines expenditurepatterns after income is adjusted to account for different demands on resources, by consideringthe household size and composition; the analysis also uses disposable income rather than gross
income. Overall, this process, known as equivalisation, somewhat reduces the differences in incomebetween the highest and lowest earning households.
Households on lower incomes apportion their spending differently from those on higher incomes.For example, after adjusting income for household size and composition, food and non-alcoholicdrink accounted for 16 per cent of spending for households with the lowest incomes; for the highest-earning households the figure was only 8 per cent. This reflects the necessity for all households tospend a certain amount on food and non-alcoholic drink, but, as income increases, there is a limit tohow much households can consume or are willing to spend.
The opposite trend is seen for transport. Transport accounts for 14 per cent of the highest -earninghouseholds’ expenditure, but only 9 per cent of the lowest. The greater proportional spending ontransport by higher-income households arises partly from spending more on buying and maintainingvehicles; the National Travel Survey (2012) noted that those on higher incomes tended to makemore frequent and longer journeys.
Computer Ownership and Internet Connection at Home
Family Spending also includes information on ownership of consumer durables, including ownershipof a home computer and having access to the internet at home.
Overall, 81 per cent of households have a home computer, and 79 per cent are connected to theinternet at home. This figure varies considerably for different types of households. For example,computer ownership increases steadily as household income increases (Table A46 (90 Kb Excelsheet)). Nearly all of the households in the top ten per cent income bracket owned a computer (99per cent); but fewer than half (49 per cent) of the lowest earning households did.
Other differences emerge when we examine ownership of home computers for different householdcompositions (see Figure 1.6). Households with children showed the highest levels of computerownership: 98 per cent of households with two adults and two or more children, and 85 per centof households with one adult and two or more children, had home computers. The situation is verydifferent for retired households. Among retired households containing two adults, slightly morethan half (53 per cent) owned a home computer, and the figure was much lower still for retiredhouseholds containing one adult where less than one third (29 per cent) had a home computer. Itshould be noted that many retired households also have lower incomes.
Figure 1.6 - Percentage of households with home computer and internet connection byhousehold composition, 2012United Kingdom
Source: Living Costs and Food Survey - Office for National Statistics
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Clearly, the relatively high proportion of all households with a home computer masks the fact thatownership is far lower among low income households and retired households. However, these typesof households have been closing the gap in recent years. In 2011, for example, 39 per cent of retiredhouseholds with two adults owned a home computer, 14 percentage points lower than in 2012.
The households with the lowest incomes have also closed the gap with higher-earning householdsin recent years. The figure of 49 per cent of households with a home computer in 2012 compareswith 46 per cent in 2011, and 38 per cent in 2009.
Society increasingly utilises the internet to share information and provide services. In this context itis important to note that not all households own a home computer or have access to the internet athome. In addition levels of ownership vary notably for different types of household: retired and lowincome households are far less likely than average to have access to the internet at home. However,households in these groups have caught up to some extent in recent years.
1. Symbols and conventions used in Family Spending 2013 edition
[ ] Figures should be used with extra caution because they are based on fewer than 20 reportinghouseholds.
.. The data is suppressed if the unweighted sample counts are less than 10 reportinghouseholds.
- No figures are available because there are no reporting households.
Rounding: Individual figures have been rounded independently. The sum of component itemsdoes not therefore necessarily add to the totals shown.
Averages: These are averages (means) for all households included in the column or row, andunless specified, are not restricted to those households reporting expenditure on a particularitem or income of a particular type.
Period covered: Calendar year 2012 (1 January 2012 to 31 December 2012).
2. Contacts
For information about the content of this publication, contact ONS Social Surveys Data Adviceand Relations Team.
National Statistics are produced to high professional standards set out in the Code of Practicefor Official Statistics. They are produced free from political influence.
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