Household Expenditure Survey

Report on the

Jersey Household Expenditure Survey

2004/05

States of Jersey Statistics Unit www.gov.je/statistics

Contents

Page Introduction  1 Chapter 1: Overview of average weekly household expenditure  3 Chapter 2: Household spending by income  17 Chapter 3: Household spending by household composition  29 Chapter 4: Household spending by tenure  45 Chapter 5: Household spending by working status and age  55 Chapter 6: Household spending by Parish  75 Chapter 7: Households in Jersey  89

Chapter 8: Comparison of Jersey and UK average weekly

household expenditure  93 Chapter 9: Children's expenditure in Jersey  99 Annex A : Statistical background 101

Annex B : Further definitions 111

Introduction

Introduction

This report presents the results from the 2004/5 Jersey Household Expenditure Survey (HES). The survey provides a detailed insight into the way Jersey residents live in terms of the range of goods and services purchased and how that differs by household structure, income and tenure.

The report has been produced by analysing detailed expenditure information from over 1,000 households covering in excess of 300,000 individual purchases. The detailed expenditure has then been grouped into broader headings in order to produce a breakdown of how, on average, a household spends their money. So whilst any individual household will spend different amounts of money on the wide range of goods and services that can be bought and as such their expenditure pattern may differ from the averages presented in the report, the data provides a valuable tool for examining expenditure patterns for typical households.

The information presented in the report has many uses. Firstly it is used to ensure that the Retail Price s Index (RPI), the official measure of how prices are changing in the Island, remains accurate. This means ensuring that the items included in the index continue to reflect the items that people are buying and that the weights (or relative importance of individual items in the index) accurately reflect their importance in households' budgets.

Secondly it allows analysis to be undertaken to look at how different household types spend their money and thus to understand the degree to which expenditure differs, whether for some households spending on essential items dominates their spending and whether there are certain household types that spend higher proportions of their money in specific areas. This type of analysis together with the insight into social issues provided by the Jersey Annual Social Survey (JASS) provides an extremely rich tool to better understand social issues.

In addition the results of the survey provide a means of estimating total consumer expenditure, which is a major element in measuring the size of the Jersey economy.

The remainder of the report is split into Chapters looking firstly at overall expenditure and then expenditure by income, household type, tenure, employment status and Parish. These Chapters are followed by a look at some of the more recent developments in household expenditure, comparisons with expenditure patterns in the UK and children's spending. Finally more technical Annexes explain the statistical background to the survey and some of the concepts used.

It has only been possible to produce this report because of the co-operation which the States of Jersey Statistics Unit received from around 2,000 individuals in the more than 1,000 households who kept a detailed expenditure diary during the survey period. We are extremely grateful for their input. Additionally without the professional work of the interviewers who worked on the survey, the results would not have been as robust; their work is equally appreciated.

Introduction

Notes:

Throughout this report individual entries have been rounded independently and as a result columns may not appear to sum to column totals. This is simply a result of rounding and the un-rounded entries do sum correctly.

Monetary values are round to the nearest 10 pence and percentages are rounded to one decimal place. In the text, apart from bullets in Chapter 1, figures are rounded to the nearest whole pound and whole percentage.

In the tables the symbol – is used to represent a non-zero cell that is less than the smallest rounded value shown in the table. Zero (0) signifies a cell whose true value is zero. The term n.e.c. after the commodity or service stated corresponds to not elsewhere classified.

All entries unless stated otherwise represent average weekly household expenditure or percentages of total average weekly household expenditure. Percentages are shown in italics in the tables.

Chapter 1:Overview of expenditure

This chapter presents an overview of average household expenditure broken down by category and introduces the main concepts used throughout the report.

Data

The data underlying all of the tables in this report were collected from a random sample of 1,037 households across Jersey via the Household Expenditure Survey (HES). The survey operated for 12 months from September 2004 to September 2005 in order to capture differences in seasonal expenditure i.e. typically higher and different expenditure in the run up to Christmas and differences between goods and services bought in winter and summer.

Each member of the sampled household aged 16 and over kept a diary of all their expenditure for two weeks and also recorded larger personal purchases that they had made over the previous 12 months. The larger items of expenditure, such as cars, computers, audio visual equipment etc, are collected over a longer reference period to ensure that these infrequently purchased items are included as they would be very unlikely to be purchased during the two week reference period.

One member of the household (the self designated head of household or reference person) also completed a record of household expenditure (i.e. spending on items that are essentially made for the entire household, such as housing costs, utility bills, major DIY, etc). In addition, in the 2004/5 survey children in the household aged 11 to 15 could also choose to keep a small diary of their own expenditure.

Once the data collection phase of the survey was completed a detailed process of data checking (the survey generated more than 300,000 individual payments) and aggregation was undertaken. However, essentially all the latter means is that data collected from the daily diaries, where it is genuine regular weekly spending, were multiplied up by 26 to convert it into annual expenditure. The larger personal and household items were then added (these are by definition annual) and the total divided by 52 to obtain weekly expenditure. All of this process is of course undertaken at a very detailed item level.

Having calculated weekly expenditure by household, individual households are grouped together and the averages of their expenditure on all items are calculated to produce the data presented in this report. The aggregation can be at the whole household population level (e.g. the tables presented in this Chapter) or by different groupings of households such as by income, tenure etc as presented in later Chapters.

All expenditure is averaged across all households, including those reporting zero expenditure on a specific item. One consequence of this is that all households are deemed to pay a proportion of all costs whether or not an individual household actually uses a good or service. This is best illustrated by housing in that all sampled households are included when calculating both rent and mortgage interest, despite the fact that they are only actually likely to pay one or the other. However, as the survey and this report aims to show average spending by a given classification of households, this conceptual issue does not affect the relevance of the averages presented in terms of understanding expenditure.

As in all surveys there is sample variation around the estimates. The variation is smallest for whole population tables and largest when the estimates are for smaller groupings of the population. The sampling variation is quantified in Annex A and whilst it does mean that little significance should be placed on very small differences in expenditure, larger differences and higher level aggregations will be robust.

The sample of the population which participated in the survey was a very close match to the population profile in terms of Parish, household composition, etc; however, all results presented in this report are weighted to reflect the actual population profile. Full details are also given in Annex A.

Classification of spending

Total expenditure is broken down into 13 groups broadly based on the Classification Of Individual Consumption by Purpose (COICOP), the classification system used on Household Budget Surveys (HBS) across the EU.

For many of the COICOP groups it is very clear what items are included within them, for example food and non-alcoholic drinks. However, for others it is a little less clear and whilst the detailed tables included in the report do provide more detail of the goods and services included in each group, table 1.1 below provides a broad overview of what each group contains.

Table 1.1 Broad definitions of COICOP expenditure groups

Notes: Group 13 is simply a number given to all items outside the classification 1 – 12.

Capital improvements to property are classified as another item recorded in UK data and are one of a number of items not counted as any form of expenditure. The only item recorded in this way for the Jersey HES is contributions to pensions and other savings where reported, but it should be kept in mind that not all households reported savings and pensions and thus is likely to be an under- estimate.

Housing expenditure

Under the COICOP classification expenditure on housing costs is split up in the following way:

Housing costs classified in COICOP category housing, fuel and power': Actual rentals for housing

- net rent (gross rent less housing abatement)

- second dwelling rent

Maintenance and repair of dwelling

- central heating maintenance and repair

- paint, wallpaper, timber

- equipment hire, small materials

Water supply and miscellaneous services relating to dwelling

- water charges

- other regular housing payments including service charge for rent

- refuse collection, including skip hire.

Housing costs found elsewhere in the COICOP Classification system:

- household insurance

- structural insurance

- contents insurance

- insurance for household appliances.

Housing costs not classified under COICOP

Other expenditure items

Housing: mortgage interest payments etc

- mortgage interest payments

- mortgage protection premiums

- rates, mortgage, insurance (second dwelling).

Other items recorded

Purchase or alterations of dwellings (contracted out), mortgage capital payments

- outright purchase of houses, flats etc. including deposits

- capital repayment of mortgage

- central heating installation

- DIY improvements: double glazing, kitchen units, sheds etc

- home improvements (contracted out)

- bathroom fittings

- purchase of materials for capital improvements

- purchase of second dwelling.

So whilst COICOP provides an extremely useful means of classifying expenditure, like any definitional system it can lead to concepts that simply do not reflect real life. One such area is the treatment of mortgage payments and rates. Under COICOP as shown above these are treated as non-consumption expenditure (i.e. outside core COICOP groups). However, for any household paying a mortgage it is that single monthly payment that may have the most influence on how much money is left to spend on other items. Therefore, in this report we have included mortgage payments, along with rates and

endowment payments[1], within the housing costs group. As a result groups 4 and 13 in the above table are redefined in the following way for this report.

Table 1.2 Definitions of COICOP expenditure groups 4 and 13 used in this report

In the detailed and summary tables throughout this report (except Chapter 8, see below) "total expenditure" is defined as the total of expenditure of groups 1 to 12 because these groups represent real or final expenditure by households. Group 13, which is essentially capital investments or money transfers and thus is not final expenditure, is then shown as a separate row or block of data below the total.

To enable direct comparisons with UK Household Expenditure data[2] the Jersey tables in Chapter 8 are shown on the same basis as UK data i.e. strictly following the COICOP breakdown. In these tables, to mirror the UK's approach, "total expenditure" is still used as the total of groups 1 to 12, with the term "all expenditure" used to include expenditure group 13. In addition, in the detailed tables the major housing elements (where this reports mainly departs from COICOP) are shown separately within the Housing group.

COICOP and the RPI

One of the main purposes of running the HES is to ensure that the 600 or so items included in the RPI, and the weights applied to each item in the overall index, continue to reflect actual spending patterns. The relevance of items is maintained by looking at the items that are purchased through the HES data and seeing if new items that are more representative or popular than existing items in the RPI list or new ways of buying goods have emerged (e.g. internet airfares were introduced to the RPI in 2003).

The weights (or proportions of every pound spent that is spent on each of the 600 or so items) are derived from the aggregate average household spending presented in this chapter. However, there is not a direct mapping between each COICOP group and each RPI group[3] and as such the proportions of expenditure spent on each group presented here will not quite be the group, section and items weights for the RPI. For example the RPI group "Alcohol" includes both off-sales which are in the COICOP group 2 "Alcoholic drinks and tobacco", and on sales which are included in COICOP group 11 Restaurants and Hotels.

A more significant difference occurs for mortgage payments. As explained above in this report all mortgage payments have been included within the housing group. However, for RPI by definition it is only the mortgage interest payment (not the capital) that is included in the determination of the item weight. As a result, in the major tables, mortgage payments have been spilt between interest and capital.

Average Household Expenditure

In 2004/5 an average Jersey household spent a total of £629 per week (table 1.3). This represents an average increase of around 26% on 1999 when the last Household Expenditure Survey was undertaken[4]. By means of comparison over the same time period the RPI increased by 27% and average earnings by 35%

Of total weekly expenditure 10% was spent on food, 29% on housing and 2% on education. However, as noted above these proportions are not the same as those used for the RPI, especially for housing expenditure where the definition is wider here. Approximating roughly to RPI weights[5], by simply taking out capital payments, changes the percentages to 11% for food, 25% on housing and 2% on education.

Table 1.3 Average household expenditure, £ per week and percentage of total

Note: Mortgage payments made up £68.90 of the housing group (or 10.9% of total expenditure), of which capital payments accounted for around two-fifths.

Table 1.3 also shows the non-expenditure items that are captured in the survey. These are shown for completeness as they do represent an outgoing, but since they largely relate to savings, money transfers or off Island spending (e.g. holiday spending) they are not included in the total expenditure and are not commented on throughout the report.

Another way to think of the breakdown in total average household spending is in terms of how each pound spent is split. So of every pound spent 10p goes on food, 29p on housing and fuel, 2p on communication and so on for all the groups. Chart 1.1 presents this information visually by splitting a notional one-pound coin into segments representing each of the expenditure groups.

Chart 1.1 Percentage breakdown of average weekly household expenditure

Food & Non-alcoholic

Miscellaneous Goods &  drinks Alcoholic (off-sales) & Services 10% tobacco

10% 3%

Restaurants & Hotels 6%

Clothing & Footwear Education

4%

2%

Recreation & Culture 14%

Housing, Fuel & Power Communication 30%

2%

Transport

12% Health

2%

Household Goods and Sevices

5%

Table 1.4 provides the full breakdown of average household expenditure and thus gives a much more complete picture of how on average we spend our money when converted to a weekly basis. Overall, households spend around £7 per week on bread, rice and cereals and because these items are bought regularly this average spend is greater than the average weekly spend on TV's and videos (£6) which, though expensive, are bought far less frequently. Therefore, it is the combination of cost and frequency which determines the overall importance within a household budget.

Looking at the detailed expenditure shows many interesting features. For example:

• of total average expenditure on telephone services (£12.70), well over half (£7.30) is spent on mobile phones;
• an average households spends £2.30 per week on parking;
• around 60% of average spending on transport services is spent on air travel (£6.30 of £11.20);
• nearly three times as much is spent on women's clothes (£10.70) than men's clothes (£4.00);
• average weekly spending on fresh fruit and fresh vegetables is essentially the same at £4.70 on each; and

• an average Jersey household spends £7.70 per week on domestic services (cleaning etc) which equates to over 1% of total household spending.

The remainder of the report looks at household expenditure by different groupings of households and thus provides a greater insight into how different households, on average, purchase goods and services.

Table 1.4 Average weekly household expenditure, £ per week

Commodity or Service

Average Weekly Household All Households  Expenditure

1 Food & Non-Alcoholic Drinks  61.70

1. Food  56.30

1. Bread, rice, cereals  7.00
2. Pasta products  0.50
3. Pastry products  2.60
4. Beef  1.90
5. Pork  1.00
6. Lamb  0.80
7. Poultry  2.00
8. Bacon, ham, sausages, pate etc  2.90
9. Processed meat & meat n.e.c  4.40
10. Fish & fish products  3.60
11. Milk  2.50
12. Cheese & curd  2.00
13. Eggs  0.70
14. Other milk products  2.50
15. Butter  0.40
16. Margarine, other vegetable fats & peanut butter  0.40
17. Cooking oils & fats  0.40
18. Fresh fruit (inc. frozen)  4.70
19. Dried fruit & nuts  0.60
20. Preserved fruit & fruit based products  0.10
21. Fresh vegetables  4.70
22. Preserved, processed or dried vegetables  1.60
23. Potatoes  1.10
24. Processed potatoes & potato products  1.30
25. Sugar & sugar products  0.40
26. Jams & marmalades  0.30
27. Chocolate  1.70
28. Confectionary products  0.70
29. Edible ices & ice cream  0.80
30. Other food products  2.70

2. Non-alcoholic drinks  5.30

1. Coffee  0.60
2. Tea  0.40
3. Cocoa & powdered chocolate  0.10
4. Fruit & vegetable juices (inc. squash)  1.80
5. Mineral or spring waters  0.70
6. Soft drinks (inc. fizzy & ready to drink fruit juices)  1.60

Commodity or Service

Average Weekly Household All Households  Expenditure

2 Alcoholic Drinks & Tobacco  16.10

1. Alcoholic drinks (off premises)  9.30
   1. Spirits & liqueurs  2.10
   2. Wines & fortified wines  5.40
   3. Beer, lager, ciders & perry  1.70
   4. Alcopops  -
2. Tobacco  6.90

1. Cigarettes  6.50
2. Cigars & other tobacco products  0.40

3 Clothing & Footwear  24.80

1. Clothing  20.10

1. Men's outer  3.60
2. Men's under  0.40
3. Women's outer  9.00
4. Women's under  1.70
5. Boy's Outer  0.70
6. Girl's outer  1.00
7. Infant's outer  0.50
8. Children's under  0.70
9. Accessories & haberdashery  1.60
10. Dry cleaners, laundry & dyeing  0.90

2. Footwear  4.70

4 Housing, Fuel & Power  184.00

1. Net rent paid, including 2nd dwelling rent  67.90
2. Materials for maintenance & repair of dwelling  1.90
3. Services for maintenance & repair of dwelling  10.70
4. Water supply  6.50
5. Sewerage & other services  1.40
6. Electricity, gas & other fuels  17.30

1. Electricity  9.80
2. Gas  2.20
3. Oil  4.60
4. Coal  0.80

7. House purchase costs  68.90
   1. - interest payments  40.70
   2. - capital payments  28.30
8. Rates  4.60
9. Mortgage endowment payments  4.80

Commodity or Service

Average Weekly Household All Households  Expenditure

5 Household Goods & Services  34.40

1. Furniture, furnishings, carpets & other floor coverings  10.20
   1. Furniture & furnishings  8.30
   2. Floor coverings  1.80
2. Household textiles  3.30
3. Household appliances  3.90
4. Glassware, tableware & household utensils  2.10
5. Tools & equipment for house & garden  2.90
6. Goods & services for routine household maintenance  12.00

1. Cleaning materials  3.10
2. Household goods & hardware  1.30
3. Domestic services, carpet cleaning, hire of furniture  7.70

6 Health  14.70

1. Pharmacy & other medical products  3.60
2. Doctors  3.00
3. Dentists  5.20
4. Opticians  1.80
5. Other medical related services (inc. hospital)  1.10

7 Transport  72.80

1. Purchase of vehicles  35.60
   1. Purchase of new cars & vans  14.20
   2. Purchase of second hand cars & vans  19.20
   3. Purchase of motorcycles & other vehicles  2.20
2. Operation of personal transport equipment  26.00
   1. Spares & accessories  0.80
   2. Petrol, diesel & other motor oils  13.40
   3. Repairs & servicing  6.20
   4. Parking  2.30
   5. Other motoring costs  3.30
3. Transport Services  11.20

1. Bus & coach fares  0.60
2. Taxi fares  1.10
3. Travel by air  6.30
4. Travel by sea  2.80
5. Other travel & transport  0.40

Commodity or Service

Average Weekly Household All Households  Expenditure

8 Communication  15.20

1. Postal services  1.30
2. Telephone & telefax equipment  1.20
3. Telephone & telefax services  12.70

1. Fixed line  5.40
2. Mobile phone account  4.40
3. Mobile phone other  2.90

9 Recreation & Culture  89.60

1. Audiovisual, photographic & information processing equipment  12.70
   1. Audio equipment, accessories & CD players  1.00
   2. TV & video  6.20
   3. Computers  4.00
   4. Photographic, cine, optical equipment & film processing  1.50
2. Other major durables for recreation & culture  3.70
3. Other recreational items & equipment, gardens & pets  11.70

1. Games, toys & hobbies  2.00
2. Computer software & games  0.30
3. Equipment for sport, camping & open air recreation  4.30
4. Horticultural goods  3.30
5. Pets & pet food  1.90

4. Recreational & cultural services  20.10
   1. Sports admissions, subscriptions, leisure class fees & equipment hire  9.40
   2. Cinema, museums, theatre etc  1.30
   3. TV, video, satellite rental, cable subs, TV licences, internet  5.70
   4. Internet subscriptions  1.20
   5. Misc. entertainment  1.30
   6. Gambling payments  1.00
5. Newspapers, books & stationery  8.70
   1. Books  2.10
   2. Diaries, address books, cards etc  2.70
   3. Newspapers  2.80
   4. Magazines & periodicals  1.20
6. Package Holidays  32.70

1. Package holidays (inc. cruises)  15.70
2. Non-package  17.00

10 Education  14.70

1. School fees  9.80
2. Higher education fees & maintenance  3.50
3. Other education costs (e.g. academic evening classes, school trips)  1.40

Commodity or Service

Average Weekly Household All Households  Expenditure

11 Restaurants & Hotels  36.60

1. Catering services  36.40
   1. Restaurants  10.80
   2. Cafes, bars etc.  25.10
   3. Canteens (inc. school dinners)  0.50
2. Accommodation services  0.20

12 Miscellaneous Goods & Services  65.00

1. Personal Care  14.30
   1. Hairdressing & beauty treatments  4.90
   2. Toiletries  0.90
   3. Baby toiletries & accessories  0.50
   4. Hair products, cosmetics & related electrical appliances  8.00
2. Personal effects n.e.c.  4.00
3. Home care  0.20
4. Nursery, crèche & childcare  6.90
5. Insurance  32.80

1. Household insurances - structure, contents & appliances  5.00
2. Medical insurance premiums (inc. sickness & redundancy)  7.00
3. Life insurance  10.60
4. Vehicle insurance (inc. boat insurance)  7.40
5. Non-package holiday & other travel insurance  1.20
6. Mortgage protection  1.60

6. Financial & other services n.e.c.  6.90

1. Bank, building society, post office & credit card charges  5.30
2. Other services & professional fees  1.60

14 Other items where recorded  5.50

14.1  Pensions & related savings  5.50

Chapter 2:Household spending by income

Income is probably the key determinant on how households spend their money as it is intuitive that the higher a household's income the more they will be able to spend. Therefore, it is very informative to look at average spending by groupings of income. This is done by splitting the population of households into income quintiles, where each quintile represents 20% of households.

However, income distributions are not symmetric, as illustrated by the figure below. The long tail represents the small proportion of the population who have significantly higher incomes than the majority. As such, taking a simple arithmetic average (mean) of all incomes will not provide a number that represents a mid-point of the distribution. Thus for income distributions a more useful average is the median, the income level below which 50% of households are found and above which 50% of households are found. As a result the median is also known as the 50th percentile.

Chart 2.1: An illustrative income distribution

Median

Mean

20th percentile  Income  80th percentile

Using percentiles an income distribution can be spilt into equal components, in this case in terms of number of households, in order to analyse spending by household income. Thus the first group (or quintile) represents all households whose income lies below the 20th percentile, or the lowest 20% of household incomes. The next quintile covers households whose incomes are above the 20th percentile but below the 40th and so on up to the final group or 5th quintile which are those households whose incomes are above the 80th percentile.

The income distribution of households covered by the HES is shown in chart 2.2 below. In the HES household income is made up of income from employment and other sources of income (pensions, benefits and earnings from savings etc).

The overall shape of the distribution matches the stylised one presented in chart 2.1.The differences occur because higher incomes have been grouped together for presentational purposes, rather than showing a very long tail, and there are some spikes in the lower half of the distribution reflecting the fact that many pensioners on a State pension will have a very similar household income, whereas individual earnings from employment for those in work will vary far more.

Chart 2.2 Income distribution of households in the HES

50 45 40 35 30

25 20 15 10 5 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -4 00 -8 0-12 0-16 0-2 0 0-24 0-28 0-32 0-36 0-40 0-44 0-48 0-52 0-5 6 0-60 0-64 0-68 0-72 0-76 0 -8 0 0-84 0-88 0-9 2 0-96 -10 0 -1 04 -1 08 -1 12 -1 16 -1 20 -1 28 -1 34 -1 38 -1 42 -1 0 150

5

20 0 6 10 0 14 0 18 0 22 0 26 0 30 0 34 0 38 0 4 2 0 46 0 50 0 54 0 58 0 62 0 66 0 70 0 7 4 0 78 0 82 0 86 0 90 0 94 0 98 00 0 20 0 0 60 0 1 00 0 1 4 0 0 1 80 0 2 60 0 3 20 0 3 60 0 4 00 0 4 80 0 r tha

0. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 n
   1. 1 1 1 1 1 1 1 1 1 te

rea

G

Income Range

The median household total annual income is £34,000, of which on average about three quarters came from earned income and a quarter from other sources such as benefits and investments. However, the spilt between earned and unearned income varies a great deal and averaged 88% earned 12% unearned for households where the reference person was working and essentially the opposite, 13% earned 87% unearned, where the reference person was not working. In the latter group other household members were working in some households and hence income from employment was recorded.

The median earnings figure derived from this survey of only those households containing members in paid employment is £39,500. The estimate of average (mean) annual earnings per full time equivalent (FTE) employee, derived from the data underlying the index of average earnings[1], is provisionally £520 per week for 2005, equating to £27,000 per year per FTE. However, census information shows that on average there are 1.25 FTE workers per household in Jersey, thus factoring up individual earnings to household level produces an average (mean) household earnings from employment of £33,800.

However, to compare the estimates derived from the HES with average earnings data, unearned income needs to be subtracted from the HES estimate. For those households with members in employment approximately 13% of total earnings came from other sources and thus median earnings from employment, from the HES, is estimated at £34,400. Whilst it would be expected that the mean would be slightly higher than the

median, given the uncertainty[2] in both surveys the comparison is very good and shows that overall the income distribution and therefore quintile ranges of the HES are robust.

Using the concepts explained above households can be spilt into income quintiles as shown in table 2.1 below

Table 2.1 Income quintiles

Charts 2.3 and 2.4 and table 2.2 provide an insight into the composition of households in each income quintile by tenure, employment status and household composition. By tenure (chart 2.3) it is clear that owner occupiers make up an increasingly large proportion of each income quintile as income rises; accounting for 33% of the lowest quintile to 78% of the highest. In contrast those households living in States, Parish or Housing Trust rental accommodation account for nearly two fifths (39%) of the lowest quintile and 1% of the highest. In many ways this may be as expected with the States providing most help for those in need. However, it does also highlight that not all owner occupiers are necessarily very well-off.

Chart 2.3 Percentage composition of income quintile by tenure

90%

80% Owner-occupier

States/Parish Rent 70% Private Rental

Lodgers & Tied 60%

50%

40%

30%

20%

10%

0%

Lowest 2nd 3rd 4th Highest

Income quintile

Working age couples generally make up a greater proportion of each income quintile as income increases (table 2.2), although it is only true across the whole distribution for couples with children, who account for 4% of the lowest quintile and 40% of the highest.

All the remaining identifiable household structures generally have lower representation in higher income quintiles than lower ones. The equivalent breakdown by employment status is shown in chart 2.4 and reflects a very similar story. In both cases the respective relatively small numbers of single parent families and self employed mean that they only make up small proportions of each quintile. Chapter 5 shows an analysis of household structure by income and chapter 6 provides working status by income.

Table 2.2 Percentage composition of income quintile by household structure

Note: the table is a breakdown of income quintile by household structure so only the rows sum to 100.

Chart 2.4 Percentage composition of income quintile by working status

90%

Working for an employer

Self employed

80%

Retired

Other Not Working

70%

60%

50%

40%

30%

20%

10%

0%

Lowest 2nd 3rd 4th Highest

Income quintile

Analysis of expenditure

As would be expected, the average amount spent per week on goods and services by a household increases with household income as shown by the high level breakdown of expenditure in table 2.3 and in more detail in table 2.5. However, when examined by expenditure group the difference is not linear (i.e. the wealthiest do not always spend the same multiple more than those on the lowest incomes).

For example average weekly spending on alcohol (off sales) and tobacco in the highest quintile is not quite double that of the lowest, whilst average spending on food, health and communication is between two and three time more per week in the highest quintile. The largest differences are for spending on furnishings, transport and education with those in the highest quintile spending seven, ten and nearly 50 times more each week.

Table 2.3 Average weekly household spending by income quintile (£ per week)

The differences in actual expenditure levels are further highlighted when looking at the percentage breakdown of each income quintile's total expenditure (chart 2.5, table 2.4).

For some types of expenditure there is very little difference, for example spending on clothing accounts for between 3 and 5% of total spending for all income levels, with spending on communications making up 2 to 3% of all household budgets. However, the largest differences occur in spending groups which may be considered to be either essential or more discretionary.

Households in the lowest income quintile spend nearly 14% of total income on food, compared to 8% for the highest and 10% for all households. Similar differences occur throughout the food group with expenditure of fresh fruit and vegetables making up 2% of the total spending of the lowest income groups compared to 1% of the highest.

Whilst the actual money values of housing costs are quite different the proportions are similar. Households in the lowest income quintile spend 31% on housing related expenditure compared to 28% in the highest and 29% on average. Energy use at home is a component of the housing group and accounted for a little over 4% of total spending in the lowest quintile and just over 2% in the highest. Average expenditure on health also falls as a percentage of total expenditure as income rises, accounting for 3% of lower income households' weekly spending and 2% of the highest. However, within health there are some differences with higher income households spending around twice as much on doctors (£4compared to £2) but nearly five times more on dentists (£10 compared to £2).

In contrast, spending on transport accounts for 14% of the highest income households' weekly spending compared to 12% on average and 7% for the lowest income group. The difference for air travel alone is quite noticeable with the top quintile spending 1.2% of all expenditure on air travel compared to 0.6% for the lowest. Higher income households also spend a greater percentage on recreation and culture at 15% above the average of 14% and lowest quintile's 12%.

Table 2.4 Percentage of average weekly household spending by income quintile

In general where the proportion of total weekly spending on a specific group does vary, it increases or decreases fairly evenly across the income distribution, as can be seen from chart 2.5. However, there is a more distinct difference for education, where the lowest three income groups spend around 1% compared to 2% and 4% for the two highest income groups. On school fees alone the highest income households spend on average £36 per week compared to £9.80 for all households and less than £2.50 for all households in the lowest three quintiles.

Chart 2.5 Percentage of average weekly household spending on each group by income quintile

35%

Lowest 30% 2

3

4

25%

Highest

All 20%

15%

10%

5%

0%

Table 2.5 Average weekly household expenditure by income quintile, £ per week

Commodity or Service  Average Weekly Household Expenditure

All House-

Income quintile group  Lowest  2  3  4  Highest  holds 1 Food & Non-Alcoholic Drinks  36.60  43.20  55.50  77.40  100.60  61.70

1. Food  33.30  39.30  50.70  71.20  91.70  56.30

1. Bread, rice, cereals  4.60  5.00  6.30  8.80  11.20  7.00
2. Pasta products  0.20  0.40  0.60  0.60  0.80  0.50
3. Pastry products  1.70  1.70  2.20  3.50  4.40  2.60

4. Beef
5. Pork
6. Lamb
7. Poultry
8. Bacon, ham, sausages, pate etc
9. Processed meat & meat n.e.c
10. Fish & fish products
11. Milk
12. Cheese & curd
13. Eggs
14. Other milk products
15. Butter
16. Margarine, other vegetable fats & peanut butter
17. Cooking oils & fats
18. Fresh fruit (inc. frozen)
19. Dried fruit & nuts
20. Preserved fruit & fruit based products
21. Fresh vegetables
22. Preserved, processed or dried vegetables
23. Potatoes
24. Processed potatoes & potato products
25. Sugar & sugar products
26. Jams & marmalades
27. Chocolate
28. Confectionary products
29. Edible ices & ice cream
30. Other food products

2. Non-alcoholic drinks

1. Coffee
2. Tea
3. Cocoa & powdered chocolate
4. Fruit & vegetable juices (inc. squash)
5. Mineral or spring waters
6. Soft drinks (inc. fizzy & ready to drink fruit juices)

0.80  1.10

0.60  0.90

0.60  0.30

1.00  1.60

1.80  2.00

3.10  2.90

1.70  2.20

1.70  1.90

1.00  1.40

0.50  0.50

1.40  2.20

0.30  0.30

0.30  0.40

0.20  0.40

2.70  3.40

0.20  0.20

0.10  0.10

2.40  3.10

0.80  0.90

0.60  0.90

0.80  1.00

0.30  0.30

0.20  0.30

1.20  1.10

0.50  0.50

0.50  0.60

1.50  1.70

3.20  3.90

0.40  0.40

0.30  0.20

0.10  0.10

0.90  1.20

0.40  0.50

1.10  1.40

1.70  2.90

0.80  1.10

0.60  1.10

1.70  2.80

2.80  3.50

10. 5.90

3.40  4.60

2.40  3.00

1.80  2.30

0.70  0.80

2.10  2.90

0.40  0.50

0.40  0.40

0.40  0.40

4.30  5.60

0.60  0.70

0.10  0.10

4.00  6.20

1.40  2.10

0.90  1.40

1.40  1.80

0.30  0.40

0.30  0.30

1.50  2.10

0.60  0.90

0.60  0.90

2.60  3.50

4.70  6.20

0.60  0.70

0.40  0.50

0.10  0.10

1.50  2.10

0.70  0.80

1.30  2.10

3.50  1.90

1.60  1.00

1.40  0.80

3.20  2.00

4.90  2.90

6.30  4.40

6.30  3.60

3.90  2.50

3.50  2.00

0.90  0.70

3.90  2.50

0.60  0.40

0.60  0.40

0.60  0.40

7.90  4.70

1.20  0.60

0.20  0.10

8.00  4.70

2.90  1.60

1.60  1.10

1.80  1.30

0.70  0.40

0.40  0.30

2.80  1.70

0.90  0.70

1.30  0.80

4.50  2.70

8.90  5.30

1.00  0.60

0.80  0.40

0.20  0.10

3.30  1.80

1.30  0.70

2.30  1.60

Commodity or Service  Average Weekly Household Expenditure

All House-

Income quintile group  Lowest  2  3  4  Highest  holds 2 Alcoholic Drinks & Tobacco  11.20  12.60  17.20  19.80  20.40  16.10

1. Alcoholic drinks (off premises)  5.30  5.30  9.90  10.80  15.80  9.30
   1. Spirits & liqueurs  1.80  1.50  2.30  2.60  2.60  £2.10
   2. Wines & fortified wines  2.10  2.70  5.40  6.30  11.10  £5.40
   3. Beer, lager, ciders & perry  1.40  1.20  2.10  1.90  2.10  £1.70
   4. Alcopops  0.00  0.00  0.10  0.00  -  -
2. Tobacco  5.90  7.20  7.30  9.00  4.50  6.90

1. Cigarettes  5.50  6.90  6.90  8.70  4.10  £6.50
2. Cigars & other tobacco products  0.40  0.40  0.40  0.20  0.40  £0.40

3 Clothing & Footwear  11.80  13.50  25.20  31.30  44.60  24.80

1. Clothing  9.20  11.40  20.40  25.50  36.20  20.10

1. Men's outer  1.90  2.30  4.30  4.50  5.10  £3.60
2. Men's under  0.30  0.30  0.50  0.20  0.70  £0.40
3. Women's outer  3.70  4.50  10.20  11.30  16.40  £9.00
4. Women's under  0.90  0.70  0.90  2.30  3.90  £1.70
5. Boy's Outer  0.10  0.80  0.40  1.30  0.80  £0.70
6. Girl's outer  0.30  0.50  0.40  1.50  2.30  £1.00
7. Infant's outer  0.30  0.30  0.80  0.50  0.80  £0.50
8. Children's under  0.40  0.40  0.70  0.90  1.20  £0.70
9. Accessories & haberdashery  0.80  1.10  1.50  2.10  2.90  £1.60
10. Dry cleaners, laundry & dyeing  0.40  0.50  0.60  0.90  2.20  £0.90

2. Footwear  2.60  2.20  4.80  5.80  8.40  4.70

4 Housing, Fuel & Power

1. Net rent paid, including 2nd dwelling rent
2. Materials for maintenance & repair of dwelling
3. Services for maintenance & repair of dwelling
4. Water supply
5. Sewerage & other services
6. Electricity, gas & other fuels

1. Electricity
2. Gas
3. Oil
4. Coal

7. House purchase costs
   1. - interest payments
   2. - capital payments
8. Rates
9. Mortgage endowment payments

80.60  105.00

50.70  71.50

0.50  0.90

3.40  3.20

3.50  3.60

0.80  1.10

11.40  10.30

7.20  6.60

1.70  1.30

1.90  1.80

0.60  0.50

6.60  11.80

4.20  6.70

2.50  5.10

3.10  2.60

0.50  -

162.50  220.60

85.40  69.60

1.90  2.10

10.60  10.10

5.90  8.70

1.60  1.80

15.20  21.00

0. 11.90

2.00  3.40

3.20  4.80

1.00  1.00

35.00  96.10

21.70  62.40

13.30  33.60

4.10  5.10

2.80  6.10

373.60  184.00

59.20  67.90

4.20  1.90

27.80  10.70

11.30  6.50

1.80  1.40

30.20  17.30

14.80  £9.80

2.70  £2.20

11.90  £4.60

0.70  £0.80

214.10  68.90 117.80  £40.70

96.40  £28.30

8.90  £4.60

16.00  4.80

Commodity or Service  Average Weekly Household Expenditure

All House-

Income quintile group  Lowest  2  3  4  Highest  holds 5 Household Goods & Services  11.60  16.50  26.30  38.20  84.90  34.40

1. Furniture, furnishings, carpets & other floor

coverings  2.80  5.10  7.70  11.20  25.80  10.20

1. Furniture & furnishings  2.40  3.70  5.60  9.70  21.70  8.30
2. Floor coverings  0.40  1.40  2.10  1.50  4.10  1.80

2. Household textiles
3. Household appliances
4. Glassware, tableware & household utensils
5. Tools & equipment for house & garden
6. Goods & services for routine household maintenance

1. Cleaning materials
2. Household goods & hardware
3. Domestic services, carpet cleaning, hire of furniture

6 Health

1. Pharmacy & other medical products
2. Doctors
3. Dentists
4. Opticians
5. Other medical related services (inc. hospital)

7 Transport

1. Purchase of vehicles
   1. Purchase of new cars & vans
   2. Purchase of second hand cars & vans
   3. Purchase of motorcycles & other vehicles

2. Operation of personal transport equipment
   1. Spares & accessories
   2. Petrol, diesel & other motor oils
   3. Repairs & servicing
   4. Parking
   5. Other motoring costs
3. Transport Services

1. Bus & coach fares
2. Taxi fares
3. Travel by air
4. Travel by sea
5. Other travel & transport

1.10  1.30

1.80  2.20

0.60  1.50

0.90  1.90

4.50  4.60

2.40  2.10

0.70  0.80

1.40  1.70

8.40  8.90

2.70  2.10

2.30  2.00

1.90  3.20

1.00  1.20

0.50  0.40

18.30  40.40

4.40  21.00

0.50  8.90

3.70  10.50

0.20  1.60

10.50  13.70

0.20  0.60

6.00  8.00

2.70  3.50

0.60  0.90

1.10  0.60

3.30  5.70

0.30  0.40

0.50  1.00

1.70  2.60

0.50  1.50

0.30  0.20

2.20  4.20

4.30  5.50

2.20  2.80

1.90  3.90

8.00  10.60

2.80  3.60

1.40  1.60

3.80  5.50

16.00  15.30

3.90  3.20

3.20  3.50

5.70  5.70

1.80  2.10

1.40  0.70

51.30  85.10

19.20  38.40

0.50  10.20

17.20  23.80

1.50  4.40

23.30  32.50

0.80  1.60

12.00  17.30

5.10  7.70

1.90  2.80

3.60  3.20

8.80  14.20

0.60  0.70

0.90  1.80

5.00  7.00

2.10  4.10

0.20  0.60

8.50  3.30

6.20  3.90

3.40  2.10

6.30  2.90

34.70  12.00

4.80  3.10

2.00  1.30

27.90  7.70

26.00  14.70

6.20  3.60

4.20  3.00

10.10  5.20

3.20  1.80

2.30  1.10

180.90  72.80

101.80  35.60

54.50  14.20

43.60  19.20

3.80  2.20

53.30  26.00

1.00  0.80

25.50  13.40

12.90  6.20

5.50  2.30

8.40  3.30

25.80  11.20

0.90  0.60

1.50  1.10

16.70  6.30

6.10  2.80

0.60  0.40

Commodity or Service  Average Weekly Household Expenditure

All House-

Income quintile group  Lowest  2  3  4  Highest  holds 8 Communication  8.20  11.60  13.90  18.40  25.00  15.20

1. Postal services  0.80  0.90  0.90  1.40  2.40  1.30
2. Telephone & telefax equipment  0.50  0.80  1.10  1.70  2.00  1.20
3. Telephone & telefax services  6.90  9.90  11.90  15.20  20.60  12.70

1. Fixed line  2.90  4.00  5.10  6.60  9.00  5.40
2. Mobile phone account  1.00  3.10  3.60  5.70  9.10  4.40
3. Mobile phone other  3.00  2.80  3.20  2.90  2.50  2.90

9 Recreation & Culture  32.30  48.20  69.50  106.70  204.80  89.60

1. Audiovisual, photographic & information

processing equipment  4.60  7.30  9.70  17.10  26.40  12.70

1. Audio equipment, accessories & CD players  0.20  0.60  0.70  1.00  2.50  1.00
2. TV & video  3.30  3.10  4.80  8.50  11.90  6.20
3. Computers  0.90  2.50  3.00  5.50  9.00  4.00
4. Photographic, cine, optical equipment &

film processing  0.20  1.10  1.20  2.20  3.00  1.50

2. Other major durables for recreation & culture  0.20  2.00  3.00  5.70  8.20  3.70
3. Other recreational items & equipment, gardens &

pets  4.00  6.50  10.10  14.00  25.70  11.70

1. Games, toys & hobbies  0.70  1.50  1.70  1.90  4.30  2.00
2. Computer software & games  0.20  0.30  0.20  0.40  0.30  0.30
3. Equipment for sport, camping & open air

recreation  1.10  2.00  3.10  5.00  11.00  4.30

4. Horticultural goods  1.30  1.80  3.40  3.60  6.60  3.30
5. Pets & pet food  0.70  0.90  1.60  3.10  3.50  1.90

4. Recreational & cultural services

1. Sports admissions, subscriptions, leisure class fees & equipment hire
2. Cinema, museums, theatre etc
3. TV, video, satellite rental, cable subs, TV licences, internet
4. Internet subscriptions
5. Misc. entertainment
6. Gambling payments

5. Newspapers, books & stationery
   1. Books
   2. Diaries, address books, cards etc
   3. Newspapers
   4. Magazines & periodicals
6. Package Holidays

1. Package holidays (inc. cruises)
2. Non-package

10 Education

1. School fees
2. Higher education fees & maintenance
3. Other education costs (e.g. academic evening classes, school trips)

9.00  10.80

2.90  3.90

0.60  0.80

4.00  3.90

0.20  0.50

0.50  1.10

0.90  0.60

5.40  5.30

0.90  1.20

1.20  1.40

2.40  1.90

0.90  0.80

9.10  16.30

5.10  8.00

3.90  8.30

1.20  3.20

0.30  2.30

0.10  0.10

0.80  0.90

16.30  24.00

6.50  11.30

0.90  1.70

5.40  6.90

1.30  1.50

1.20  1.40

1.00  1.20

7.70  10.20

2.10  2.10

2.20  3.30

2.30  3.20

1.10  1.60

22.70  35.70

10.30  17.60

12.40  18.20

4.30  18.60

2.40  10.90

1.20  6.20

0.70  1.50

43.00  20.10

24.30  9.40

2.90  1.30

8.70  5.70

3.00  1.20

2.50  1.30

1.50  1.00

15.80  8.70

4.20  2.10

5.60  2.70

4.20  2.80

1.70  1.20

85.60  32.70

40.20  15.70

45.40  17.00

50.40  14.70

36.00  9.80

10.80  3.50

3.50  1.40

Commodity or Service  Average Weekly Household Expenditure

All House-

Income quintile group  Lowest  2  3  4  Highest  holds 11 Restaurants & Hotels  16.20  17.20  34.00  57.60  62.60  36.60

1. Catering services  16.20  17.20  33.90  57.40  62.30  36.40
   1. Restaurants  3.80  4.80  9.60  16.60  20.80  10.80
   2. Cafes, bars etc.  12.20  12.10  24.00  39.90  40.30  25.10
   3. Canteens (inc. school dinners)  0.20  0.30  0.30  0.90  1.20  0.50
2. Accommodation services  0.10  -  0.10  0.20  0.40  0.20

12 Miscellaneous Goods & Services  23.20  27.90  49.40  81.70  153.80  65.00

1. Personal Care  7.00  7.90  12.80  18.80  26.60  14.30

1. Hairdressing & beauty treatments  2.50  2.50  4.50  5.00  10.40  4.90
2. Toiletries  0.70  0.70  0.80  1.20  1.40  0.90
3. Baby toiletries & accessories  0.20  0.40  0.50  0.50  0.70  0.50
4. Hair products, cosmetics & related

electrical appliances  3.60  4.30  7.00  12.00  14.10  8.00

2. Personal effects n.e.c.  1.00  1.80  2.60  4.80  10.50  4.00
3. Home care  0.10  0.10  0.30  0.20  0.10  0.20
4. Nursery, crèche & childcare  2.10  1.20  6.00  11.40  15.10  6.90

Insura

5. nce 12.5.1

12.5.2 12.5.3

12.5.4 12.5.5

12.5.6

11.40 Household insurances - structure,

contents & appliances  2.50 Medical insurance premiums (inc.

sickness & redundancy)  3.00 Life insurance  2.20 Vehicle insurance (inc. boat insurance)  3.00

Non-package holiday & other travel

insurance  0.40 Mortgage protection  0.20

0. 22.60

2.40  3.70

2.60  5.50

3.00  5.80

4.70  6.10

0.80  0.80

0.40  0.80

40.30  81.70  32.80

5.50  11.90  5.00

8.80  16.30  7.00

12.10  32.40  10.60

9.60  14.30  7.40

1.60  2.30  1.20

2.60  4.70  1.60

12.6  Financial & other services n.e.c.  1.50  2.90  5.10  6.30  19.70  6.90

1. Bank, building society, post office & credit card charges  0.90  2.50  4.10  4.20  15.80  5.30
2. Other services & professional fees  0.60  0.50  1.10  2.10  3.90  1.60

14 Other items where recorded  2.50  2.30  4.60  2.40  16.30  5.50

1. Pensions & related savings  2.50  2.30  4.60  2.40  16.30  5.50

Chapter 3: Household spending by household composition

As Chapter 2 showed, income is a major determinant on the level and type of household spending. Another major factor is likely to be the make up (or composition) of the household. Therefore, this Chapter examines how the number and age of people in a household changes the nature of average spending. Household composition has been broken down and classified as shown in table 3.1

Table 3.1 Definition of household composition

This classification is by necessity a simplification because the sample data places limitations on how the population of households can be broken down and still present accurate results. For example the sample of households used in the survey is not large enough to draw meaningful comparisons between households with one, two or more children, but it is sufficiently robust to compare households with and without children. However, given the small relative size of the effective sample of single parent households, the uncertainty surrounding estimates for this group is likely to be about twice that for other household compositions.

Table 3.2 below provides a breakdown of households by composition and income level to help understand where differences in spending by household composition are likely to be heavily influenced by the income analysis of chapter 2. This demonstrates that there are more working age couples (with or without children) in the top two quintiles than for any other household structure: in both cases over 50% of these groups are in the top two quintiles. Of single adult households between 65% and 90% are in the lowest two income quintiles.

Table 3.2 Housing composition by income quintile (percentage in each quintile)

Note: the table shows a breakdown of household composition by income quintile so only the rows sum to 100.

As well as differences in income there will be significant differences in tenure as table 3.3 demonstrates. The key point to note here is the very high percentage of pensioner couples who are owner occupiers which, together with the fact that nearly all owner occupiers whose reference person is retired own their home outright (see Chapter 4), explains why the proportion spent on housing for pensioner couples is much lower than for the other groups (see table 3.6). As a result of lower expenditure on housing, the relative expenditure as measured in percentage terms on other categories will be higher.

Table 3.3 Housing composition by tenure (percentage)

Note: the table shows a breakdown of household composition by tenure so only the rows sum to 100.

Table 3.5 shows average weekly expenditure and table 3.6 shows expenditure in percentage terms. One very clear feature is that single person households spend less than half the amount on food compared to other households. However, given that single person households occur at higher proportions in the lower end of the income distribution, as a percentage of total expenditure there is no difference. Indeed, on average, couples without children actually spend a lower proportion of total income on food than single pensioners. Table 3.6 also shows that: pensioner households tend to spend twice the proportion of total expenditure on health than other households; single person households of working age spend the highest proportion on restaurants, hotels and bars; single parents spend the lowest proportion on alcohol and tobacco; and couples without children spend the greatest proportion on transport.

Table 3.5 Average weekly household spending by Household composition (£ per week), (Pensioners is abbreviated to PN)