FAMILY CONSUMER SPENDING 2004

A report on the 2003-04 Expenditure and Food Survey

Family Spending published today by the Office for National Statistics includes new analyses on housing expenditure, children’s expenditure and equivalised income.1

The report presents the results of the 2003-04 Expenditure and Food Survey (EFS). This shows that household consumer expenditure in the UK averaged £418 per week. Transport (including buying and running vehicles as well as public transport fares) accounted for £61. Spending on recreation and culture represented the second highest outgoing, with households paying out £57 a week on TVs, computers, newspapers, books, leisure activities and package holidays.

Purchases of food and non-alcoholic drink contributed £44 to weekly household expenditure – £10 of which went on meat, £6 on fresh fruit and vegetables, £4 on non-alcoholic drink and £2 on chocolate and confectionery.

ONS has classified households into ten equal sized income groups to aid analysis. Households in the lowest group spent £140 per week, and those in the highest group spent £905. Households in the lowest income group spent the highest proportion of their income on food and non-alcoholic drink, followed by housing, fuel and power.

1 ONS is also issuing separate releases on housing expenditure and children’s expenditure today

Conumer Spending and how it varies with income (All amounts are weekly expenditure per household)

Analysis of average weekly expenditure by households in the UK in 2003-04

COICOP categories £
Transport 60.70
Recreation and culture 57.30
Food and non-alcoholic drinks 43.50
Housing, fuel and power 39.00
Restaurants and hotels 34.90
Miscellaneous goods and services 33.60
Household goods and services 31.30
Clothing and footwear 22.70
Alcoholic drink and tobacco 11.70
Communication 11.20
Education 5.20
Health 5.00

Total COICOP expenditure1 356.20

Other expenditure items
Other items 61.90

Total expenditure 418.10

1 See background notes 7 to 10
All amounts are rounded to the nearest 10p

Income is not adjusted to take into account the different composition of households (equivalisation) when calculating these figures – as done in some other income analyses. Analysis of equivalised income data can be found in Chapter 3 of Family Spending.

Average weekly expenditure in 2003-04 was £418. It ranged from £140 a week in the lowest of the ten income groups to £905 a week in the highest.

Transport was the highest category of spending, with an average of £61 a week. Next was recreation and culture, £57 a week, followed by food and non-alcoholic drink, £44 a week.

For households in the lowest three income groups the highest categories of spending were food and non-alcoholic drinks and housing, fuel and power (excluding mortgage interest payments, council tax/rates). For households in all other income deciles, however, the highest expenditure was for transport and recreation and culture.

As a proportion of their total expenditure, households in the lowest income group spent twice as much (15 per cent) on food and non-alcoholic drinks as those in the highest income group (7 per cent). Spending on tobacco was highest for households in the ninth income decile who spent £7 a week compared to £4.40 for those in the lowest three income groups.

The proportion of transport spending going on the purchase of vehicles increased with income, from around 40 per cent in the lower income groups to nearly 50 per cent in the higher groups.

How spending varies with age

Average weekly expenditure for all households in 2003-04 was £418. This varied by age from the highest at £525 in households where the reference person was aged 30 to 49 to the lowest at £183 in households where the reference person was aged 75 or over.

The only category where households with a reference person aged under 30 spent more than all other age groups was housing, fuel and power (excluding mortgage interest payments, council tax/rates).

The proportion of spending going on food and non-alcoholic drinks rose with age from eight per cent where the reference person was aged under 30 to 16 per cent for those aged 75 or over. The proportion spent on restaurants and hotels decreased with age from nine per cent of total spending where the reference person was aged under 30 to six per cent for those aged 75 or over.

Households where the reference person was aged 50 to 64 spent more than other age groups on fresh fruit, vegetables and potatoes. Those in the under 30 age group spent the least. Spending on chocolate and confectionery was highest for the 30 to 49 age group at £2.40 a week and lowest for those aged 75 or over at £1.20 a week.

Transport was the largest item of expenditure for households where the reference person was aged 30 to 59. Households where the reference person was aged 50 to 64 spent more than other groups on purchases of new cars/vans, but for second-hand vehicles the highest spending group were households with a reference person aged 30 to 49.

Spending on newspapers was highest for households with a reference person aged 65 to 74 at nearly £3 a week and lowest for the under 30 age group at 80p a week.

Spending and employment status and education

In 2003-04 households with a self-employed reference person had the highest average expenditure at £588 a week. This was around two and a half times the expenditure of households where the reference person was retired (£232 a week).

For households where the reference person was in employment spending was greatest on transport and recreation and culture at £81 and £71 a week respectively. Where the household reference person was unemployed, most was spent on food and non-alcoholic drinks (£29 a week) and recreation and culture (£27 a week). For economically inactive households, the highest expenditure category was recreation and culture, at £38 a week.

Total expenditure increased by age at which the household reference person completed continuous full-time education from £203 a week for those who were aged 14 or under, to £621 a week for those aged 22 or over. Those who left school aged 14 and under had an average age of 74, so most would be retired, and those who left full-time education aged 15 were on average aged 57 and nearing retirement age.

Expenditure on most commodities and services increased with age at which the reference person completed continuous full-time education. However, spending on alcoholic drinks and tobacco was similar across all groups (at £12 to £13 a week) except for those were the household reference person completed education aged under 14 (at £7 a week).

Spending and type of household

Average weekly expenditure was highest for households consisting of three or more adults with children, at £686 a week. Households with two adults and two children spent an average of £611 a week.

One-person non-retired households had an average weekly spend of £281. The corresponding figures for one person retired households, dependent and non-dependent on a state pension, were £111 and £203 respectively.

Households with children

Average weekly expenditure by households with children increased as the number of adults in the household increased, from around £269 a week for one adult households to £686 a week where there were three or more adults.

The highest expenditure categories for single adult households with children were food, housing and recreation. The highest categories for two-adult households with children were recreation, transport and food.

Regional spending in the UK Figures are for Government Office Regions averaged over 3-years

Averaged over the last three years total expenditure varied from £486 a week in London to £336 a week in the North East. London, the South East and East of England were the only regions in which average expenditure was higher than the UK average. Spending in the North East was 17 per cent lower than the UK average.

Expenditure on housing, fuel and power (excluding mortgage interest payments, council tax/rates) accounted for 12 per cent of total expenditure in London, a higher proportion than any other region.

Households in Northern Ireland spent the most on cigarettes, at £8.10 a week, and households in the South East spent most on recreation and culture, at £64 a week.

Households in London spent by far the most on transport services (such as rail, tube, bus and air fares) at £16.70 a week, nearly double the UK average of £8.50. However, they spent the least on petrol, diesel and other motor oils at £11.90 a week, compared to a UK average of £14.80.

Urban and rural areas Classification based on the population of the continuous built-up areas, irrespective of administrative boundaries.

Averaged over the last three years, total expenditure was highest in the London built-up area at £491 a week. It was lowest in other metropolitan built-up areas at £344 a week. The highest value outside London was £461, in rural areas.

Transport was the largest item of expenditure for most areas. In ‘other metropolitan built-up areas’ and ‘other urban areas with a population between 25,000 and 100,000’, however, spending was highest for recreation and culture.

Rural areas spent more than other areas on transport, at £75 a week. They were also the highest spending households on food and non-alcoholic drinks (£47 a week), household goods and services (£37 a week) and recreation and culture (£63 a week).

Detailed expenditure and place of purchase Detailed expenditures shown are averaged across all households, including those reporting zero expenditure on a specific item.

Transport was the area of highest expenditure in 2003-04, at £61 a week. Included within this category are vehicle purchases (both new and second-hand) at £28.10, operation of personal transport (including petrol and diesel costs) at £23.80 and spending on transport services such as rail and tube fares, at £8.80 a week.

Spending on recreation and culture was £57.30 a week. Twenty per cent of this was spent on package holidays abroad, at £12.40 a week, while £4.70 a week was spent on sports admissions, subscriptions and leisure class fees, £1.70 on the cinema, theatre or museums and £3.60 a week went on gambling payments.

Place of purchase Half of all households (50 per cent), bought and consumed alcoholic drinks on licensed premises, spending £8.50 a week on average, of which, £5.10 went on beer and lager. A further £6.20 a week was spent on the purchase of alcohol from off-licences and supermarkets.

Of the £43.50 spent each week on food and non-alcoholic drinks, £35.50 was spent in large supermarket chains. Just under a third of the amount spent on petrol, diesel and other motor oils came from purchases in large supermarket chains.

Consumer durables

Between 1998-99 and 2003-04 mobile phone ownership increased from 27 to 76 per cent. Forty seven per cent of households in the lowest income group owned a mobile phone compared to 93 per cent in the highest. Households in the South East reported the highest levels of mobile phone ownership (77 per cent of households); the lowest levels were reported in Northern Ireland (51 per cent of households).

Fifty-eight per cent of households had a home computer and 49 per cent had an internet connection in 2003-04. The highest level of ownership for home computers and internet access were in London and the South East. Northern Ireland and Wales reported the lowest levels.

Thirty-one per cent of households owned a dishwasher; this figure varied from seven per cent for households in the lowest income group to 73 per cent for the highest income households. Other large differences between income groups were reported in the ownership of home computers (23 per cent in the lowest group compared to 93 per cent in the highest) and internet connection (15 per cent in the lowest compared to 90 per cent in the highest). A fifth of households in the lowest income group owned a satellite receiver, a higher proportion than those with home computers, internet access or dishwasher.

Three-quarters of households in the UK owned a car. The lowest levels of ownership were reported in the North East, London and Scotland (62, 65 and 65 per cent respectively); the highest levels were recorded in South East, South West and East (all over 80 per cent).

Almost a third of households (29 per cent) in the lowest income group owned a car. For the top four income groups this increased to over 90 per cent. Over half of households in the two highest income groups owned at least two cars.

Trends in household spending over time, 1980 – 2003-04 (see background note 10) All expenditure figures are shown at 2003-04 prices. From 2001-02 figures are based on COICOP broadly mapped to the 14 main categories used on the Family Expenditure Survey, the predecessor to the Expenditure and Food Survey.

Leisure goods and leisure services were for the second year running the largest item of expenditure with an average of £76 a week, 18 per cent of total expenditure. Around 17 per cent of total expenditure went on housing (£70 a week) and 17 per cent went on food and non-alcoholic drinks (£65 a week).

Spending on motoring has increased steadily from £35 a week in 1980 to £62 in 2003-04. This was equivalent to 12 per cent of total spending in 1980 and 15 per cent in 2003-04.

As a proportion of total household expenditure, the largest decrease is in the spend on food and non-alcoholic drinks, down from 23 per cent of spending in 1980 to 16 per cent in 2003-04. Over the period there have also been falls in the proportion spent on fuel and power, from 6 per cent to 3 per cent of total expenditure, on clothing and footwear, from 8 to 5 per cent, tobacco from 3 to 1 per cent and there have also been small falls in the expenditure on fares and other travel costs, down from 3 to 2 per cent and on alcoholic drinks, down from 5 per cent to 4 per cent of total expenditure.

Total consumer expenditure on leisure services has more than doubled as a proportion of spending from six per cent of all expenditure in 1980 to 13 per cent in 2003-04. Over the same period there have been small increases in the proportion spent on housing (net), from 15 to 17 per cent, motoring, from 12 to 15 per cent and household services, from 4 to 6 per cent.

Total expenditure during the period 1980 to 2003-04, for household goods (8 per cent), personal goods and services (4 per cent) and miscellaneous (less than one per cent), as a proportion of overall spending remained constant.

BACKGROUND TO THE SURVEY

How the information is collected 1. The EFS is a voluntary sample survey and is conducted annually.
The field work is carried out by the Office for National Statistics in
Great Britain, and by the Northern Ireland Statistics and Research Agency
of the Department of Finance and Personnel in Northern Ireland, using almost identical questionnaires.

2. In 2003-04, 7,048 households in the United Kingdom participated in the
survey, a response rate of 58 per cent in both Great Britain and Northern
Ireland. The random sample of households to be visited is designed so that
the EFS is representative of all regions of the UK and of different types
of households. The survey is continuous: interviews are spread evenly over
the calendar year to ensure that seasonal expenditure is covered.

3. Strict care is taken to keep the information supplied by the individual
households confidential. No material is released in a form which would allow
individual households to be identified.

How the information is used.
1. The EFS shows how households spend their money; how much goes on food, clothing and so on; and how spending patterns vary depending upon income, household composition, and regional location of households. The survey also contains data on household income and its sources.

2. The main historical purpose of the EFS (formerly Family Expenditure
Survey) is to define the ‘basket of goods’ for the Retail Prices Index (RPI).
The RPI is the primary measure of inflation, and it has a vital role in the
uprating of state pensions and welfare benefits, tax allowances and savings,
as well as being a key macroeconomic indicator.

3. Information from the EFS is also a major source for estimates of Consumers’ Expenditure in the UK National Accounts.

4. EFS information on expenditure and income is used by HM Treasury to study how taxes and benefits affect household incomes and to analyse the effects of policy in these areas.

5. Regional EFS information is one of the sources of regional estimates of
consumer spending and other regional statistics.

6. Many other government departments use EFS data as a basis for policy
making, for example in the areas of housing and transport.

7. Users outside government include independent research institutes,
academic researchers, and business and market researchers.

BACKGROUND NOTES

1. Family Spending 2003-04 available free on:
http://www.statistics.gov.uk/StatBase/ Product.asp?vlnk=361

2. In common with any sample survey, Expenditure and Food Survey (EFS)
standard errors in the tables of Family Spending 2003-04 which are discussed
in Appendix B3 of the report. Figures and differences between figures should be interpreted in the light of these standard errors.

3. The EFS is reviewed each year, and changes may be made to keep it
up-to-date. Year-on-year changes should be interpreted with caution.

4.The definitions of income and expenditure used are explained in Appendix
B4 of Family Spending 2003-04.

5. Experience of household surveys in the United Kingdom and in other countries indicates that reported expenditure on a few items (notably tobacco and alcohol) is below the levels which might be expected by comparison with other sources of information. National Lottery spending has also been significantly under-recorded in the EFS, particularly for scratchcards.

6. The format of the Family Spending publication has changed this year and
the tables of key results which previously were found in the main body of the report are now in Appendix A. This year’s report focuses upon three principal topics: expenditure on housing; expenditure by children and the impact of equivalising income when calculating results. Chapter 1 presents results of expenditure on housing which has for the first time been extended to cover all reported expenditure on housing. Chapter 2 gives results of expenditure by children and results based on equivalised income are presented in Chapter 3. Results of trends in household expenditure over time, from 1980 to 2003-04, are presented in Chapter 4.

7. The household expenditure figure of £418 is presented using an
internationally agreed classification system which enables the survey results
to be used for National Accounts and other such estimates. In addition to
these data, the EFS records information relating to other household expenses, such as life assurance; savings and investments and the purchase or alteration of dwellings.

8. COICOP – From 2001-02, the Classification Of Individual COnsumption by
Purpose was introduced as a new coding frame for expenditure items on the EFS. COICOP has been adapted to the needs of Household Budget Surveys (HBS) across the EU and, as a consequence, is compatible with the classifications used in national accounts and consumer price indices. This allows the production of indicators which are comparable Europe-wide, such as the Consumer Prices Index (CPI) (computed for all goods and services as well as sub-categories such as food and transport).

9. The COICOP system does not include household expenditure such as mortgage interest payments, water rates and council tax. These are shown under ‘other expenditure items’. This is a consequence of COICOP data being used in the calculation of national accounts and therefore utilising national accounting definitions and conventions. National accounts use COICOP data to provide a breakdown of household final consumption (household expenditure) measured as rent: either actual paid rent (in the case of tenants) or imputed rent (in the case of owner occupiers). This enables all dwellings to be treated in the same way and prevents the need to change the measure of GDP of the economy, each time a dwelling changes from tenant to owner occupied and vice versa.

10. The COICOP categorisation of spending used in the EFS is only
comparable with that used previously by the Family Expenditure Survey
(FES) at a broad level. Codes are available that map COICOP to the FES 14
main categories. However these two coding frames are not comparable for
any smaller categories. This leads to a break in trends between 2000-01 and
2001-02 for any level of detail below the main 12-fold categorisation.

11. The report gives a broad overview of the results of the survey,
and provides more detailed information about some aspects of expenditure.
However, many users of EFS data have very specific data requirements which may not appear in the desired form in this report. The ONS can provide more detailed analysis of the tables in this report, and can also provide additional tabulations to meet specific requests. A charge will be made to cover the cost of providing additional information.

12. Details of the National Statistics policy governing the release of new
data are available from the press office. Also available is a list of the
names of those given pre-publication access to the contents of this release.

13. National Statistics are produced to high professional standards set out
in the National Statistics Code of Practice. They undergo regular quality
assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. Crown copyright 2005.

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