Poverty rates on the decline - but 22% of Britons still live below the line

Poverty in Britain has fallen to levels last seen in the late 1980s, according to a survey published by the Joseph Rowntree Foundation today.

The New Policy Institute found there were 12.5 million people in 2001-02 living in homes with incomes below the poverty line.

This compared with a peak of 13.4 million in the mid-90s, and was lower than at any time during the 1990s.

Altogether 22% were living below the line, including 3.8 million children, 2.2 million pensioners and 6.6 million working-age adults.

The institute said: "There are signs that Britain may have started to move away from the bottom of the EU poverty league, which it shared four years ago with Portugal, Greece, Spain, Italy and Ireland."

An analysis of 50 different poverty indicators found that the east, south-east and south-west of England performed better than average. Inner London was the most unequal part of the country, with 29% of people in the richest fifth of the population and 32% in the poorest fifth. Homelessness was also higher in the capital than elsewhere.

Levels of treatment for drug abuse in the north-east, Yorkshire and Humberside were four times those in the east and south-east.

Scotland was typical of Britain on many poverty indicators, but its death rate among men below retirement age was higher than elsewhere.

The report said poverty continued to affect a large number of low-income households with someone in paid work. About 3.5 million people experienced "in-work poverty" between 1999 and 2002.

After dropping steadily between 1995 and 1999, the number of 19-year-olds without five GCSE passes or vocational equivalents has stalled. Half of all adults in their late 20s with no qualifications earn less than £200 a week, compared with one in six of those with five GCSE passes or better.

Premature death rates for men and women under 65 fell by a sixth between 1991 and 2001. But obesity among women rose by half in the decade to 2001 to a point where a quarter of all women aged 25 to 64 were affected.

Guy Palmer, co-author of the report, said: "With five years' data available to measure progress since Labour came to office, it is much clearer where the government's strategy for combating poverty is working - and where it is not.

"There is still a long way to go... but the reduction in poverty levels to below those of the 1990s is a notable milestone."