19.Section 7 provides detail as to how net household income is calculated. Section 7(1) provides that housing costs are to be deducted in calculating the net income of a household. (This represents a departure from the position taken in the UK Child Poverty Act 2010. Section 7(2) of that Act provided that housing costs were not to be deducted in calculating net household income.) Setting the targets on an after housing costs basis means that they are based on an assessment of the disposable income households have once they have paid their housing costs.
20.Subsection (2) defines what is meant by “equivalised” – which is that household income has been adjusted to take account of variations in household size and composition. Subsection (2) also defines “median equivalised net household income” as the median equivalised net household income for the United Kingdom.