May
21
2019
Author
Jennie Pollock
J+ welcomes new poverty measure

The DWP announced on Friday that it will begin to develop experimental statistics to measure poverty, based on work undertaken by the Social Metrics Commission (SMC). Jubilee+ applauds this move, which is a significant step towards addressing some of the recommendations we have made to Amber Rudd since her appointment as Work and Pensions Secretary.

 

What is this new measure?

Historically, poverty has been assessed using a simple measure of household income. The average incomes of households across the UK are assessed, and any household bringing in less than 60% of the average is considered to be in (relative) poverty.[*] This old measure has been the subject of much debate, and has been discarded by many, because it doesn’t take into account any other factors.

The new measure recognises that not all households are equal, and takes into account what the SMC describes as ‘inescapable costs’ such as rent or mortgage payments, childcare and costs associated with disability or chronic illness. It also factors in ‘liquid assets’ such as savings, stocks and shares.

 

Why is this good news?

Every household’s needs are different. If poverty is measured purely on the basis of income, many families with higher inescapable costs may experience poverty while being considered by the government as above the poverty line. Similarly, households with a low monthly income but low inescapable costs (such as pensioners who own their own home so are no longer paying mortgage costs), would be counted as being in poverty when they were living quite comfortably.

Using this new method of measuring poverty, the SMC report, released in September 2018, found that:

  • 14.2 million people in the UK population are in poverty: 8.4 million working-age adults; 4.5 million children; and 1.4 million pension age adults
  • Of the 14.2 million people in poverty, nearly half, 6.9 million (48.3%) are living in families with a disabled person.
  • Far fewer pensioners are living in poverty than previous measures suggested. Poverty rates amongst pension-age adults have also nearly halved since 2001 (falling from 20.8% in 2001 to 11.4% in 2017).

The measure currently used by the government finds that 14 million people are in poverty, of which 4.1 million are children and 2 million are pensioners. So while the SMC figures don’t show a dramatic rise in the number of people in poverty, they do show significant differences in the type of households that are affected. This is a deliberate choice. The SMCnotes that there is no universally agreed threshold for measuring poverty, either absolute or relative, so they had to choose the defining point. They chose to set the threshold at 55% of the median figure for total resources available, and explained their decision by saying:

“The Commission took the decision not to make large changes to the understanding of the number of people judged to be living in poverty in the UK. Instead, the major contribution of the Commission is to improve the understanding of the different types of people who fall beneath any given threshold and to explore the lived experience of these people.”

Having the right figures and, importantly, understanding how those figures are made up, is essential to ensuring that the appropriate processes are put in place to tackle poverty. For example, discovering that more children and fewer pensioners are in poverty than was previously thought means that funding can be redistributed appropriately, and better-informed attempts can be made to tackle the root causes of poverty.

 

We congratulate the SMC, made up of partners such as the Joseph Rowntree Foundation, for their hard work in urging the Government to adopt this new measure of poverty. We are delighted that the Government has listened and responded, and believe this will help ministers such as Amber Rudd to respond more effectively to poverty in the UK.

For more information about how poverty figures are currently calculated, see this helpful article by FullFact.org.

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[*] There is also a calculation for absolute poverty, for which the figures are slightly lower. You can read more about what that is and how it is calculated here.