What is the new measure?
The Social Metrics Commission (SMC) set out to develop a poverty indicator that goes beyond a simple measure of people’s relative income by taking into account core living costs such as housing, childcare and the extra costs of disability. It also accounts for people’s wider resources, such as savings, in assessing whether they can be defined as in poverty.
Why is a new measure needed?
The existing measure, which sets the poverty line at 60% of median UK income, was abolished as an official measure in 2015 by the Conservative government (although it has been retained in Scotland, Wales and Northern Ireland). Critics said this was flawed. It produced paradoxical outcomes, for example, when child poverty figures fell after the economy nose-dived after the 2008 financial crash.
Conservatives maintained it failed to reflect what they insisted were other key causes of poverty, such as family breakdown and worklessness. When it was abolished, poverty campaigners suspected a government that had overseen a raft of austerity cuts wished to rid itself of the accountability that came with overarching poverty targets. There is currently no formal UK-wide measure, making it harder to hold government to account on tackling poverty, the SMC says.
How does it define poverty?
The SMC measure sets a poverty threshold of 55% of median total available resources – in effect creating a poverty line relative to what the median family has available to spend. A key principle of the measure is that poverty “should be related to the extent to which people have the resources to engage adequately in a life regarded as the norm in society”.
Does the new measure change the overall picture of UK poverty?
In terms of numbers of people, its findings are broadly similar to those generated by existing relative poverty measures: 14.4 million people in the UK were in poverty in 2016-17, according to the SMC, compared with 14.3 million under existing measures. These included 4.5 million children, compared with 4.1 million, and 8.4 million working-age adults, against 8.2 million. A notable change is that under the SMC measure far fewer pensioners are defined as living in poverty – 1.4 million against 1.9 million.
Does it change our understanding of who is in poverty?
By taking into account total household resources, the new measure redefines who is in poverty. For example, a family with relatively high income could be counted as in poverty because high unavoidable living costs (such as rent and childcare) leave them unable to afford basic material necessities. Equally, a household with low income but a high level of financial savings would not be in poverty because they would be able to afford basic necessities using available resources. It also highlights that disabled people, single parents and people without a job or in insecure zero-hours employment are proportionately much more likely to be in poverty.
Does it examine why people are in poverty?
The new measure explores multiple dimensions of poverty, including income, overall resources, living costs and housing adequacy. It also uses official data to compare the perceptions, experiences and behaviours of people either side of the poverty line across a range of indicators, from health to family. But it refuses on principle to speculate on how people came to be in poverty.
What does it tell us about the experiences of people in poverty?
Perhaps unsurprisingly, while people in poverty are more likely to report poor mental and physical health, they are less likely than wealthier people to drink to excess or take illegal drugs. They are much less likely to have educational qualifications and more likely to have debt problems. Otherwise, the data shows they are pretty much like everyone else in factors such as closeness to family and satisfaction with local public services.
How might the new measure influence policy?
The SMC hopes it will encourage ministers to consider measures to reduce the cost of living, as well as ones that increase income. There will inevitably be debate about the impact on poverty of cuts and freezes to benefits. That far fewer pensioners are in poverty than in previous measures may persuade a government to switch welfare resources from the over-65s to working-age families, although alienating older voters would be politically risky.
Will the new measure get consensus political support?
The commission included people with links to all three main British political parties, as well as representatives of respected independent organisations such as the Institute for Fiscal Studies, the Joseph Rowntree Foundation and the Royal Statistical Society. According to the SMC’s chair, Tory peer Philippa Stroud: “Sensible people on the mainstream left and right who genuinely care about poor people will recognise the truth of this [measure].” Whether the new measure will be adopted by this government or a future one remains to be seen.
