A new measure of poverty: identifying people with the greatest need

Hetan Shah is Executive Director of the Royal Statistical Society. He is visiting professor at the Policy Institute, Kings College London, and deputy chair of the Ada Lovelace Institute.

One of the blocks to effectively tackling poverty has been a lack of agreement on how it should be measured. In the recent tumult of British politics, it would have been easy to have missed an important positive development. The Government has recently agreed to take forward a new measure of poverty which was recommended to it by the independent Social Metrics Commission, of which I am a member.

The Social Metrics Commission was formed by Baroness Philippa Stroud. It brings together people from expert bodies such as the Joseph Rowntree Foundation and Institute for Fiscal Studies, and from differing political backgrounds. The aim was to create a long lasting consensus about how we can best measure poverty. After two and a half years of work, we published a new method for poverty measurement in autumn 2018. This commanded a wide degree of support from civil society and across the political spectrum. The UN Rapporteur on Poverty also recommended in his report that our measure be adopted by the Government.

Our new measure continues to show that a shocking 14.2 million people were in poverty in the UK (2016/17). This is in line with the findings of the traditional measure of relative poverty where a household is considered poor if its income is below 60 per cent of the median household income after housing costs.

Our measure casts new light, however, on the kinds of people that are poor. We take liquid assets into account, so those who may have savings or shares that can alleviate immediate poverty are no longer classed as poor. Our measure also uniquely considers inescapable costs such as childcare, rent and mortgage payments, and the extra costs of disability. As a result we learn that nearly half the households classed as poor have someone with a disability living in them. Under our measure we also see more households where children are poor than previously thought.

The Social Metrics Commission also developed measures of poverty depth, poverty persistence, and a range of lived experience indicators. These show us that 7.7 million people are in persistent poverty.

Politicians from all sides of the political spectrum agree that we want to reduce poverty in our society. They will naturally hold different views on the ways to achieve this. But our national efforts will be in vain if our statistics misidentify the people with the greatest needs. What gets measured can drive policy. With a better handle on the types of people that are poor, we can design better interventions to reach and support them.

It is time that we stopped arguing about how to measure poverty, and started doing more to address it. The Government taking forward the Social Metrics Commission measure is a welcome step on this road.

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