information for transformational people

Measure 246Insights into poverty and inequality - 2 


Various poverty measures based on household income are in common use.

The one you see most often is; people in relative low income – living in households with disposable income below 60% of the median in that year.

(Median is not an average - it may be thought of as the "middle" value of a data set. For example, in the data set {1, 3, 3, 6, 7, 8, 9}, the median is 6, the fourth number in the sample.)

I found it helpful to think of it this way - the income of the household (note - not assets) that is available to spend is low relative to the income of the median household in the UK. It is a relative poverty.

The Office of National Statistics report that in April 2017, based on their Living Costs and Food Survey, the UK median disposable household income was £27,300 - this is income after Income Tax, NI, Council Tax. 60% of this would be £16,380pa.

To many the relative low income measure is unsatisfactory for several reasons, some of which are below:

  • It does not take circumstances into account . A single person in a 1 bed flat might earn the same as a single mother but their needs would be very different.
  • If there was a recession which mostly affected households above the median, the median income would decrease and the number of people getting out of poverty would rise despite the lower paid not earning any more. 
  •  With an aging population, the number of pensioners increases every year and the nation would be faced with an unsustainable burden to increase pensions for those without occupational pensions to the level required.  
  • It does not take into account assets or lifestyle; if you were a pensioner with house paid off, you might have a low income, live a simple life and have a considerable asset and yet you would be counted as living in poverty.
  •  It does not take into account the cash economy.
  • As you would expect, people living in households with just one person working account for almost 60% of people experiencing relative low income poverty, more than double their population share¹.
  • Most low paid workers are not counted as 'poor', because many low paid workers live in households with additional earners¹.

So when we see headlines such as '10M people now live in poverty in the UK', we should reflect that this means 10M people live in households with relatively low income compared to others. It does not mean they live in 'poverty' as some would define 'poverty'. But that doesn't make a good headline...

What is needed really is a mix of measures of 'poverty' - measuring quality of life not just financial income but, as you can imagine, these are harder to obtain.

In June 2010, Frank Field was appointed by the then Prime Minister, David Cameron to undertake a Review of Poverty with the specific aim of examining the case for reforms to the current poverty measures, in particular for the inclusion of non-financial measurements. Mr Field’s paper ‘The Foundation Years: preventing poor children becoming poor adults’ did just that. Life Chances Indicators were therefore established to monitor how well developed children are. Added to this, in April 2017, the Government defined nine measures that would be monitored. These are:

1. Parental worklessness 
2. Parental conflict
3. Poor parental mental health
4. Drug and alcohol dependency
5. Problem debt 
6. Homelessness
7. Early years attainment?
8. Educational attainment 
9. Youth employment  

These measures reflect some of the pathways to poverty identified by The Centre of Social Justice. Once established, they will give a far better indication of 'poverty' and will also focus attention on those areas that need improvement to prevent 'poverty' in the first place. They will of course also show us what we are doing well.

¹ Understanding Society 




Geoff Knott, 13/02/2018

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