New child poverty measures could allow government to shirk its responsibilities

Credit: Pink Sherbert Photography, CC BY 2.0

Last week the Conservative Government announced that it would be abandoning the indicators and targets in the Child Poverty Act (passed with cross-party support in 2010), and replacing them with a set of broader measures of life chances. It will introduce a statutory duty to report on measures ofworklessness and GCSE attainment, and it will develop a range of other indicators “to measure progress against the root causes of poverty” – which it identifies as family breakdown, problem debt, and drug and alcohol dependency. Income based poverty measures are not merely being downgraded within this new approach; they are being dropped entirely. Crucially, the relevant data will still be published (at least for now). It is vital that the data continue to be published – and on time – so that others can hold governmentaccountable. But the Conservatives have made it clear that they no longer consider income poverty part of their concern.

We are deeply concerned at this development. There is no question in our view that it will damage theinterests of disadvantaged children, and that it is a significant step backwards in attempts to make Britain a fairer society in which children’s life chances are not hemmed in by the lottery of birth.

The first and most fundamental point that needs to be made – over and over again – is that family income matters to children’s development and opportunities. No-one would suggest that it is the only thing that matters (as we argued in our own response to the original consultation on this issue). But it is one very important factor driving child outcomes. At CASE we conducted an extensive and systematic review of the relationship between household income and children’s outcomes, looking only at research using methods which are considered robust enough to get at causal relations (for example, tracking outcomes for children in households that receive a boost in income because of a benefit change, and comparing them to children in similar households which were unaffected).

The evidence from this review was unequivocal: children from low-income households do worse in part because they have lower incomes. The findings are clearest and strongest for cognitive development and school achievement, with social and behavioural development close behind. In part the causal effect reflects the fact that money enables parents to buy things that children need to flourish – more nourishing food, warmer clothes, books, toys and outings. But the stress of managing on a very low income is also an important issue. Constantly worrying about money reduces the extent to which parents are able to focus on and engage with their children. As any parent will testify, parenting well and positively is much harder under conditions of stress or anxiety.

Not measuring income poverty, then, while professing concern about life chances, is little short of bizarre.That leads to the question of how income poverty should be measured. The main child poverty measurein the UK (and indeed the rest of Europe) is currently a relative income measure: children are considered to be poor if they live in households with income below 60% of the household median (adjusted for family size). Because the measure is based on the median (middle) income, rather than the mean, it is not affected by rich people getting richer – a common misperception. But if the middle income changes (and that of lower income households does not) the number of people counted as poor will change. This is simultaneously a strength and a weakness of the indicator. It is a strength because it captures the idea that being poor is about being excluded from participating in things that people ‘in the middle’ of society can normally do. Being poor in a rich society is not only about being able to provide basic food, clothes and shelter for oneself and one’s children (though those things are far from given for all families in Britain in 2015). It is also about being excluded from participating in the everyday activities that others take for granted: swimming lessons, birthday parties, perhaps a holiday once a year. In the mid–1990s no-one would have argued that being able to afford a mobile telephone was a requirement for any family; in 2015 not having one is a major obstacle to social and even employment participation.

The idea that poverty is relative in this sense is widely accepted. Indeed, even David Cameron recognised it not so long ago, committing his party in 2006 to measuring and to reducing relative poverty: “We need to think of poverty in relative terms – the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear: the Conservative Party recognises, will measure and will act on relative poverty.”

The 60% of median income measure is generally recognised to be the most consistent and coherent measure of relative poverty available, which is why it is the standard used across the European Union, and received vigorous support from the academic community when the Coalition Government consulted on it in 2013. It allows us to track both over time and across countries how incomes for those towards the bottom of the income distribution compare to those in the middle. It is worth emphasising that there is nothing impossible about reducing and even eliminating poverty under this measure (a point that sometimes causes confusion): not everyone can have the median income, clearly, but it is perfectly feasible for everyone to have at least 60% of the median.

No indicator is perfect, though, and the relative income measure does have a weakness: it can give a misleading picture of what is happening for low-income households when things change quickly, and particularly when there is a sharp fall in median income. In the early years of the recent recession median income fell, while incomes at the bottom were protected by benefits, so relative child poverty also fell. In such a situation it is helpful to have more than one income-based measure, to give a fuller picture of what is happening. This is exactly why the Child Poverty Act includes not just one measure but several: the relative measure; a combined income and material deprivation indicator; and an ‘absolute’ income measure based on 60% of the median income at a fixed point in time. The Act does not enable governments to claim success by reducing relative poverty while absolute poverty is rising: the terms require progress against all three measures.

Of course, it is important also to monitor other aspects of children’s well-being and opportunities – their education, their health, their housing situation. It is also crucial to understand and address the many causes of poverty. Worklessness – one of the new indicators the Government has announced it will use – is central among these, though we should remember that well over half of children living in income poverty in the UK today have at least one parent in work, and low pay and precarious work are also major drivers. (Nor is it the case that worklessness must by definition result in poverty: this is a policy choice. The point of a social security system is to provide financial security when people – or economies – fall on hard times. That our system is not effective at achieving this does not mean it is impossible, as comparisons with our European neighbours shows.)

However, at the heart of the concept of poverty remains the lack of material resources necessary to participate in the life of our society. Monitoring the extent to which people lack these resources must therefore remain central to any anti-poverty strategy.

One last point: household income is something government can influence very directly, more so than almost any other variable. That has been used by some as an argument for not having an income-based measure, as government can ‘fiddle with the system’ to meet its poverty target. But it is precisely because government has so much control that it is vital to hold it to account on this measure. If expected cuts to in-work tax credits materialise in next week’s budget, for example, the number of children in in-work poverty will rise as a direct effect. Perhaps it is no surprise that the government is hurrying to redefine what poverty means ahead of those announcements.

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Note: This article was originally published on our sister site, the LSE’s British Politics and Policy blog. It represents the views of the contributors and not those of Democratic Audit UK or the LSE. Please read our comments policy before posting.