Philippa Stroud is CEO of the Legatum Institute
It was on this website, just over three years ago that I announced the creation of an independent commission called the Social Metrics Commission (SMC), with the sole aim of delivering new poverty metrics.
Today, I continue to chair the SMC and I am thrilled to share the news that not only did we launch the new metric in September 2018, after more than two years of development work that united thinkers from the left and right with poverty and data experts to reach a new consensus; it is now in the process of being adopted by the Government as a new official poverty measure.
This is no mere technical intervention. It is a pivotal moment in the fight against poverty because it enables the Government to help the most vulnerable and disadvantaged people in Britain. There are four reasons why I think it is so important.
First, it was clear to me from the start that only an independent commission could devise a new poverty measure. When I was in government, there were two failed attempts to develop new measures in the lead-up to the Welfare Reform and Work Act 2016. It was obvious that whoever was going to be held accountable – the Government – could not also develop the measure by which they were going to be held to account. Hence the reason we brought together top thinkers from across the political spectrum to create these new measures.
I am so grateful to the SMC commissioners from Institute for Fiscal Studies, the Joseph Rowntree Foundation, The Royal Statistical Society, Social Finance, Oliver Wyman, and others that reflect the broad make-up of the commission and the wide support we now enjoy for the new measures.
Second, with new, agreed measures of poverty it will be much harder for governments of any party to remain unaccountable for their policy actions to reduce poverty. One of the most concerning findings is that, since 2001, and under successive governments (Labour, coalition of Conservative and Liberal Democrat, and Conservative), although the composition of who is poor may have changed, the number of people in poverty has remained consistent. We need an agreed measure to drive accountability, because what gets measured gets done.
For too long, much of the political and policy debate on poverty has focused on whether and how we should measure poverty, rather than the action needed to drive better outcomes for the most disadvantaged in our society. With this metric we can move from a debate about measurement to one about what drives better outcomes for people. It has been too easy for politicians and peers to debate the 200,000 people who moved from one side of the poverty line to the other rather than develop a strategy to deliver improved outcomes for those people living in persistent poverty. With this new measure we can drive more action.
Third, the new measures reveal more precisely who is most in need and where the Government’s efforts and interventions should be focused. The metric looks at income but for the first time, it also accounts for the range of inescapable costs that reduce people’s spending power, as well as the positive impact of people’s liquid assets on alleviating immediate poverty. These inescapable costs include rent or mortgage payments, childcare and the extra costs of disability. Liquid assets include savings, stocks, and shares that can be drawn on to address poverty now.
Historically, you could be on an income just above the poverty line but in significant debt, and you would not have been considered poor, even if your debt repayments meant that you could not meet your needs. Alternatively, you could have been on a low income below the poverty line and have significant liquid assets, but you would have been considered poor. It is still surprising to me that liquid assets and debt were never included, and it is fundamental that we have addressed this.
The results tell us more about the experience of people living in poverty, by including measures of poverty depth, poverty persistence, and a range of Lived Experience Indicators, which capture the resilience gap of people living in poverty. Of the 14.2 million people who are in poverty at any one time, the people we should be most concerned about are the 7.7 million people living in persistent poverty.
Much of the political debate has centred around the number of people in poverty who show up in a snapshot of data captured at a single point in a survey in any year. While this is important, as it clearly shows vulnerability, I am even more concerned about those who show up in the data year after year, and about how far below the poverty line some families have fallen. That is why we created a measure that can assess the depth of poverty, to understand how far below the poverty line a particular family is; and a measure that captures the persistence of poverty, to show how long people have been in poverty.
We also wanted to capture the lived experience of those in poverty – the resilience gap between those who are in poverty and those who are not – with a set of indicators that look at a range of issues, from mental and physical health, to work and skills, community engagement and family structure, which may impact on the likelihood of people being in poverty, their experience of it and their chances of moving out of it in future. As well as improving our understanding, each of these measures provides clear levers for policymakers to target policy on reducing the number of people living in poverty, and improving the outcomes of those families who do experience hardship.
The new metric also tells us that in nearly half of all households in poverty there is a disabled adult or child. Disability has been seriously underestimated in historic poverty measurement because an income-only measure overlooks the real costs of caring for a disabled member of the household, and the impact on a carer’s ability to work full time, often resulting in them taking part-time work or no work at all.
Finally, this measure can put tackling poverty at the heart of government policy-making and ensure that decisions are made genuinely with the long-term interests of those in poverty in mind. Views on policy priorities will differ across the political spectrum but with a much better understanding of the extent and nature of poverty, on which we can all agree, I believe that the people and organisations across and outside of the political spectrum can put all their energy into reducing poverty and creating pathways out of it.
Any sustained effort by Governments of any colour to genuinely tackle poverty will be rewarded in this measure, and subsequently result in genuine life change.