Poverty: Metrics

Baroness Stroud Excerpts

Monday 21st January 2019 Lords Chamber

Asked by

[Baroness Stroud]

To ask Her Majesty’s Government what assessment they have made of metrics to measure United Kingdom poverty, in the light of the report from the Social Metrics Commission.

[Baroness Stroud (Con)]

My Lords, the Social Metrics Commission was formed three years ago with the sole and express aim of delivering new poverty metrics for the UK. The need for an independent commission to do this was clear. 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 to me that whoever was going to be held accountable—the Government—could not in reality develop the measure by which they were going to be held to account. So we brought together top thinkers from left and right to create new measures. That is one reason why I am so grateful to noble Lords from the Labour, Liberal Democrat, Bishops’ and Cross Benches. Their participation, alongside Conservative Peers, reflects the make-up of the commission and the broad support for the proposed new measures.

Why was it so important to create new, agreed measures of poverty? The lack of an agreed measure has meant that Governments of any party have been left unaccountable for their policy actions to reduce poverty. One of the most concerning findings in the report 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 cannot allow this to be the reality of our generation and we need an agreed measure to drive accountability, because what gets measured gets done.

The lack of an agreed measure also affects government behaviour. It was my observation of how Governments behave in Budgets and spending reviews that led me to create the Social Metrics Commission in the first place. When it came to the big economic decisions, it was quite obvious that the OBR and the IFS played a significant role in driving the accountability of Treasury decisions. However, there was no such equivalent for social policy decision-making. The events of the past 20 years have also shown that it is not enough just to have a measure of poverty. It is also crucial that it is an agreed measure and that it rewards decision-making that improves people’s lives. We need to move from a debate about measurement to one that drives better outcomes for people. It is too easy for those in this Chamber and in the other place 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 the 7.7 million who are in persistent poverty.

If it is important that we have this new measure, how does it actually improve on what we have had historically? There are many aspects of the commission’s approach to measuring poverty which are a significant improvement on what was previously used—too many to go into in detail in this short debate. However, the changes lead to two key positive impacts: they better identify who is living in poverty, and they provide a greater insight into the nature of that poverty and wider life experiences. The old measure was purely of income. Commissioners felt that this did not adequately capture the nature of poverty. They wanted to identify both the wider resources that families have available to them and the range of different needs that those resources must meet. It is, in effect, a balance-sheet model of available resources versus inescapable needs and costs.

For example, we include in the measure the available assets and the obligated debt of a household. 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. This seems potentially counterintuitive. Noble Lords may have known that assets and debts were not included in previous measures of poverty, but I can remember being seriously surprised a few years ago when I first came across this fact.

We also wanted to offset those resources against inescapable family-specific costs that had not previously been taken into account, such as the costs of disability and childcare. It is clear that disability benefits are given to people who are disabled to cover the extra costs of disability, but in the old measure they are credited purely as income and not offset against the corresponding extra costs of disability. This gives a distorted view of the available resources for a family coping with disability. The costs of childcare are typically unavoidable and related to working, but we all know that in any household they are offset against income. Having income as our sole measure of poverty does not acknowledge the inescapable and very real costs of working. Does my noble friend agree that understanding the inescapable costs of childcare and disability contributes to our understanding of the measurement of poverty?

The proposed measures also provide a greater insight into the nature of poverty and the wider life experiences of those who are in it. Poverty measures are created from the data housed in the big government datasets. We wanted to understand the depth, persistence and lived experience of those in poverty. Much of the debate in this House is about the number of those who show up in a snapshot of data captured at a single point in the year. While this is important, as it clearly shows vulnerability, we in the commission were even more concerned about those who show up in these surveys year after year, and about how far below the poverty line families actually are. So we created a measure that will 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. So we developed a set of lived experience indicators that look at a range of issues, from mental and physical health, to work, 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. This is one reason why this new measure has developed real consensus. Any genuine and sustained effort by Governments of any persuasion will be rewarded in the metric.

I was delighted on the day of the launch to stand with commissioners from the Joseph Rowntree Foundation, Making Every Adult Matter and the Institute for Fiscal Studies; to have endorsements from the Child Poverty Action Group, the most reverend Primate the Archbishop of Canterbury, and the Centre for Social Justice; and to have academics such as Paul Gregg and Naomi Eisenstadt supporting us.

What does the measure tell us? The good news is that there are fewer pensioners living in poverty than previously thought. This is a tribute to the hard work done to improve the lives of pensioners over the past two decades and shows that concerted policy action can really make a difference. However, there are many other findings that challenge us to sharpen our focus. Some 14.2 million people are in poverty at any one time, but as concerning for me are the 7.7 million people who are in persistent poverty. These people have spent all or most of the past four years in poverty. Perhaps the most concerning finding to come out of the new measure is the link between disability and poverty. In nearly half of all households in poverty there is a disabled adult or child. Disability has been seriously underestimated in historic poverty measurement, and therefore most likely in our strategies.

What happens next? I have been delighted by support from all parties. A few weeks ago we received a letter from the Prime Minister asking us to work with her officials. Last week the chairman of the Work and Pensions Select Committee asked us to work up a draft Bill that could put the measures into legislation. We believe that there is consensus around these new measures, and we and other organisations will start to use them as we make the code public. We urge the Government to seriously consider adopting them as their own, too. I ask my noble friend to commit her department to exploring how the UK’s measurement of poverty could be improved by using the Social Metrics Commission measure and to outline what steps her department is taking to assess whether or not to adopt the measures as official government metrics.