Question to the Department for Work and Pensions:

To ask Her Majesty's Government what assessment they have made of the concept of relative poverty.

Relative low income sets a threshold as a proportion of the UK average (median) income and moves each year as average income changes. It is used to measure the number and proportion of individuals who have income below this threshold (typically 50, 60 or 70 per cent of the median).

The percentage of individuals in relative low income will decrease if average (median) income stays the same or rises, and individuals with lower incomes see their incomes rise more than the average. The percentage of individuals in relative low income will also decrease if average (median) incomes fall, and individuals with lower incomes fall by less than average incomes.

This second scenario, where individuals can move out of low income despite a fall in their own income, is an example where relative low income measures taken on their own might be misleading. A further hypothetical scenario where relative measures have their limitations is if all incomes doubled overnight there would be no change in relative low income estimates.

This is why the Department also publishes a range of absolute low income measures. Absolute low income takes the 60 per cent of median income threshold in 2010/11 and adjusts this to take account of inflation. This is designed to assess how incomes are faring with reference to inflation over time.

The percentage of individuals in absolute low income will decrease if individuals with lower incomes see their incomes increase by more than inflation.

The Department also publishes a measure of persistent low income as the amount of time an individual has low income has been shown to have an impact on their actual standard of living. Persistent low income is defined as having had low income in at least 3 out of the last 4 years. Also a measure of material deprivation is published which measures whether individuals have access to a range of goods and services so provides a broader measure of living standards which goes beyond assessing income only.

No one measure of poverty is able to fully capture the concept of a low standard of living in all economic circumstances. Taken together all these measures are required to provide a comprehensive assessment of living standards.