Social Finance CEO David Hutchison sat on the steering committee for the Social Metric Committee, which has launched its new measure of UK Poverty.
17th September 2018
Social Metrics Commission launches a new measure of UK poverty
- Independent commission unites poverty experts and thinkers from the left and right with new poverty metric
- Metric accounts for the inescapable costs that reduce people’s spending power and the liquid assets that can be used to alleviate people’s immediate poverty
- New data shows who is poor now and how that has changed over time, to provide a clear focus for policy makers.
The Social Metrics Commission (SMC) is an independent commission founded in 2016, that has brought together thinkers from the right and left with data and analytical experts to develop a new approach to measuring poverty. Currently there is no agreed UK government measure of poverty and the SMC’s mission is to provide a new consensus around poverty measurement that enables action, informs policy making and so improves the lives of people in poverty, in real ways.
For the first time, as well as looking at incomes, the new metric accounts for a range of inescapable costs that reduce people’s spending power, and 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. The new metric reflects more accurately the realities and experiences of living in poverty than previous measures.
The SMC report, available here, reveals numerous key findings and challenges. The total number of people living in poverty is 14.2 million with the composition of poverty moving towards a better identification of children (4.5 million) and working-age adults (8.4 million). The good news is the shift away from pensioner poverty with far fewer pensioners living in poverty following a significant reduction of poverty amongst pension age couples, over the last 15 years.
The report reveals that people with a disability are much more likely to be living in poverty than previously thought, with around half of the 14.2 million people in poverty living in families with a disabled person.
The report also reveals the persistence and depth of UK poverty. More than one in ten (12.1%) of the total UK population are in poverty now and have been in poverty for at least two of the previous three years. A further 2.5 million people live less than 10% above the poverty line and are close to falling below it with relatively small changes to their circumstances; and around 2.7 million people live less than 10% below it.
SMC KEY FINDINGS
- 2 million people in the UK population live in poverty: 8.4 million working-age adults; 4.5 million children; and 1.4 million pension age adults.
- Over half of those in poverty (58.2%) also live in persistent poverty. This means that more than one in ten (7.7 million) of the total UK population are in poverty now and have been in poverty for at least two of the previous three years. Persistent poverty is highest in families more than 10% below the poverty line, in workless families and families where someone is disabled.
- People with a disability are much more likely to be living in poverty. Nearly half of the 14.2 million people in poverty live in families with a disabled person (6.9 million people equal to 48.3% of those in poverty). The SMC metric recognises the inescapable costs of disability, accounting for them alongside the value of disability benefits, to reflect the lived experience of living with a disability.
- Far fewer pensioners are living in poverty than previously thought, with a significant fall in pensioner poverty over the last 15 years. Poverty rates amongst pension-age adults have nearly halved since 2001, and have fallen to one in ten, a drop from 17% of the total population in poverty in 2001 to 11% in 2017. There are, however some pensioner groups still experiencing high levels of poverty. For example, the poverty rate for pensioners who do not own their own home is 34.2%.
The SMC is an independent Commission and a non-partisan organisation dedicated to helping policy makers and the public understand and act to tackle poverty. It was formed and led by the Legatum Institute’s CEO, Baroness Stroud.
Membership of the Commission numbers fifteen commissioners, as follows:
|Philippa Stroud (Chair)||Legatum Institute|
|Helen Barnard||Joseph Rowntree Foundation|
|Dr Stephen Brien||Legatum Institute|
|Prof Leon Feinstein||Office of the Children’s Commissioner|
|Deven Ghelani||Policy in Practice|
|Prof Paul Gregg||University of Bath|
|Dr David Halpern||Behavioural Insights Team|
|Dr Nick Harrison||Oliver Wyman|
|Oliver Hilbery||Making Every Adult Matter|
|David Hutchison OBE||Social Finance|
|Robert Joyce||Institute for Fiscal Studies|
|Rt Hon David Laws||Education Policy Institute|
|Hetan Shah||Royal Statistical Society|
The Commission will release further information on how it will continue to play a strong role in leading the development of poverty measurement and affecting positive change to tackle poverty.
Commenting on the findings of the report, Philippa Stroud, Chair of SMC and CEO of Legatum Institute said:
“I established the Social Metrics Commission with the aim of developing new measures of poverty for the UK. The need for an independent Commission was clear; much of the last decade of political and policy debate on poverty has focussed on whether and how we should measure poverty, rather than the action needed to drive better outcomes for the most disadvantaged in our society. The approach, results and recommendations in this report represents a consensus view uniting right and left, supported by every one of the fifteen Commissioners involved, on how we should measure and understand poverty in the UK and the experiences of those who are in poverty. For too long it has been possible to have a debate about the measurement of poverty. Now I call on people and organisations across, and outside of, the political spectrum to support this new measure of poverty so that we can all put our energy into creating the policies and solutions that build pathways out of poverty.”
Helen Barnard, Head of Analysis at the independent Joseph Rowntree Foundation, SMC commissioner said:
“I am delighted that we have launched this new poverty measure today. It gives us a clearer picture of who is in poverty and highlights the importance of housing and childcare costs in sweeping people into poverty, and the protection that savings can provide. For too long we have been stuck in debates about how to measure poverty. Working as part of the Social Metrics Commission has shown how much we share. We all want to live in a society where people have the resources to meet their needs, and to open up opportunities for people to build a better life. We call on the government, the Office for National Statistics and all of those working to solve poverty, to support this new measure of poverty and concentrate now on taking action to loosen the grip of poverty on people’s lives.”
Professor Leon Feinstein, Director of Evidence at the Office of the Children’s Commissioner, SMC commissioner said:
“The work undertaken by the SMC has improved the accuracy of estimation of levels and types of poverty, focusing better than previous measures on the experience of poverty. By taking childcare and other needs into account the work of the Commission has shown a greater level of poverty for children, which has hitherto been hidden. All the Commissioners hope that government and other agencies will use the measure to re-establish a clear policy focus on poverty reduction and to improve the targeting and effectiveness of policy.”
David Hutchison, CEO of Social Finance, SMC commissioner said:
“What do we mean by living in poverty? Five people living in one room because they can’t afford any more space. Falling behind on household bills with no savings to rely on. Not being able to go out to work because childcare costs are too high. If we are serious about supporting vulnerable people, we need to understand what drives them into poverty and what keeps them there. This new measure is a bold attempt to understand the characteristics of those who face the challenge that their resources fall short of the inescapable costs of daily life. It is a critical step if we are to change the way we tackle poverty in the UK.”
Oliver Hilbery, Project Director, Making Every Adult Matter said:
“The broad alliance of people involved in developing this new measure and the politically neutral nature of the Commission’s work is vital. Making Every Adult Matter wholeheartedly supports the call to see this new measurement of poverty adopted by government, all political parties, and wider organisations, so it can be used to shape future policy and hold decision-makers to account. Without this, a large group of society, and especially those facing multiple disadvantage, risk being left further behind without the support they so desperately need.”