How to lift 2.5 million people out of poverty…..

I’ve spent some of today reading the Social Metric Commission’s report on poverty, which puts the number of people in poverty in the U.K. at 22% of the population, or 14.2 million people.

The report developed a new way of measuring poverty which takes account of the following:

  • material resources – i.e. how much debt and savings people have to tide them over in hard times.
  • inescapable costs – such as the higher costs associated with being disabled or child care.
  • homelessness – the report automatically defines anyone sleeping rough as being in poverty.

This should give a more valid measurement of the numbers of people in poverty than the ‘Households Below Average Income Survey‘ which only uses household income to determine ‘households on low relative income*’, as factoring in debt or savings will respectively push or pull certain households out of poverty, and factoring in the hundreds of thousands of households which face unusually high costs (e.g. of childcare for dual earner households with young children and no family support) would likewise push a few more households into poverty.

Once all of the above additional costs and resources are factored in, the number of people in poverty in the UK is 14.2 million people, or 22% of the UK population  – that’s the number which now fall below the Commission’s new poverty line, which is all those who fall below 55% of median average income

WTF – All those who fall below 55% of median income?

If the 55% threshold sounds a little arbitrary, that’s because it is!

Despite the fact that the UK government uses 60% of median income as its poverty threshold, the Commission decided this itself was just an arbitrary decision (the EU uses 50%), which then gave it free reign to set it’s own ‘arbitrary bench mark’.

They give three reasons for the new 55% threshold:

  • It’s an arbitrary decision whatever the threshold
  • They want to be able to easily communicate it (55% isn’t that memorable?!?)
  • They wanted a figure that wasn’t too far off existing measurements.

And surprise, surprise, the poverty rate that the commission has ‘uncovered’ which is basically exactly the same figure you can find in the government’s most recent ‘Households Below Average Income’ survey, which uses a 60% threshold.

If the commission had taken the 60% threshold, it would have put a further 2.5 million people in poverty, to give a total figure of 16.5 million, or 25% of the population.

It seems they’ve modified the threshold to make the figures look more acceptable. I mean, I guess after you’ve spent more than a year figuring out a more accurate way to measure poverty, it’d be a shame if the government just flat-out rejected your measurement, wouldn’t it now!

In their defence they say it’s just a bench mark, whatever threshold you use.

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