Deven Ghelani was part of a cross-party commission to develop a new measure of poverty that will drive more effective policy interventions.
We need to measure poverty in order to be able to hold government to account. However, the UK no longer has an official measure of poverty for children, adults or pensioners since targets based on reducing child poverty in the UK were abolished in 2015.
While Scotland, Wales and Northern Ireland have retained income-based measures of poverty they were dropped by the Westminster government partly because the associated targets were proving difficult to hit, but also because they were flawed in number of key respects.
Poverty metrics based solely on income are flawed
Firstly, existing income-based measures of poverty do not take the needs of a family into account. This means that disabled households in receipt of disability benefits appear better off, even though their disability payments are primarily there to meet the extra costs of being disabled.
Secondly, income-based measures reward government actions to increases incomes, but don’t reward policies that lower the cost of living. We would all agree that lower living costs make people better off, and it would be great to see a greater focus on this within public policy.
And thirdly, it is difficult to operationalise existing income-based measures. They can’t easily be used to target activity, design interventions, or track how effective policies are at tackling poverty, except at the largest national scale, making them less useful for frontline practitioners.
Total Resources Available
I was asked to contribute to a cross-party commission to develop a new measure of poverty. One that would be widely accepted, help drive the right policy behaviours and hold current and future governments to account.
The Social Metrics Commission today launches ‘Total Resources Available’. An empirically robust measure that does a better job of identifying people that are struggling to make ends meet, relative to the rest of the population.
Total Resources Available = Net Earnings + Benefit Income + 1/12 Liquid savings – 1/12 Debts owed Less inescapable costs for Housing, Disability and Childcare. Adjusted for family size and number of bedrooms
The measure has number of features, some nuanced elements you can read about in the report. The core features of the report are that it:
- Accounts for the inescapable costs that some families face, which make them more likely than others to experience poverty. These include, the extra costs of disability, and costs of childcare and rental and mortgage costs;
- Broadens the approach of poverty measurement to include an assessment of housing adequacy, by taking into account over crowding for example.
- Positions the poverty metric within a wider measurement framework, which allows us to understand more about the complex nature of poverty in the UK.
The new measure would mean that governments are rewarded for tackling high housing costs, and that local councils are able use the measure to target preventative support. The Social Metrics Commission have made the code used to calculate the metric freely available to download. Policy in Practice are delighted to announce that we will be adopting key elements of the measure in full, in our the ‘financial resilience’ indicator used within our local authority analytics platform.
Using the measure to help those on the ground and in Local Authorities
Local councils in the UK have a statutory duty to protect their most vulnerable households, and are asked to do so with reduced resources and shrinking budgets. In this context, effective measurement becomes an essential aspect of both the design and the delivery of any type of support strategy at the local level.
Policy in Practice works with councils’ anonymised Housing Benefit and council tax support data, using the new metric to help identify households in need of support, engage them before they reach crisis point, and track the impact of interventions aimed at boosting their resilience.
Key elements of the Total Resources Available metric are built into our financial resilience indicator. This allows councils to identify households that are coping or struggling, by balancing their income against their housing and other costs.
The measure can go much further. Councils need to target limited support as effectively as possible, not only to make the most of scarce resource but to make sure those that need their help are most likely to get it.
The challenges in developing a new poverty metric
Many of the core limitations we faced were in the availability of the existing data. There are a range of measures that capture the lived experience of poverty, from social isolation, poor physical or mental health, addiction or low educational attainment, and many others that frontline workers are able to easily identify as the causes of, and sometimes the consequence of poverty, but are not measured consistently.
The biggest challenge by far in developing the Total Resources Available measure was ensuring that all commissioners reached agreement at each stage of the process. We all started with quite different perspectives, and each learned a huge amount through the process.
Some of the biggest challenges were resolved by an excellent technical team, carrying out detailed analysis that helped commissioners reach principled decisions that were also rooted in the existing data. We are confident that the ‘shape of poverty’ is better captured by Total Resource Available than other existing measures.
The biggest success the new metric will have
The fact that Total Resources Available better captures the shape of poverty is shown in the table below. The new metric captures more working age families, fewer pension age families and more disabled households than the relative-income ‘After Housing Costs’ poverty measure.
The measure also captures the depth of poverty, and whether people are falling into higher risk groups, in order to target support proactively and help people today from falling into crisis in the future. A measure that is more likely to capture families who are in work, but still struggling, those facing high and rising rents, and those with disabilities means that policymakers and practitioners can deliver support to those that need help the most.
The biggest impact in my opinion is that the measure will put a renewed focus on tackling high and rising living costs. This means that policymakers will be rewarded for tackling the high cost of housing, a huge part of the lived experience of poverty, and a problem that is at the heart of many of the challenges this country will face in the years ahead.
The Social Metrics Commission hopes that others will take on its approach and that a range of organisations and individuals begin to use the measure.
Policy in Practice believes administrative data is the future of social policy analysis. We will be using the new metric in our analysis, ensuring the local organisations we work with are able to better target, and track the effectiveness of their support. We hope you will engage with the Social Metrics Commission, and are able to use the measure in your daily efforts to build resilience and tackle poverty.
To hear how Newcastle City Council uses the financial resilience indicator to identify and prevent vulnerability join guest speaker, Chris Parker, at our webinar on Wednesday 19 September at 10:30. See details and register here.