14 Jun 2012

Minister changes poverty measures after targets missed

The work and pensions secretary announces that the government is to change the way it measures poverty amid new figures revealing that targets to halve child poverty by 2010 have been missed.

Iain Duncan Smith announces change to poverty definition (Reuters)

Iain Duncan Smith has launched a consultation which aims to include factors such as worklessness, welfare dependency, addiction, education and family breakdown as ways of measuring poverty as well as the more traditional income measures.

The consultation is being launched as new figures reveal that the former government failed to reach the targets enshrined in the Child Poverty Act of 2010. Questions have also been raised as to whether the current government is on track to meet its 2020 target of eradicating child poverty altogether.

Under the act, relative poverty is defined as 60 per cent of mid-way national incomes. A target was set that by April 2010, no more than 1.7m children should be living in households officially classed as being in poverty, but latest figures suggest that although the proportion of children in poverty fell by two per cent, to 18 per cent, some 2.3m children remained in homes defined as poor – 600,000 short of the target.


Mr Duncan Smith described the current measure of poverty – which had previously been supported by David Cameron while in opposition – as “perverse” because it depends on the relative income of the nation. Although he insists that a relative income measure will be retained, he has previously referred to it as being a “poverty plus a pound” benchmark, in which earning £1 above the 60 per cent line means a family is no longer in poverty.

Because of the way it is measured – against the median income – the number of children considered to be in poverty will fall simply because the rest of the population has got poorer by comparison.

Between 2009-10, median income was £432, but between 2010-2011 it fell to £419, making 60 per cent of median income currently £251.

“How perverse that the simplest way of reducing child poverty is to collapse the economy,” Mr Duncan Smith said. “Today’s figures show that we must bring an end to the tick-box culture that cost so much and professively failed to achieve its aim. What we need is a system that understands that government policy should be measured by the effect social programmes have on changing lives, not just counting how much money is put in.”

But the proposed changes have sparked accusations by Labour and child poverty organisations that the Tories are moving the goalposts in order to reach the 2020 target of eradicating child poverty.

Although the minister has said that income measures of poverty would remain, Labour fears that by making other indicators more significant, the government will attempt to insist that it is on track to meet the target as newer factors gain importance. It is unclear whether the 60 per cent line will be kept or not.

Alison Garnham, Chief Executive of Child Poverty Action Group, said: “By measuring whether the poor are getting poorer compared to the rest of society, the relative income poverty measure is the single best indicator of whether ‘we’re all in it together’. It would be shameful if the Coalition’s approach on child poverty was moving the goalposts rather than tackling the problem.

“The Coalition still has no clear roadmap for how they will continue the child poverty reductions they inherited. If we side-line income poverty it will backfire and we will see an increase in problems like debt, family breakdown, poor health and addiction. What worked is the broad approach required by the Child Poverty Act, focussing on financial support alongside areas like parental employment, childcare, Sure Start, education, health, housing and parenting skills.”

Perfect storm?

Shadow chancellor Ed Balls said: “With long term unemployment rising and deep cuts to tax credits and childcare support making thousands of parents better off quitting work there is a real risk that child poverty will now rise.

“What we need is a plan to get the economy growing again, tax credits to make work pay and services like Sure Start to give every child, and not just some, the best start in life.”

The latest figures on child poverty came as Oxfam warned that the UK was heading for inequality levels “not seen since Victorian times”, citing figures suggesting that six in every 10 of 7.9m working-age adults in poverty are from working households.

In a report called The Perfect Storm, the charity says that the government’s deficit reduction strategy has targeted £99bn of cuts against £29bn of tax increases is disproportionately affecting those on the lowest incomes.