However you measure poverty, money matters

Today’s announcement that the Government will be consulting on new child poverty measures is sure – in the first instance – to send everyone running to their stock commentary on the strengths and weaknesses of the various income measures.  

For a detailed analysis of the whole lot, you could do a lot worse than read this excellent paper by Kristian Niemietz at IEA (for the record, I don’t just think it’s excellent because it recommends an approach similar to our Minimum Income Standards work: that’s just an added bonus).

Fundamentally, money matters, whichever measure you pick and however messy, imperfect or statistically impenetrable it may be.  

But Iain Duncan Smith is right to say, as he did today, that money isn’t everything, and that in reducing the experience and impact of poverty to a single income statistic, we are sometimes missing the point. It’s for this reason that our Monitoring Poverty and Social Exclusion programme has been tracking changes in more than 100 indicators for the last 12 years.  It looks at incomes, yes, but also unemployment, underemployment, in-work child poverty, education and skills, and so the list goes on.

One of the key challenges facing the Government now is that they will have to grapple with the choices JRF has avoided by tracking so many things.  

They will have to make those choices despite significant evidence gaps.  We know money matters, but not enough about how much it matters compared to other things. In fact, we are pretty murky about drivers and causation, or to put it another way, whether and when income is determining the kinds of outcomes we all worry about. These aren’t technical quibbles: these questions are central to picking a small basket of measures to sit alongside income, and knowing which ones matter most for which children.

For instance: how far are we interested in measuring child poverty here and now, as opposed to poverty’s impact on children when they grow up?

If we are interested primarily in poverty now, we might want to complement our income target with targets for the costs that make getting out of poverty so difficult. We could have a childcare costs measure, or a housing costs one.  

If we are more interested in later-life outcomes, we might have targets for educational attainment, or perhaps more importantly a target for closing the attainment gap between richer and poorer children.  

Targets focused on the labour market could improve family incomes now and offer children more opportunities when they grow up. We could have a target on job security and ending the low pay/no pay cycle. We’d definitely need a target about job creation.  

And for all those people who are understandably concerned that the Government is seeking to dilute the income measure, it may be some comfort that many of these potential targets would be every bit as challenging to hit as getting more children and their families above 60 per cent of the median income. They are also likely to increase incomes just as much – if not more than – redistributive welfare transfers.

Despite all of this, and although this is a difficult, perhaps even scary conversation to have, I think it’s an important one. We all agree that money matters, and that poverty is about more than money.  Now we have a chance (even if it is only a very small one) to try to agree on what that ‘more’ is, and help create the transformative policy that Iain Duncan Smith was talking about.

Nancy Kelley