Today’s poverty figures
The number of people in absolute poverty rose by nearly a million in just twelve months. The 2011-12 poverty figures, the Households Below Average Income statistics, have just been published and I’m genuinely shocked.
The number of people in absolute poverty went up by 900,000 from 2010-11.
I’ve just written it down for a second time and I still find it hard to believe. Those of us who eagerly open up these statistics as soon as they’re published are used to smaller shifts, of two or three hundred thousand. True, there were some big changes – over a million – in the first three years of the century, but they were all falls in the number of people in absolute poverty.
The second shock is that 300,000 of the people in that increase are children. At this point, I need to say what I mean by “absolute” poverty. The poverty statistics provide figures for poverty defined in three ways:
- ‘Material deprivation’ (where the figures show a minor reduction in poverty but the small print cautions that the figures “may not be significant in view of data uncertainties”.)
- ‘Relative poverty’ – having an income below 60 per cent of the median for that year. That is, you take the level of income where half of all households have more and half have less and work out what 60 per cent of that would be. This is an internationally accepted way to measure relative poverty. Here the figures show very little change – a small reduction, if anything. (*)
- ‘Absolute poverty’ – having an income below 60 per cent of the median in a reference year. For the last government this was 1998-99; for the current one it is 2010-11. This is where the huge increases have been. (*)
Today’s figures provide a good illustration of why we need to use different measures to get a full picture of poverty. Relative poverty is the headline figure, and quite rightly, because this is the measure that shows how many people have incomes so low they are likely to be excluded from taking part in the normal activities of the society they live in. Combine that with figures on material deprivation, which show how many families cannot afford things like birthday parties for their children, and you have a effective picture of social exclusion.
So am I being unfair highlighting what has happened to absolute poverty?
No! These figures are consistent with a country where the relative position of the poor has not changed much (yet – I’ll come to this in a moment) but the poor and people on middle incomes have seen a large fall in their standard of living. This is not OK – it’s like the old poster with four men on a ladder in a flooded basement; the one at the bottom just has his head above the water and the man at the top calls out “equality of sacrifice! Everyone down a rung!” That 900,000 increase in absolute poverty represents people who were just keeping their heads above water and who have gone under in the past year.
Most people’s incomes usually go up – the norm is for absolute poverty to fall every year. Under the last government, it fell by 4.7 million, including 2 million children. Under the current government, it hasn’t just gone up in the latest figures, in their first year it went up 300,000. Unfortunately, we can’t just add up the two figures, but I think we can be pretty confident that absolute poverty has risen by more than a million under the Coalition.
And finally, as I pointed out yesterday, the unchanged figures for relative poverty and material deprivation do not mean that austerity will not hurt people in poverty. These figures are for 2011-12; most of the Coalition’s benefit cuts had not yet hit. When they do, we can expect relative poverty to increase too.
(*) Of course things are even more complicated than this. The figures are worked out on an “equivalised” basis; that is, taking household composition into account – the poverty threshold for a couple with three children is different from that for a single adult, for instance.
And two sets of figures are produced, for before and after housing costs are taken into account. Anti-poverty organisations tend to prefer the AHC measure, because it is based on what people actually have to spend. Governments tend to prefer BHC, which better takes account of the value of property. To simplify matters, I’ve used the BHC figures. This doesn’t affect the thrust of my argument; if I’d used AHC, the numbers would be different but the pattern of changes would be the same.