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finance

New measure of poverty proposed for UK


Britain’s most deprived families fail to receive enough help or attention because poverty is not measured adequately, according to a commission on social metrics.

The report, called ‘A new measure of poverty for the UK’, found that families with disabled members, those with high debts and the homeless were more likely to suffer from extremely low living standards than official poverty measures suggested, while poor pensioners were, in fact, doing relatively better.

The results — endorsed by groups across the political spectrum — were published by the Legatum Institute with the aim of providing the government with a methodology for determining the official poverty line.

Phillippa Stroud, chief executive of the Legatum Institute, said far too much energy had been wasted in debating the measurement of poverty and called on the government and campaigners, “to support this new measure of poverty so that we can all put our energy into creating the policies and solutions that build pathways out of poverty.”

The government stopped measuring poverty in 2016 because it said the old methodology failed to reflect the true level of deprivation.

The commission tried to find a way of accounting for the unavoidable expenditure that depressed living standards but did not appear when poverty was measured solely by income, using 2015 poverty figures to illustrate its new calculation,

Families with a disabled adult or child, for example, receive certain benefits to meet the additional costs of the disabilities, but under the old calculation this extra income raised many above the poverty line. In the proposed new measure, this benefit — along with others such as debt servicing and childcare costs — is not counted.

The new measure would also count a family’s assets, and assumes that its weekly income could be supplemented by spending a small proportion of accumulated savings.

When the new methodology was applied to the 2015 figures, the number of people judged to be living in poverty remained constant at 14m, but its composition shifted — 2.6m mostly pensioner families were lifted above the poverty line, and were replaced by roughly the same number of families with disabilities or problem debts.

“Compared to previous measures, it also shows that those families struggling to make ends meet because of childcare and housing costs and those who lack a financial buffer to fall back on are much more likely to be in poverty,” Ms Stroud said.

Paul Johnson, director of the Institute for Fiscal Studies, who did not sit on the commission, said the work was a “useful contribution” to the debate. “There are advantages in this measure which maps better on to other indicators of deprivation,” he added.



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