The change in measurement therefore leads to a profound change in our understanding of who is poor: it indicates far fewer pensioners are living in poverty than the old measure suggested, while also pointing to disability as a much bigger feature than previously recognised.Hetan Shah
05 September 2019
Better measurement of poverty means better policymaking
HETAN SHAH: To develop robust policy responses to tackling poverty, we first need to develop better ways to measure it.
This piece was originally written for the Policy Institute's new Policy Review publication, which features essay contributions on a range of different issues by the institute’s researchers and Visiting Faculty.
As Director of the Royal Statistical Society, I know that what gets counted, counts. The way we define and measure something changes the way that we understand it. For example, on the same day in 2014 David Cameron said “there are 3,000 more nurses under this government” Tom Blenkinsop MP said “today, there are 2,500 fewer nurses in our NHS”. Both were right, according to the definitions and timespans they were using. Mr Blenkinsop compared the number of people working as nurses between September 2010 and September 2014.
Mr Cameron, on the other hand, considered the full-time equivalent number of nurses, health visitors and midwives, and reviewed the period between May 2010 and September 2014. There is widespread agreement that tackling poverty is an important policy matter. But how we measure poverty is critical to thinking about how we should tackle it. The traditional measure of poverty in the UK has been to consider a household as being in relative poverty if its income is below 60% of the median household income after housing costs. I was a member of the independent Social Metrics Commission, chaired by Baroness Stroud, which reviewed how we measure poverty and put forward recommendations at the end of 2018 to change the traditional measure. The Commission argues poverty should be about the relationship between the total resources that somebody has at their disposal, and the total needs that they have. This rather simple statement leads to significant changes in our practical understanding of poverty. “Total resources” implies looking beyond income to assets. Under our new total resources measure, more than a million people who hold liquid assets of over £10,000 are taken out of poverty in comparison to the traditional measure. Assessing needs means not treating everybody the same but, for example, taking childcare or disability costs into account.
Our new poverty measure shows that 14.2 million people in the UK population are in poverty: 8.4 million working-age adults, 4.5 million children and 1.4 million pension age adults (2016/17). The total number is around the same as the traditional poverty measure. But by counting assets and assessing people’s real needs more effectively, around two and a half million people who were living in poverty according to the old poverty measure – in particular, many pensioners with assets – are no longer counted as poor. These are replaced by a different set of people – mostly people with disabilities and families with children. Of the 14.2 million people in poverty, nearly half – 6.9 million – are living in families with a disabled person.
The change in measurement therefore leads to a profound change in our understanding of who is poor: it indicates far fewer pensioners are living in poverty than the old measure suggested, while also pointing to disability as a much bigger feature than previously recognised. Inevitably this means we need to also rethink the best ways to tackle poverty. Our policy prognosis is driven by what we count and how we count it.
The other recommendation of the Commission was to position our measure of poverty within a wider measurement framework. This includes indicators of the depth, persistence and lived experience of poverty, which allow us to understand more about the nature of poverty in the UK. This moves us away from the reliance on a single measure, which can never give the full picture.
But better measures rarely change things on their own. Policymakers can sometimes take an overly technocratic view that better data will solve everything. I would argue there are deeper lessons in the experience of the Social Metrics Commission about how to do policymaking in contested areas. This increasingly matters in the polarised times we live in.
The first lesson is that the Commission brought together a range of people with differing perspectives. Around the table were expert bodies such as the Institute for Fiscal Studies, the Joseph Rowntree Foundation and the Royal Statistical Society. There were also people with a mixture of political leanings and affiliations, who would not normally work together.
The second lesson is that it took a number of things to build trust between a politically diverse group. This required a skilful chair in the form of Baroness Stroud. It also took time: the Commission met almost monthly over a two-and-a-half year period, with a significant portion spent at the outset building a shared understanding of the problem we were trying to tackle. People were able to listen to each other, and there was a safe space to change our minds. And perhaps most important of all, we would not proceed on any issue until there was a consensus.
Thirdly, the group engaged from the outset with a wide range of external stakeholders. A group of academics and a group of civil society organisations were kept abreast of the work on an ongoing basis. Natural suspicions that they may have had about the work that was happening were therefore reduced. This meant that when the Commission published its final report, there was almost unprecedented support for its findings from external organisations, and from commentators from different parts of the political spectrum. Government, including statisticians, were also consulted at an early stage, with the National Statistician, John Pullinger, being an advisor to the project.
We can stop arguing over definitions, and start arguing about how to address poverty.Hetan Shah
The work of the Commission can be considered successful at multiple levels. It was analytically successful in providing evidence to throw new light on an old problem. But perhaps more interestingly, it was able to create consensus among a wide range of stakeholders in an area that is highly politicised. The UN Special Rapporteur on Extreme Poverty and Human Rights used the Commission’s assessment to underpin his review of poverty in the UK. The government announced in May 2019 that it will take up the findings of the Commission and develop new experimental statistics based on its recommendations for publication in 2020. The Commission is hopeful that this is a first step towards our proposed measure being taken up as the UK’s official poverty measure. Then we can stop arguing over definitions, and start arguing about how to address poverty.
Hetan Shah is Executive Director of the Royal Statistical Society, and a Visiting Professor at the Policy Institute, King’s College London.