Introduction

Why the need for this review?

Poverty is an important social and economic issue in the UK. Successive government strategies have sought to eradicate poverty. However, the number of people in poverty has remained largely unchanged across multiple leading metrics over the last decade.

There is no universally accepted definition of poverty. As the concept of poverty means different things to different people, this makes it difficult to define and therefore measure. Despite this challenge, central and local governments need to understand the prevalence and nature of poverty in the areas they serve to ensure that targeted support can be put in place.

There are a number of different measures commonly used to understand income-based poverty that have been built around international best practice and successive UK government strategies concerning child poverty. In 1999, the government committed to eradicate child poverty in a generation and subsequently outlined the metrics it would use. These were absolute low-income (percentage below 60% of 2010/11 median income, adjusted for inflation), relative low-income (percentage below 60% of contemporary median income) and material deprivation (the inability to afford basic resources). These were in line with several other countries and organisations, such as the Organisation for Economic Co-operation and Development (OECD), which focus on absolute and relative low-income measures of poverty.

The commitment to end child poverty by 2020 was enshrined in law through the Child Poverty Act 2010. This created a legal duty on UK governments to produce strategies to address child poverty and established four UK-wide targets to be met by 2020. These were:

• for less than 10% of children to live in relative low-income families
• for less than 5% of children to live in material deprivation and low-income families (for this target, low income is defined as below 70% of the median)
• for less than 5% of children to live in absolute low-income families
• for fewer children to live in relative poverty for long periods of time (three years or more)

The Welfare Reform and Work Act 2016 abolished the Child Poverty Act and its targets. However, there remains a legal requirement in the Act for the UK government to regularly publish data on the number of children in poverty. The data are published by the Department for Work and Pensions (DWP) through its Household Below Average Income (HBAI) statistics, which are sourced from the Family Resources Survey (FRS) as well as through Income Dynamics statistics derived from Understanding Society data collected by the University of Essex.

In addition to the statistics produced by DWP, the Office for National Statistics (ONS) also produces official statistics concerning income-based poverty, including statistics on household income inequality based on the Household Finances Survey (HFS) There are a number of other official statistics producers working in this space, including the Northern Ireland, Scottish and Welsh Governments. The devolved administrations also make use of HBAI data in their own publications. We have sought to collect users’ views on using the HBAI data through these different publications, as well as directly from DWP, as experiences may differ depending on how users access the data. For the purposes of this report, where we refer to ‘statistics producers’, this includes all of these producers who work with income-based poverty statistics. Where recommendations apply to specific producers, we will refer to them by name. A full list of the relevant official statistics on income-based poverty are given in Annex B of this report.

Outside of the official statistics landscape, there are also several prominent non-government organisations that contribute to the evidence base on poverty. These include think tanks such as the Institute for Fiscal Studies and the Resolution Foundation who carry out secondary analysis of the FRS. Some organisations who carry out secondary analysis also produce their own analyses, such as the Joseph Rowntree Foundation (JRF) and its destitution study.

One organisation that has made an important contribution to the landscape of poverty statistics outside of government in recent years is the Social Metrics Commission (SMC). The SMC is an independent commission that was formed in early 2016 with the goal of creating a new approach to poverty measurement that better reflects the experiences of families across the UK and developing a consensus around how poverty should be measured. Led by the Legatum Institute’s CEO Baroness Stroud, its membership draws together experts on poverty from different political and professional backgrounds.

In 2018, the SMC published its recommended approach to measuring poverty based on existing data and research. The SMC decided to focus its measure of poverty on the extent to which the material resources that someone has available to them now are sufficient to meet the material needs that they currently have. Alongside its measure of poverty, the SMC created a wider measurement framework which would report on three areas:

• the depth of poverty: to assess how far above/below the poverty line families are
• the persistence of poverty: to assess how long families have been in poverty for
• the Lived Experience of those in poverty: to assess a range of factors and characteristics that impact on a family’s experience of poverty or are likely predicators of their poverty experience

The measurements that inform the wider debate on poverty can be prone to misinterpretation and misuse. When poverty is discussed in the public domain, it is often painted as a single number or trend, which can mask the complexity of the underlying issue. The fact that there are multiple approaches to measuring poverty also means that measures can be used selectively, to suit a particular argument or point of view. We have received several complaints to date about the misuse of poverty statistics in political exchanges.

As the regulator of official statistics in the UK, we are in a unique position to take a broader and independent look at issues of importance to society and make the case for improved statistics. This is supported by our ability to convene and influence and highlight best practice from other sectors. This review forms part of our programme of Systemic Reviews which aims to drive improvements in the public value provided by statistics and is underpinned by the Code of Practice for Statistics. It is not our role to form a judgement on decisions about government policy nor suggest how policy can be improved to tackle poverty.

We want to ensure that statistics provide a robust evidence base for national and local policy development and decision making. We champion the need for statistics to support a wide range of uses, including by charities, researchers and individuals. Statistics should allow individuals and organisations to reach informed decisions, answer important questions, make the case for change and hold government to account.

Our review approach

We have focused this review on income-based poverty statistics, as these are the main measures referred to in the public debate on poverty. It is important to note that there are other ways of looking at poverty, such as health, education and crime outcomes.

We have looked at statistics across the four nations of the UK and considered income-based poverty statistics for working-age adults, children and pensioners.

We began our review of income-based poverty statistics in November 2020. After carrying out initial desk research, we explored with users whether the statistics:

• answer the key questions about income-based poverty in society today
• tell a coherent story about poverty in the UK and provide a comprehensive evidence base to inform decision making on poverty
• are supported with sufficient guidance to help individuals understand how and when to use the statistics appropriately

We know from our regulatory work that poverty statistics are used by a wide range of organisations and expert users. To inform our review, we carried out interviews, workshops and focus groups with individuals from a range of organisations with an interest in poverty statistics. This approach ensured that we obtained the views of a wide range of users from differing backgrounds. These meetings took place between January and February 2021.

Full details of the organisations that took part, the statistics landscape and a glossary of key terms are provided in the annexes to this report.