Why Iain Duncan Smith is wrong on child poverty

Relegate the relative measure? Only if we want to pretend that poverty is something else altogether.

When is child poverty not child poverty? When it is measured using the relative poverty indicator if Iain Duncan Smith is to be believed today.

We use a range of different measures to assess poverty in the UK, but the one that we pay the most attention to, and that most often captures the headlines, is the relative poverty measure.

This indicator sets the poverty line for the UK at 60 per cent of the median household income (which is then adjusted to take into account a household’s composition and size). In other words, if a child lives in a household with an income less than 60 per cent of this national average, they are considered to be living in poverty.

This measure generates what look, at first glance, like counter-intuitive outcomes under some conditions. In 2010/11, for example, we witnessed declining average incomes in the UK but at the same time, a reduction in the numbers living in poverty. How, some have asked, can there be less poverty in a situation when we are all worse off?

The answer, of course, is simple. To achieve decreases in relative poverty in a period of declining median incomes such as now we have to protect the incomes of those at the bottom more robustly than those elsewhere in the distribution. It’s the right thing to do because children in these households are most vulnerable to further falls in income.

And this is exactly what the last government did. For example, as late as 2010 Labour introduced a disregard for child benefit in housing benefit and council tax benefit calculations. As a result, low income families were able to keep the whole of their child benefit payment, rather than watching it be offset against other forms of assistance.

In contrast, the coalition is cutting support for families left, right and centre. The value of working tax credit, child tax credit, child benefit and housing benefit have all been eroded in the last two years, with many more cuts to come. It is no surprise, then, that the Institute for Fiscal Studies projects that child poverty will begin to rise again from 2012/13.

Here, perhaps, lies the reason why Duncan Smith objects so vigorously to the relative poverty measure. As a minister expected to preside over the period when the thirteen-year downward trend in child poverty is predicted to turn back in the opposite direction, it may be no surprise that he is trying to change the yardstick against which the coalition will be measured.

No single indicator is perfect: all have strengths and weaknesses. But the great advantage of the relative measure is that it recognises that poverty goes far beyond existential basics, and instead is a question of being able to participate in the society within which we are situated. If children cannot enjoy the products, services and experiences which are the norm today, we should regard them as living in poverty.

That said, we all recognise the relative poverty measure does not capture all aspects of poverty and that other indicators provide useful information that can be read alongside. This is why the Child Poverty Act (CPA) 2010 requires the government track progress against three other key indicators: persistent poverty, material deprivation and absolute poverty. It is also why we concern ourselves with many other measures of child wellbeing in the UK. 

But the CPA goes further. Not only does it require us to measure progress against indicators other than relative poverty, it also demands that the government develop a child poverty strategy that addresses a host of ‘drivers’ beyond financial support. So rather than skew policy priorities towards welfare payments as suggested, the CPA actively requires government to consider parental employment, parenting skills, physical and mental health, education, childcare, social services, housing and social inclusion as part of its programme of action to address child poverty.

To claim, then, that the relative measure doesn’t tell us anything about the lived experience of poverty is nonsense.  And to suggest it is driving the wrong kind of policy to the exclusion of other areas is a misunderstanding of the CPA and the requirements on the strategy for which Duncan Smith is responsible.

Let’s supplement the measure by all means. Let’s explore the interesting relationships between income poverty and a range of other indicators. But relegate the relative measure? Only if we want to pretend that poverty is something else altogether.

Work and Pensions Secretary Iain Duncan Smith arrives for a Cabinet meeting at 10 Downing Street in London. Photograph: Getty Images.

Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.