Written evidence from Joseph Rowntree Foundation’s (JRF) (CPM0019)

1. This response offers the Joseph Rowntree Foundation’s (JRF) view on the questions asked by the Work and Pensions Committee inquiry on “Children in poverty: Measurement and targets.”

2. JRF is an independent social change organisation working to solve UK poverty.  Through research, policy, collaboration and practical solutions, JRF aims to inspire action and change that will create a prosperous UK without poverty, where:

• More people want to solve poverty, understand it and take action.
• More people find a route out of poverty through work.
• More people find a route out of poverty through a better system of social security.
• More people live in a decent, affordable home.

3. We work with private, public and voluntary sectors, and people with lived experience of poverty, to build on the recommendations in our comprehensive strategy – We can solve poverty in the UK – and loosen poverty’s grip on people who are struggling to get by.

Summary

4. In our assessment, what is currently lacking is an agreed poverty definition or measure and then an agreed strategy to move towards it.  Most critically, once we have these, we also need the political and public will to stress test actions taken by Government against the strategy commitments. 

5. We believe the Social Metrics Commission core measure (alongside its wider framework looking at poverty depth, poverty persistence and the lived experience of people in poverty) forms a suitable measure of poverty based on a poverty definition of someone being in poverty if their resources are well below what is enough to meet their minimum needs, including taking part in society.

6. Targets can be useful in helping to drive action in prioritising addressing an issue, as well as setting out a level of what constitutes solving poverty, but can also create incentives to carry out short-term actions to show progress towards a target at the expense of potentially more effective measures that take longer to show up in the statistics, such as for instance building more social housing to reduce housing costs. On balance, we would support long-term targets, but there is also a need for assessable actions over a shorter period of time with shorter-term targets that serve to move towards the long-term targets based on a publicly available statement of a theory of change.

7. Removing the targets from law has had only a marginal effect on child poverty as there is little evidence that the Government felt bound by these while they were in place.  Rather than having targets in law, we think there should be a statutory requirement to produce the measure used to gauge progress (with some flexibility in the law to allow methodological improvements over time.)

8. Reducing and alleviating child poverty requires cross government action and co-ordination across multiple policy areas.  A single Department cannot, and should not, be seen as solely responsible for policy on child poverty.  Whilst the Department for Work and Pensions has responsibility for social security and employment services, successfully reducing Child Poverty will require action across government.

9. A Child Poverty Strategy could be a critical vehicle for galvanising cross-Government action, but requires buy in from across Government, drawing on expertise from bodies outside Government, and serious engagement. There would need to be active and on-going commitment from the Prime Minister and Chancellor to the strategy in order for progress to be made.

Question 1: How should child poverty be measured and defined?

10. As stated in our UK Poverty 2020/21 report[1], we define poverty as when your resources are well below what is enough to meet your minimum needs, including taking part in society.

11. Breaking down each element of this:

• Resources

Resources are what people can use to meet their needs. In terms of a poverty definition, it is material resources that matter. The level of direct material resources and assets that people own or control are the main determinant of whether or not they are defined as being in poverty.

These include:

• income (from employment, benefits, pension, interest on savings, gifts);
• financial assets (savings, a home);
• material goods (e.g. washing machine, car, computer).

Everybody needs housing regardless of their income, and the money spent on this is generally not available for a person to spend elsewhere, so we feel that the cost incurred should therefore not be considered as available income and thus deduct housing costs from income or resources in the measures we look at.

• Well below

There is no scientific basis that can neatly classify households into poor and non-poor groups, but what is clear is that the further a household’s resources are below the typical level of a society the less likely they are to be able to meet their minimum needs.  All the measures we typically use base their threshold on a proportion of the median, be it the current year, a past year or a combination of these.  (Note we are able to validate that these thresholds are indeed below that needed to meet your minimum needs using the Minimum Income Standard[2] developed by Loughborough University.)

• Minimum needs

Poverty means being unable to afford to meet the minimum needs that are deemed reasonable by the standards of the society in question.  Measures based on a proportion of the median mean what is considered as the minimum changes over time (and usually rises as society’s overall living standard improves.)

• Including taking part in society

The cost of a minimum standard of living within any society depends on (a) the extent to which goods and services are provided by the state or the market; (b) social norms; and (c) the price of food and other goods. These can each change over time, meaning poverty also changes with the wider economic context. So, participation includes being able to conform to minimum norms such as buying birthday presents for relatives, or social activities for children.

12. For this definition, there are a range of ways of measuring this.  The measures we use most often at JRF are:

• Relative poverty AHC, i.e. where someone’s household income is below 60% of the middle household’s income, adjusted for family size and composition. Broadly speaking, this falls if the incomes of poorer households are catching up with average incomes.
• The Social Metrics Commission’s core measure of poverty, which is low material resources compared with inescapable costs including housing costs, accompanied by a broader measurement framework. This looks beyond income at all material resources, assesses extra costs, including those due to disability and childcare, and includes people sleeping rough. It also uses a smoothed poverty line to avoid potentially misleading year-on-year changes.  This falls if the resources of poorer households are catching up with average resources, smoothed for year-on-year volatility.
• Absolute poverty AHC, i.e. where someone’s household income is below a fixed line based on an inflation-adjusted 2010/11 poverty line (set at 60% of median AHC income in 2010/11). Broadly speaking, this falls when the incomes of poorer households are increasing faster than the cost of living.

13. All these measures say something useful about the situations of households in low income.  They also agree on some of the key groups who have higher rates of poverty, including children, people in families not containing full-time workers, people in lone parent families, people in families containing a disabled person, people in families with three or more children, people in rented accommodation, and people in households headed by someone of non-White ethnicity (particularly those of Pakistani, Bangladeshi or Black ethnicity). Data also shows that households with no savings or no formal qualifications also have higher rates of poverty.

14. While our current headline measure is relative low income After Housing Costs (the first measure described above), we plan in future to move to the measurement framework agreed by the Social Metrics Commission, which is underpinned by years of research and collaboration. It commands the support of experts across the political spectrum because it better accounts for the reality facing people on low incomes.  As well as the headline core measure, there is a holistic framework to understand the nature of poverty, including poverty depth, poverty persistence and the lived experience of people in poverty.

15. This measure is still being refined and we were pleased by the commitment by the Department for Work and Pensions to produce experimental statistics using this framework.  This work has been paused because of the coronavirus and we are concerned by the Secretary of State saying she “do[es] not have a fixed time at all about restarting[3]” the work. We strongly recommend DWP restart that work as soon as they are able to and we look forward to continuing to play a leading role in its development, moving to use this measure as soon as possible.

Question 2: The measures of child poverty changed in 2016. What has the impact of those changes been?

16. It is our perception that these changes have only had a very limited impact, with all the key poverty reports produced externally[4] to hold the Government to account retaining a primary focus on one of the measures set out above, which are rooted in the previous measurement framework.  Government Ministers are also still referring to low-income statistics as poverty in answers to Parliamentary Questions[5].

17. The life chances indicators have been published diligently in line with the Welfare Reform and Work Act[6], and provide useful contextual information, but it is not our view that these are driving action or well used inside or outside Government.

Question 3: What were the advantages and disadvantages of having a set of targets for reducing child poverty?

18. Targets can help drive action in prioritising addressing an issue, but can also create incentives to carry out short-term actions to show progress towards a target at the expense of potentially more effective measures that take longer to show up in the statistics[7].  This is one of the criticisms of income-based poverty measures, where increasing social security benefits can have an immediate and modellable impact on levels, whereas longer term investments in skills and education, helping people progress in work, or in building more social housing to make housing more affordable will not.

19. It can also be difficult to change a target once published, even if the situation has dramatically changed through factors outside the control of Government.  An example of this was the fuel poverty target in the Warm Homes and Energy Conservation Act 2000, which used a measure which was very sensitive to energy prices.  When energy prices rose mostly from factors outside Government control, this was enough to completely mask underlying changes in poverty and energy efficiency for low-income households[8].

20. The Child Poverty Act 2010 targets were based on the lowest levels of child poverty achieved in the UK historically as well as the lowest levels achieved internationally.  Having a level of what constitutes solving poverty is helpful – in our 2016 comprehensive strategy, “We can solve poverty in the UK”, we proposed targets by 2030 of:

• No one is ever destitute [i.e. no very deep poverty];
• Less than one in ten of the population are in poverty at any one time [i.e. around the lowest level achieved historically and internationally]; and
• Nobody is in poverty for more than two years [i.e. no persistent poverty].

21. These can be amended to be based on the Social Metrics Commission core measure and framework as well as our destitution work.  We believe having a view of depth and duration as well as overall levels are important, as is having a target date.  There is also a need for assessable actions over a shorter period of time with shorter-term targets that serve to move towards the long-term targets based on a publicly available statement of a theory of change.  These shorter-term targets here could cover a period of three to five years, and will probably be a mix of input, output, outcome and impact measures[9], with hopefully an evolution to more outcome and impact measures as time goes by.

22. There should also be a robust assessment of whether we are on track to meet the long-term targets.  If off track, then there needs to be an honest conversation about whether additional actions can bring the trajectory back on track or, if not, the target date should be moved but combined with an assessment of extra actions to address factors which caused the target date to move.

Question 4: What has been the effect of removing from law the targets in place between 2010 and 2016?

23. Removing the targets from law has had only a marginal effect on child poverty as there is little evidence that the Government felt bound by these while they were in place, and the statutory duty to report on the Child Poverty Act measures, after some pressure has been retained in the Welfare Reform and Work Act 2016[10].  We think what is important is an agreement on a main measure, which would ideally be the Social Metrics Commission core measure, with this followed a statutory requirement to produce the measure (with some flexibility in the law to allow methodological improvements over time.)

24. Despite frequent claims that the then Government and other political parties remained committed to the targets during the period they were in place, it was clear that no significant actions were being taken to move towards these[11].  The final Child Poverty Strategy covering 2014-17[12] published under the Act set out a range of policies, covering a wide range of areas, but those areas were not explicitly linked together to build towards a coherent set of actions to drive levels of child poverty downwards towards the targets, nor was the combined impact of actions on levels of poverty assessed.  Many of the policy actions carried out over the period when the Act was in force served to increase poverty[13].

25. In our assessment, what has been lacking since 2010 is an agreed poverty definition or measure and then an agreed strategy to move towards it.  Most critically, once we have these, we also need the political and public will to stress test actions taken by Government against the strategy commitments.

Question 5: What is the impact of child poverty and how can it best be measured?

26. Poverty restricts the options and opportunities available to people and limits their access to things that are mostly taken for granted by society[14].  Material resources matter hugely for children’s outcomes[15].  Poverty can affect the prospects of children, who may fail to reach the same level of educational attainment as those from wealthier families[16] or who can face worse health outcomes[17]. This in turn can make escape from poverty even harder when they become adults, with a Government evidence review from 2014 stating “Parental income has one of the strongest associations with children’s future income and children’s intermediate outcomes, with poor children disadvantaged across a spectrum of outcomes and from an early age”[18].

27. Poverty at any stage of life can lead to later negative consequences. The low incomes of people in poverty mean they are more likely to live in the rental sector, which has higher weekly housing costs than other housing tenures. Their ability to afford to buy what they need and participate in the activities routinely undertaken by others in society is severely constrained. Low incomes also reduce financial resilience to unexpected expenses, such as car repairs or a faulty washing machine, and lead to households falling behind with bills for utilities, Council Tax or other essentials. Money worries and debt in turn contribute to low-income adults being much more likely than wealthier adults to suffer from depression or anxiety[19].

28. In terms of measurement of impacts, we would recommend use of the Social Metrics Commission’ Lived Experience indicators which forms a dashboard of indicators in five domains: Family, relationships and community; Education; Health; Family finances; and Labour market opportunity, and examining these by poverty status (or low household income if poverty in not available).  Good progress here would be a narrowing of the gap between poorer children and non-poor children.  It would be useful to set out short-term and long-term targets for the key indicators in line with the reporting on the poverty indicators, noting that eradicating the gap is unlikely to be possible given the direct link between household income and children’s outcomes[20].

Question 6: What links can be established for children between financial hardship, educational under-achievement, family breakdown and worklessness?

29. The Government conducted an Evidence Review in 2014[21] looking at drivers of child poverty, which included an examination of the factors listed in this question.

• This said the evidence was stronger that financial hardship in the form of debt was a consequence of poverty.
• This review say that educational under-achievement was a factor in poor future life chances, and previously cited JRF work says that current poverty can negatively affect educational achievement creating a potential vicious circle.
• In terms of family instability, it found that being in a lone parent family is associated with significantly higher poverty rates, with this mainly acting through the labour market and the fact such families are often reliant on just one adult’s income.  In our UK Poverty 2020/21 report[22], we found lone parents had lower employment rates, and that working lone parents are more likely to be women, working in a low-wage sector, working fewer hours, and restricted by childcare and transport.
• Worklessness is an important risk factor for poverty, but low paying work or insufficient hours of work can mean children in working families can still be in poverty, with around 7 in 10 children in poverty being in working families using any of the three measures set out in the response to the first question.

Question 7: How effectively does the Department for Work and Pensions work with other Government departments, particularly the Department for Education and the Treasury, to reduce child poverty?

Question 8: How effectively does the Department for Work and Pensions work with local authorities and with support organisations to reduce the numbers of children living in poverty and to mitigate the impact of poverty on children?

Question 9: What would be the merits of having a cross-government child poverty strategy? How well has this worked in the past?

30. We have combined our responses to these three questions.

31. Reducing and alleviating Child Poverty requires cross government action and co-ordination across multiple policy areas. A single Department cannot, and should not, be seen as solely responsible for policy on child poverty.

32. Whilst the Department for Work and Pensions has responsibility for social security and employment services, successfully reducing Child Poverty will require action across government. For example, The Department for Education would need to look at how far its childcare, schools, and adult education policies address child poverty. The Ministry for Housing, Communities and Local Government would need to consider child poverty in relation to its housing policies, regional investment, and its support for local government. The Department for Transport would need to think about child poverty in relation to the affordability of public transport - especially buses - and their role in connecting people to jobs and services. The Department for Businesses, Energy and Industrial Strategy would need to consider child poverty in relation to minimum wage rates, labour market regulation and climate change. The Treasury would need to ensure that reducing child poverty is a consideration in budgets and spending reviews.

33. In addition to the need for individual departments across government to take action to address child poverty, there are important policy areas where joint action and effective coordination between departments is crucial. For example, long-term success at supporting people to progress into good jobs requires the right combination of training, retraining, basic skills development and formal qualifications. However, there is currently a tension between Department for Education policies on education or training to upskill and Department for Work and Pensions policy that can act to push people into lower paid work as quickly as possible. Recent research with single parents receiving Universal Credit found different work coaches in different Job Centres were giving different advice about what single parents are entitled to, what they are required to do, and what support is available[23]. Improved co-ordination between departmental policy would improve this situation.

34. A Child Poverty Strategy could be a critical vehicle for galvanising cross-Government action, but requires buy in from across Government, drawing on expertise from bodies outside Government, and serious engagement. There would need to be active commitment from the Prime Minister and Chancellor to the strategy. The final cross-Department Child Poverty Strategy covered a period when the proportion of children in relative poverty increased[24] and the Secretary of State responsible for the strategy resigned over planned cuts to disability benefits[25].

35. Governments that want to co-ordinate action on specific policies across Departments have established joint or central units with varying degrees of success. The Institute for Government (IFG) suggest that successful units, such as the Social Exclusion Unit in the Blair government, tend have to several key components, including that the unit is addressing a clear gap in policy, have clear backing from the Prime Minister, and a head who the Prime Minister is willing to back[26]. Previous governments have put in place elements of this approach with respect to child poverty. The Child Poverty Unit, a cross-Departmental body responsible for the Child Poverty Strategy was tasked with coordinating actions on tackling child poverty between 2007 and 2016. When it was established, it had many of the components of a good unit as set out by the IFG, but commitment to its objectives changed over time. It was in theory sponsored by HMT, DfE and DWP, but it looked to us that it was dominated by DWP Ministers and never had any staff seconded from HMT. This meant there was very little it could do compel actions more widely across Government.

36. There are good examples of DWP working closely with Departments on shared policy goals. This is most clearly evidenced in Government’s Youth Offer, where policy and delivery is co-ordinated between DWP, DfE, Mayoral Combined Authorities and Local Authorities. This collaboration is being driven by a shared ambition and objective, backed by the Prime Minister, to tackle youth unemployment and prevent long term scarring from periods out of work or education at a young age. We cannot currently point to this same level of co-ordination on child poverty policy.

February 21