What is Poverty?

This week, figures published by the Department for Work and Pensions showed that 4.1 million children across the UK are living in poverty – a record 2.9 million children from working families in the UK are living in poverty after housing costs.

 

As ever, when the issue of poverty is in the news, there are a number of terms that get tossed about that can be difficult to decipher and tell apart. Naturally, some confusion may arise around these very similar terms.

 

We decided it might be a good idea to put together this: a poverty jargon-buster, to try and offer a little more clarity about the words we use when discussing poverty.

 

Poverty

No single definitive measure or explanation of poverty exists. However, most definitions draw upon the same themes: a lack of material resource and the wider impacts this lack of resource can have on inclusion and wellbeing.

 

For the Child Poverty Action Group (CPAG), it is “struggle to pay for essentials and participate in in society.” For the Joseph Rowntree Foundation (JRF) it is “not being able to heat your home, pay your rent, or buy the essentials for your children… waking up every day facing insecurity, uncertainty, and impossible decisions about money. It means facing marginalisation – and even discrimination – because of your financial circumstances.

 

How do we measure Poverty?

As there is no definitive definition of poverty, there can be no definitive way of measuring it. However, a number of methods are commonly used. As well as the ubiquitous measures of Relative and Absolute Poverty, there are a number of alternatives.

 

The JRF produces a Minimum Income Standard (MIS), which itself is not a measure of poverty, but is what the public believes to be sufficient income to afford a minimum acceptable standard of living.

 

Adjustments can also be made to offer a more realistic picture of household income. For instance, the DWP publishes poverty levels both before and after housing costs, in order to reflect that income alone is not a good enough measure – especially given that house prices and average rents can vary significantly across the country.

 

In 2018, the Social Metrics Commission launched their own new measure of UK Poverty. As well as looking at incomes, the new metric accounts for a range of inescapable costs that reduce people’s spending power, and the positive impact of people’s liquid assets on alleviating immediate poverty. These inescapable costs include rent or mortgage payments, childcare and the extra costs of disability. Liquid assets include savings, stocks and shares.

 

Relative Poverty

Relative poverty is when a household cannot afford to live at a standard that is commensurate with the rest of society. Taking the latest figures, for example, a household is considered to be in relative poverty if their income is below 60% of median income (£507 a week in 2017-18).

 

Absolute Poverty

Absolute poverty represents a much starker situation, closer to destitution, in which a household is unable to afford even the most basic needs such as food, clothing and shelter. It is absolute in the sense that it’s measured relative to a fixed standard of living, rather than the rest of the population.

 

In the UK, the government definition of absolute poverty taken as the 60% of the median income from 2010-11 (when the measure was set), adjusted for inflation.

 

Furniture Poverty

At EFP, we define Furniture Poverty as it is inability to afford or access to the basic appliances and items of furniture that provide a household with an acceptable quality of life and the ability to participate in the norms of society.

 

Each definition of poverty also comes with its own set of pitfalls. Because of the way the relative poverty is calculated – your income relative to the people around you – a fall in incomes of other people within the study can lead to you being classed as ‘not in poverty’ when your own day-to-day experience tells you otherwise.

Meanwhile, measures of absolute poverty often fail to account for widening income gaps and can be at risk of quickly falling outdated in that they do not keep pace with any changes from when the 60% cut-off was originally set.

 

As fact-checking website Full Fact notes “a more general problem with these figures is that a low income doesn't necessarily imply a low standard of living. The ONS uses the "60% of the median" benchmark to indicate whether someone is 'at risk of poverty'.”