The Government is carrying out a major overhaul on the way that poverty is measured in the UK, with new factors such as savings, assets and daily living costs being included, when determining whether a household or an individual is poor.
The DWP is due to publish experimental statistics using the new measure in 2020, with the potential for it to come into use an official statistic later. The metric has been put forward by the independent cross-party Social Metrics Commission (SMC), and will include ‘inescapable costs’ for the first time. These are things that reduce people’s spending power, and the positive impact of people’s liquid assets on alleviating immediate poverty. Examples include: rent, mortgage payments, childcare and the extra costs associated with disability.
The change has been welcomed by the SMC, which says that without an effective measure of poverty, the government cannot help to reduce the number of people who experience it.
At present, the number of people defined as living in poverty is roughly the same, using the new metric against the current system – approximately 14.2m people. However, the breakdown of households changes. Roughly 2.7m people are removed from the list – mostly pensioner households. However, 2.6 m people are added to the list – mostly large families, and households with a disabled child or adult, whose living costs are much higher.