What is poverty?

There is an ongoing debate about what ‘poverty’ means and how to measure it. However, most commentators agree that poverty is relative and must be understood in relation to typical living standards in society.

Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the types of diet, participate in the activities, and have the living conditions and amenities which are customary, or are at least widely encouraged and approved, in the societies in which they belong. [source] P Townsend, Poverty in the United Kingdom: a survey of household resources and standards of living, Penguin, 1979, p31

The UK government recognises the importance of a relative approach to poverty. It currently uses a variety of proxies as measures. The most commonly used measure (the ‘headline’ measure usually reported) treats poverty incomes as a percentage of median disposable income.

Some people stress that poverty is not only about income, but in the UK we all live in a marketised and consumerised society where having enough income is key to our ability to live decent inclusive lives. Income is therefore a good proxy for resources and living conditions, and statistics of income distribution are commonly used as poverty measures in the UK and internationally.

Read a more detailed discussion of different approaches to thinking about poverty.

Measuring poverty: the government's 'poverty line'

The UK government’s poverty line is where household income is below 60 per cent of the median UK household income, before and after housing costs have been paid. [source] http://research.dwp.gov.uk/asd/index.php?page=hbai

The median household income is the amount where half of all households have incomes more than this and half have less. The main poverty measure counts the number of people living in low-income households, below 60% of the median. Below this amount a household and its members are described as living in income poverty. The poverty line is adjusted to take into account how expenditure needs differ between people and types of households (equivalisation).

This is not the only poverty measure the government uses. The Child Poverty Act 2010 requires the government to report to Parliament on progress towards child poverty reduction targets for 2020. The Act states that the number of children living in households in poverty should be measured in four different ways

• Income poverty alone: households with incomes below 60% median household incomes;
• A combined measure of low income and deprivation: household income poverty below 70% median household incomes, combined with a measure of material deprivation;
• A constant measure holding the purchasing power of incomes constant: households with incomes below the cash value in real terms of the 60% median level in 2010.
• A persistent measure of income poverty: households whose income was below the 60% median level in three of the previous four years.

A discussion of the choice of low income thresholds like these can be found at ‘The Poverty Site’

The 'headline' poverty statistics

Every year the Government publishes a survey of income poverty in the UK, Households Below Average Income (HBAI), which measures the number of people in households below 60 per cent of UK household income.

The ‘headline’ poverty statistics usually report the numbers before housing costs (BHC), which results in fewer people being shown as in poverty than if the housing costs were deducted.

UK poverty line for a range of households, 2009/10

UK poverty line for a range of households, 2009/10

Household type	Poverty line: Household income, £ a week
Single person, no children	£124
Couple with no children	£214
Lone parent with two children (aged 5 and 14)	£256
Couple with two children (aged 5 and 14)	£346

How many children live in poverty?

The latest available figures (for 2009/10) show there are:

• 3.8 million children living in poverty (after housing costs)
• 2.6 million children living in poverty (before housing costs).

Percentage of Children living in poverty in recent years

Before housing costs or after housing costs?

CPAG prefers to report the ‘after housing costs’ (AHC) figure because it is a better guide to the number of households who experience poverty. The cost of housing is unavoidable and essential. People’s level of living is what they can support on the disposable incomes they have after paying for their housing. Where low incomes entitle people to Housing Benefit it is treated as their income BHC and a rise in this benefit is treated as higher income BHC even though it only reflects a rise in housing costs and not in people’s disposable incomes. This makes a large difference to poverty statistics in those parts of the country, particularly London, where housing costs are very high, and many more households are found to be in poverty there after housing costs are deducted.

All the figures on this page are from the most recent HBAI survey in 2009/10 unless otherwise stated. HBAI includes figures before and after housing costs: we use the ‘after housing costs’ figures.

What causes poverty?

The main cause of poverty is inadequate income, arising from worklessness, low wages and the low level of benefits.

Unemployment

In the three months to February 2011 statistics show unemployment averaging 7.8 per cent of adults of working age. The recession has led to a rapid increase in unemployment and this is expected to rise further. [source] Figures from National Statistics are to February 2011 The risk of not being in work is higher for those with low skills, from certain minority ethnic groups, and for those living in low employment areas. Other barriers to work include caring responsibilities and discrimination.

Low wages

Paid work is not, on its own, a guarantee of being free of poverty. In 2009/10, 58 per cent of income-poor children were in households where one or more adult in the house was in work. Low wages, part-time work and not having two adults in work in a couple household all increase the risk of poverty.

Inadequate benefits

Benefits and tax credits, that are supposed to act as a safety net, are too low to protect families with children from poverty. Their value remains significantly below the poverty line.

Further information

• To see the ten practical steps CPAG is calling for to end child poverty, see Ending Child Poverty: a manifesto for success
• For more on child poverty and education visit our campaign website 2 skint 4 school
• For further information and resources see the CPAG website
• Sign up to receive policy, campaigns and other news from CPAG by email
• The Child Poverty Toolkit, resources for local authorities and local campaigners
• The New Policy Institute’s Monitoring Poverty and Social Exclusion website
• The Joseph Rowntree Foundation website