The new UK child poverty measure

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The new UK child poverty measure
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A historic pledge...

• March 1999 - PM pledged to eradicate child
  poverty
• September 1999 - launched Opportunity for all
  annual report and indicators
• SR2000 - set HMT/DWP child poverty PSA target

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Poverty is multifaceted

• Complex Opportunity for all tracks lots of
  indicators, from teen pregnancy to educational
  failure
• 17 children indicators low income, health,
  education, employment, housing
• Since baseline (mostly 97/98)
• 12 moving in the right direction
• 4 broadly constant
• 5 insufficient data as yet to determine trend

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How we currently monitor progress

• Multi-dimensional approach
• Opportunity for all indicators
• reviewed annually
• 20 child indicators
• 5 headline indicators (low income, worklessness,
  education, health inequalities, housing)
• Public Service Agreement targets

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Why did we consult?

• No definition of eradication or long-term measure
• Current low income PSA target is only for the
  short-term 2004/5
• Need to build consensus for any new measure
• OFA indicators good, but in absence of clear
  headline measure relative income receives most
  attention

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The challenge we face
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Need the best measure

• So that definitions of poverty resonate with
  peoples understanding of poverty
• To target and monitor effective policies

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Four options

• Four options set out in consultation document
• Multi-dimensional headline indicators
• Child poverty index
• Consistent poverty (combining relative low income
  and material deprivation)
• Tiered approach (core set of low income and
  consistent poverty indicators)

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Preliminary Conclusions (1)

• Preliminary conclusions published May 2003
• No consensus on best measure, but acceptance of
  problems with all measures
• Most agreed income central, but not sole measure
• Strong support for tiered approach, material
  deprivation and OFA indicators

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Preliminary Conclusions (2)

• Rule out at this stage
• Child poverty index (combining health, income
  etc)
• Little support difficult interpretation of
  measure and progress
• Using a consistent poverty approach (income and
  material deprivation) as a sole measure
• Not tested in long-term
• FACS analysis

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Next Steps - programme of analysis

• Programme of work in-house and external
  analysis technical experts group
• Tiered approach - appropriate components (income
  measures deprivation multi-dimensional
  indicators)
• Material deprivation - appropriate indicators to
  include in FRS how to update measures overtime
  persistent low income and deprivation
• Multi-dimensional indicators review indicators
  - do they reflect peoples views?

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The new long-term measure

• New measure announced in December 2003
• Tiered approach
• Absolute low income
• 60 median h/hold income fixed at 98/99 level
  adjusted for inflation
• Relative low income
• 60 median h/hold income
• Material deprivation and relative low income
  combined
• both materially deprived and below 70 median
  h/hold income

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Child Poverty Targets

• PSA 2004 Tiered approach
• reduce child poverty by half by 2010
• Absolute and Relative low income
• Both with a 1998/99 baseline
• Additional target in 2006 halving of child
  poverty based on 70 and material deprivation
  combined
• With a baseline of 2006

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Developing the material deprivation measure

• Family Resources Survey
• Data available in 2006
• Preliminary scoping work
• Families and Children Study (FACS)
• 6-month Family Resources Survey

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FACS Preliminary Analysis
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FACS Analysis Preliminary results
Deprivation category Income poor Not income poor
Lacking no items 8 36
Lacking 1-2 items 34 47
Lacking 3-5 items 42 15
Lacking 6 or more items 16 2
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The challenge we face
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Future decisions

• Simple count vs Weighted approaches
• Threshold setting
• Frequency of recalibration/uprating
• Modelling material deprivation

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Contacts and further information

• Child poverty measurement daphne.white_at_dwp.gsi.g
  ov.uk
• Consultation documents
• www.dwp.gov.uk/consultations/consultations2002
• www.dwp.gov.uk/consultations/consult/2003/childpov
  /index.htm
• www.dwp.gov.uk/consultations/consult/2003/childpov
  /final.asp
• Opportunity for all
• www.dwp.gov.uk/ofa
• Research papers
• Berthoud et al, 2004, The dynamics of
  deprivation the relationship between income and
  material deprivation over time, DWP research
  report 219
• McKay and Collard, 2004, Developing deprivation
  questions for the Family Resources Survey, DWP
  Working Paper Number 13