House of Commons - Work and Pensions

Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Sue Middleton (CP 10)

SUMMARY OF RECOMMENDATIONS

I. Severe, and Persistent and Severe Childhood Poverty

— Eliminating severe and persistent and severe child poverty should be incorporated in to official targets.

— Data need to be collected that allow official measures of severe poverty, and of its persistence, to be published so that the effects of policies can be properly monitored. (Section 1.3.1)

— The Social Fund needs to be urgently reviewed.

— Attention needs to be given to ensuring that families claim their full benefit entitlements.

— The operation of benefit sanctions in families with children needs urgent investigation.

— The extent to which families take-up their entitlement to Tax Credits and other benefits remains an issue of concern and needs continued monitoring, as well as initiatives to improve take-up.

— Out of work benefits must be sufficient to ensure that children in households who receive these benefits do not experience severe poverty.

— Ongoing monitoring is required to ensure that policy initiatives to assist working parents are sufficient to protect their children from (severe) poverty, particularly in households where only one worker is available.

— It needs to be accepted that work will not be an option for some parents at some points in time, and policy should protect children in these families from the experience of severe poverty. (Section 1.3.2)

— Change in children's lives, in terms of living with adults who move from work to no-work or vice versa, from receipt of out of work benefits to non-receipt and vice versa, seem particularly associated with the experience of persistent and severe poverty.

— The best protection would be to reduce the number of transitions from work to benefits through policies to assist job retention, but a more dynamic tax and benefits system is needed that takes account of the dynamics of the flexible labour market, and does not catapult children in households who make these transitions into persistent and severe poverty. (Section 1.3.3)

— Changes in the type of family in which children live, particularly from living with a couple to living with a lone parent, are also associated with an increased risk of persistent and severe poverty. The take-up of benefits needs to be promoted, particularly at the point in time when families are making these transitions, but above all there is a need to ensure that families in transition have adequate incomes. (Section 1.3.4)

II. Social Exclusion and Poverty

— All children should have access to social activities and local services and these services must be distributed (redistributed) equitably. Whilst school resources are apparently distributed equitably, there is a policy debate to be had about whether educational resources should be redistributed to children in the poorest areas. (Section 1.4.1)

— Policy is right to make improvements in housing quality a priority for children. The poor quality of the neighbourhoods in which severely poor children live also suggests that the policy of targeting specific localities is correct. However, many of these policies and programmes are time and cash-limited. Consideration needs to be given to bringing housing and neighbourhood regeneration initiatives into mainstream funding. (Section 1.4.2)

— Further efforts may be needed to assist the families of poor children in accessing financial services, such as bank accounts.

— Progress needs to be made in assisting poor families to avoid going into debt, particularly to expensive lenders. This, suggests again, the urgent need for a review of the Social Fund.

— Flexible savings plans are required which families on low incomes can pay into in "good" years and take payment holidays from in bad years without penalties.

— Policy attention would be better focused on assisting families to escape from and then avoid, debt rather than having unrealistic expectations about the capacity of families on low income to asset building implied by "Assessed Based Welfare" proposals.

— All children should be taught in school about managing money and financial services. (Section 1.4.3)

III. Measurement of Poverty and Social Exclusion

— Policy needs to be concerned about the impact of poverty on children's current lives as children, not just with of the effect it may have on children's later lives as adults.

— Poverty measures which incorporate material deprivation should be collected, not just in annual cross-sectional surveys, but also over time.

— New poverty indicators need to be child-centred and developed in consultation with children themselves.

— Social exclusion measures specifically for children are also required, and these should also be developed by and with children.

— There is a need for a new survey of children in families, rather than families with children, which can follow children's circumstances over time and produce data relatively quickly. This should collect as much data as possible from children themselves.

— A large scale national survey of the circumstances of children from ethnic minority backgrounds is urgently required, to ensure that the policies in place to remedy childhood poverty in general are appropriate to the varied needs and circumstances of these children.

— Policy should not focus exclusively on children whose circumstances can be easily measured. Resources should be directed to assessing the size and nature of the problems experienced by particularly vulnerable groups of children, such as the children of asylum seekers and refugees, and those who are homeless.

— The multiple manifestations and dimensions of childhood poverty and social exclusion and their inter-relationships must be measured in the same survey. (Section 2.1)

IV. Adequacy Standards

— Although a relative income measure of poverty will, and should, remain important in measuring childhood poverty, there are a number of difficulties in relying on relative income measures of childhood poverty. They are arbitrary, provide a "moving target", (arguably) under-estimate childhood poverty, assume that poverty is equally distributed within households, and cannot describe what poverty (and social exclusion) means in children's lives (Section 2.2).

— As a result, there is an urgent need for agreement on levels of income that are adequate to keep children (and adults) out of poverty. In other words, adequacy standards or minimum income standards need to be established that can command widespread agreement and support both by government, the academic community, pressure groups, and the general public as a whole. These standards could solve many of the problems with relative income measures and would provide a clear and easily comprehensible definition of poverty. (Section 2.3)

INTRODUCTION

This memorandum is in response to the House of Commons Work and Pensions Select Committee call for evidence to assist it in its enquiry into Child Poverty. The author is pleased to respond and will be happy to supply further information if required.

The government is to be applauded for its commitment to end child poverty "within a generation" and the contents of this note should be seen in this context. Although progress has undoubtedly been made, much remains to be done, not least in capturing public opinion and support for the required policy initiatives.

The memorandum is in two parts: the first summarises findings from recent research undertaken by the author and colleagues at the Centre for Research in Social Policy for Save the Children-UK, to explore the circumstances of children in the most severe poverty in Britain[134]. The second part focuses on the definition and measurement of childhood poverty and, in particular, the rationale for "Adequacy" or "Minimum Income" Standards.

1. FINDINGS AND POLICY IMPLICATIONS OF, "BRITAIN'S POOREST CHILDREN"

This research, funded by Save the Children—UK, was completed in early 2003 and published on 2 September 2003. It is based on secondary analysis of two nationally representative datasets: the Poverty and Social Exclusion Survey of Britain (1999), and the British Household Panel Survey (1991-99). Further details of these datasets (and their limitations), and of the methodology used in the analysis can be found in Annex 1 to this memorandum.

Although the data are somewhat out of date in policy terms, their advantage is that they provide a baseline against which policy success can be measured in later analyses. But, more importantly, they provide clear indications of whether policy thinking was and is on the right lines, and unique insights into a range of poverty and social exclusion experiences among children which are not, unfortunately, available from more recent data.

1.1 WHY THE RESEARCH WAS NECESSARY

The rationale for the research was that, despite the recent explosion of research on child poverty, little seemed to be known about the poorest children in Britain. Earlier research had suggested that some 300,000 of the poorest children in Britain had actually become worse off as a result of government reforms aimed at reducing childhood poverty[135]. So, our research aimed to answer the following questions about Britain's Poorest Children:

— Who are they and what are their family characteristics?

— Are they similar to poor children as a whole or are they different and, if so, in what ways?

— How long do they remain in severe poverty? Is severe poverty a temporary phenomenon or more long lasting in a child's life? And, if they do escape from severe poverty do they escape poverty completely or simply remain in a poverty which is less severe?

— Do these children experience "social exclusion" differently or to a greater extent than other children—poor and not poor?

It was felt that the answers to these questions would throw light on whether current anti-poverty policies are appropriate for the poorest children or if different policy solutions are required.

1.2 Aims of the Research

— To take a child-focussed approach as far as possible, making the child the unit of analysis so that the investigation could consider children in families, rather than families with children.

— To move away from a purely income based approach to defining and measuring poverty and severe poverty, and begin to explore new definitions and measurements that could incorporate material deprivation.

— To develop our understanding of what social exclusion means in children's lives. Too often it is assumed that social exclusion means the same for children as for adults.

— To explore if, and to what extent, poverty and social exclusion coincide in children's lives. Are children who are poor the same children as are socially excluded or are they different groups? Very little is known in this area because indicators of poverty and social exclusion are rarely collected in the same surveys.

— To explore these issues over time, in particular in relation to severe poverty in childhood.

1.3 Findings and Policy Implications: Severe, and Persistent and Severe Poverty

1.3.1 The extent of severe and persistent poverty

In 1999 8% of children were severely poor in that they were materially deprived, their parents were materially deprived and their household income was below 40% of median.

Analysing data over time, over a five year period of childhood in the 1990s, 9% of children experienced persistent and severe poverty, that is, they were poor for at least three out of five years and had at least one year in severe poverty (Table 1).

Table 1 Extent of Persistent and Severe Poverty


Poverty Type	%

Persistent and Sever	9
Persistent only	20
Short-term and Severe	4
Short-term only	18
No poverty	50

The proportions shown in Table 1 are likely to be under-estimates of the proportions of children who experience poverty during their childhood because we are measuring only a five year period so that, for some of these children, poverty will have begun before the five year period in which they were studied, and may or may not continue beyond the five years.

Policy Implications

Within the context of target-driven policies, such as the reduction of child poverty by one-quarter by 2004, there is a temptation to focus on those who are easiest to help, that is, those children who are closest to the poverty line and, arguably, easiest to raise above it. Yet if this leaves a group of children behind who are experiencing the most severe poverty, humanitarian concerns would suggest that different policy solutions are required. If child poverty is to be eradicated, it would seem essential to maintain a focus on dealing with children who are facing the most difficult circumstances and to ensure that policy interventions benefit this group. Logically, therefore, eliminating severe poverty should be incorporated in official targets. Data need to be collected that allow official measures of severe poverty and of its persistence to be published so that the effects of policies on this group of children can be monitored.

1.3.2. Severe Poverty and Receipt of Income Support (IS) and Job Seeker's Allowance (JSA)

Almost nine in 10 children who were in severe poverty in 1999 (87%) were in households that were in receipt of IS or JSA compared with only just over one quarter of those who were in non-severe poverty (27%) and only 3% of children not in poverty. Yet the average household income of children defined as severely poor in this analysis was well below Income Support and JSA levels. This may seem illogical at first sight—how can children in households in receipt of benefits have incomes below benefit levels? There are a number of possible explanations, each of which has policy implications.

Policy Implications

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an urgent Review of the Social Fund

— Non take-up and under-claiming. For those children who were severely poor but not in benefit households, it may be that their parents had not taken-up their entitlement or, if they were on benefit, had not received their full entitlement for reasons other than deductions at source.

Attention needs to be given to ensuring that families claim their (full) benefit entitlements.

The operation of sanctions in families with children needs urgent investigation.

take-up remains an issue and continued monitoring is required.

Out of work benefits must be sufficient to ensure that children in these household do not experience severe poverty.

1.3.3 Severe Poverty and Work

Central to the government's policy reduction policies is the view that having parents in paid work is the best protection against poverty for children. The evidence seems to suggest that, in 1999, having working adults in the household did seem to protect children from poverty (Figure 1). More than nine in 10 children who were not in poverty had at least one full-time worker in the household and children in households with no working adult accounted for more than four-fifths of children in severe poverty. However, work by no means always protected children from poverty. Almost one in five children in severe poverty had at least one adult in the household who was in some form of paid employment and more than three-quarters of children who were in poverty that was not severe.

Changes to the Tax Credit system and the impact of the minimum wage may have improved the situation of children in households with working adults since 1999, but this needs to be monitored to ensure that work does protect children from poverty. Consideration also needs to be given to the impact of policy on households where there is only one worker possible, for example in lone parent families, but particularly in families where work is not an option. Further analysis revealed that, for example, many severely poor children lived in households where at least one adult is sick or disabled. For many of these parents work is unlikely to be a realistic option, not least because of the additional problems of combining work with caring for a family for parents who are disabled.

Policy Implications

Ongoing monitoring is required to ensure that policy initiatives to assist working parents are sufficient to protect children from (severe) poverty, particularly in households where only one worker is available.

There are a number of reasons why work may not be an option for some parents at some point in time and policy should protect their children from the experience of severe poverty.

1.3.3 Poverty, Work and Benefits

The analysis of changes in children's circumstances over a five year period has begun to suggest the particular difficulties that are caused in households where parents move between work and benefits. First, Figure 2 shows the proportions of children who were in persistent and severe poverty according to the working status of their households during the five year period. Whilst almost one in five children who experienced persistent and severe poverty were in households that had no workers in any of the five years (19%), far more were in households that had moved between having someone and no-one in work (65%). Indeed, the largest proportion of children in persistent and severe poverty were in households which had experienced at least two changes in either direction, between having at least one adult in work and having no-one in work (29 per cent). It seems that, far from being "work-shy" the parents of children who experienced persistent and severe poverty had attempted to move into work but had failed to sustain employment.

A similar picture emerged from an examination of how the households of children in persistent and severe poverty moved between being in receipt of Income Support or Jobseeker's Allowance and not receiving these benefits (Figure 3). Whilst 29% of children who experienced persistent and severe poverty were in households that were receiving benefits in all five years, the majority were in households that moved from not receiving benefits to receiving them (18%), from non-receipt to receipt (23%) or experienced two or more such changes (which could have occurred in either direction) (16%). Again, it seems that, far from widespread welfare dependency, parents were attempting to move from benefits but were failing to sustain such moves.

Whilst these data are from the 1990s, some early evidence from longitudinal analysis of the Families and Children Study suggests that such movements may still be problematic[137].

Policy Implications

It seems that the worst forms of childhood poverty may be associated more with changes in children's lives, in terms of the experience of benefits and work, than with stability. There is a need to increase protection for children at times when their household are making these transitions, both when households move from benefits into work and when they move from work to benefits. Tax credits—and particularly the Child Tax Credit—will have made some impact on the transition from benefits to work and, because of its portability, from work to benefits (although the speed with which higher/maximum rates of Child Credit are paid once families move onto benefits needs to be monitored). But more may need to be done, particularly through policy initiatives to protect children in families who are making these transitions. Obviously the best protection would be to reduce the number of transitions from work to benefits through policies to assist job retention. This is a relatively recent focus of policy concern, although some developments are in hand, for example, the Employment Retention and Advancement Demonstration Project, but more clearly needs to be done.

In an economy whose strength is said to lie in the flexibility of its labour force, where workers have been told that they can no longer expect a job for life but must be prepared to move from job to job, people will inevitably continue to make these transitions between work and, for most, short periods of no work. The impact of such movements is inevitably greatest on those workers with the lowest skills and who command the lowest wages. There is a need for a more dynamic tax and benefits system that takes account of the dynamics of the flexible labour market and does not catapult children in households who make these transitions, into persistent and severe poverty.

1.3.4 POVERTY AND FAMILY CHANGE

Our analysis of how children's circumstances changed over time also examined the stability of children's family lives, in terms of whether they lived with a lone parent or couple family throughout the five year period, or whether they moved from one family type to another. As might be anticipated, relatively large proportions of children who had experienced persistent and severe poverty had lived with a lone parent throughout the five years (24%), although a larger proportion had lived in a couple household throughout the five years (47%). But almost three in 10 children in persistent and severe poverty had experienced a change between living with a lone parent, living with a couple or living independently (29%).

Policy Implications

Much policy concern has focused on poverty among children in lone parent families. Two factors need to be recognised: first, because of their relative proportions in the population, poverty and, as has been suggested here, persistent and severe poverty is most prevalent among children who live in couple families; secondly, policy should recognise that lone parents re-partner and couples become lone parents and that children seem to be at particular at risk of severe poverty at these times of transition. The take up of benefits needs to be promoted particularly at the point in time when families are making these transitions but above all, and yet again, there is a need to ensure that these families in transition have adequate incomes—particularly benefits to ensure that they can protect their children from severe poverty.

1.4 Social Exclusion in Childhood

Whilst the meaning of social exclusion in adulthood continues to be hotly contested and debated, almost nothing has been written or said about its meaning in relation to children. Yet the indicators of disadvantage in childhood in Opportunity for All go far beyond measures of income poverty and assume that these indicators are measuring something that, whilst they may be associated with poverty, are somehow different. There are two main problems here; first, there is no commonly accepted definition of social exclusion in childhood and, secondly, the association between poverty and these other indicators is assumed, rather than measured, because data about poverty and possible indicators of social exclusion are rarely collected in the same survey. What is clear is that definitions of social exclusion in childhood cannot be assumed to be the same as for adults, and that some attempt needs to be made to define and measure social exclusion in childhood.

Figure 4 shows how we attempted to operationalise possible dimensions of social exclusion in childhood in our analysis and the indicators that were used under each dimension. The focus was on three potential aspects of exclusion as it might affect children. First, there is the direct exclusion that children might experience in terms of their own experiences. It is known that parents go to great lengths in their attempts to protect their children from these direct exclusion experiences (and, indeed, from the effects of low income)[138]. But there are a second set of potential exclusionary experiences from which parents will be unable to protect their children—those that affect the whole household—such as those listed in Figure 4. Finally, parents may experience their own individual level exclusion which may also impact on their children, if less directly, through the stress that these experiences bring.

Two points need to be made here: the manifestations of social exclusion identified in our analysis are by no means the last word on the subject. Rather, they are a first attempt at exploring the possible manifestations of social exclusion in childhood, about which much more work is required. Secondly, if and how these three dimensions interact with each other was beyond the scope of this project. We were concerned to investigate if and how each of the manifestations interact with childhood poverty. Further research is needed to see whether the dimensions themselves are associated with each other—that is, to what extent do they appear in the same households? However, it must be emphasised that it is my view that compiling a single index of poverty and social exclusion in childhood is the search for the "holy grail". Each of these manifestations and dimensions will be experienced differently and at different times and to different extents by children in poverty. Each will be of greater or lesser importance to individual children: is lacking social activities more or less important than being bullied in school?; is lacking adequate local services more or less important than living in inadequate housing? To simply count the presence of these manifestations and dimensions in a child's life would be overly simplistic and could result in a distorted view of the circumstances of Britain's children.

The full report of the research contains details of analysis of all these manifestations and the extent to which they overlap with material poverty. This paper focuses on just a small number from each dimension as examples; the point is that such measures need to be included in official government surveys so that it is possible to identify whether children who are removed from poverty are also removed from experiencing these manifestations of exclusion.

1.4.1 Children's Experiences of Exclusion and Poverty

Figure 5 compares the experiences, in 1999, of severely poor, non-severely poor and non-poor children in terms of their exclusion from social activities, local services and school resources. Details of these measures are included in the report. The chart shows the average proportion of children in each poverty group who were excluded on these dimensions. There is a clear association between poverty and exclusion from social activities, such as having friends round for tea or a snack once a fortnight, going swimming at least once a month, because parents could not afford them. One quarter of children in severe poverty were excluded from social activities because their parents could not afford them, compared with only 7% of those in non-severe poverty and only 2% of those not in poverty. The same pattern—if less extreme—was seen for exclusion from a range of publicly or privately provided local services because they were either unavailable or could not be afforded. It is encouraging that publicly provided services, such as health and education, were available to almost all children (although their adequacy has yet to be investigated) but, again, it was leisure activities and services that had to be paid for that were a problem. For example, severely poor children were particularly likely to be excluded from youth clubs and sports and play facilities, that is, places where children and young people can meet and play or socialise safely.

More encouragingly, there was almost no difference in the proportions of children who had experienced school resource problems according to poverty status, although it is worrying that more than one in eight children had experienced problems such as teacher and book shortages and inadequate repair and maintenance.

Greater levels of exclusion among children who were poor and, particularly, children who were severely poor were seen on almost all dimensions of children's exclusion.

Policy Implications

All children should have access to social activities and local services and these services must be distributed or redistributed equitably. Whilst the fact that school resources are apparently distributed equitably is encouraging, there is a policy debate to be had about whether educational resources should be redistributed to children in the poorest areas. There is, of course, a counter argument that this would only encourage wealthier parents to opt-out in greater numbers from the state education system and this must be considered. Nevertheless the debate about redistribution of resources is one that needs to be had.

1.4.2 Household Exclusion and Childhood Poverty

In terms of experiencing housing problems, such as shortage of space, damp, leaking roofs and so on, children in severe poverty were only slightly more likely than those in non-severe poverty to experience these problems, but both groups were much more likely than children not in poverty to have housing problems (Figure 6). For problems in the local area such as graffiti, crime, traffic and noise, the pattern was, again, clearly associated with poverty and poverty severity. One-third of severely poor children experienced neighbourhood problems, compared with one fifth of non severely poor children, and only just over one in 10 children who were not poor.

POLICY IMPLICATIONS

Local area and housing problems were clearly associated with childhood poverty. Housing quality is clearly vital for a child's well-being and is the only environmental indicator specifically for children and young people in Opportunity for All[139]. These findings suggest that policy is right to make improvements in housing quality a priority for children. The poor quality of the neighbourhoods in which severely poor children lived also suggests that the policy of targeting specific localities is correct. However, many of these policies and programmes are time and cash-limited and whether improvements in housing and area quality will be sustained once funding is removed is open to question. Consideration needs to be given to bringing housing and neighbourhood regeneration initiatives into mainstream funding.

1.4.3 Financial Exclusion and Childhood Poverty

Clear associations also emerged between childhood poverty and financial exclusion.

Bank accounts, debts and borrowing

More than two fifths of children in severe poverty in 1999 (44%) were in households where no adult had a bank account compared with only 1% of children not in poverty. Almost two-thirds of children in severe poverty (65%) were in households that had been seriously behind in the previous 12 months in paying bills for utilities, housing, loans, and credit cards compared with only 7% of children not in poverty. Levels of debt were also high for children in non-severe poverty at 45%. Finally, well-over half of severely poor children (56%) lived in households that had borrowed money from sources other than a bank or building society in the previous 12 months, such as money lenders or family and friends. This compares with just 4% of children not in poverty.

Types of debt

Investigation of the type of debt that parents had also showed significant variations according to poverty status (Figure 7). Whereas the parents of children not in poverty were more likely to have personal loans from banks and building societies and particularly, to have credit card debts, mail order debts were far more prevalent among the parents of children in poverty, particularly those in persistent poverty only. In terms of debts to the Social Fund, 13% of children in persistent poverty only had parents who had debts to the social fund and only 4% of children whose poverty was persistent and severe. This paper has suggested earlier that one of the possible reasons why children in households on benefit were receiving incomes below income support levels might be that deductions were being made from the family's benefits at source to repay debts to the social fund. Therefore, these low levels of social fund debts among the most seriously poor children are somewhat surprising and must raise questions about whether the Social Fund is genuinely assisting the government in meeting its poverty targets. It seems likely that many of the poorest families prefer to "borrow" money through purchasing from mail order catalogues, which means they continue to receive their full benefit and can maintain least some control over whether they make a repayment in a particular week.

Ability to save

The patterns of parents ability to save in each year of a five year period were as might be expected; the parents of children in the poorest groups were far more likely not to have been able to save in any of the five years, and the parents of children who had not experienced poverty had been able to save at some point (Figure 8). However, even among children in persistent and severe poverty two-fifths of their parents had been able to save in at least one of the five years. Further analysis (results not shown) also revealed that when the parents of persistently and severely poor children did manage to save, they did so at quite high levels, averaging more than £50 per month.

POLICY IMPLICATIONS

It is worth considering together the policy implications of all these findings about financial exclusion and childhood poverty. First, in 1999 there was clearly a need to assist the families of poor children in accessing financial services, such as bank accounts. There is some evidence that government interventions in this area have had some success[140], but further monitoring is required.

Progress needs to be made in assisting poor families to avoid going into debt, particularly to expensive lenders. Whilst research evidence suggests that families on low incomes manage their money very well and seek to avoid debt[141], lengthy periods on low income currently make debt unavoidable for many. This finding, and those relating to the type of debt that parents had, again shows the urgent need for a review of the Social Fund.

There is also a need for flexible savings plans. The current proposal for the Savings Gateway would require people to commit savings for five years in order to receive the government's contribution. Our evidence suggests that five years is far too long. The fact that parents do save when they can suggests the need for savings plans which families can pay into in "good" years and take payment holidays from in bad years without penalties. It is unrealistic to expect low-income families, prone to spells of (severe) poverty, to save for five years rather than spending money on the immediate needs of their children.

Some comment is also necessary here about proposals for Asset Based Welfare. However desirable it might be for families to build up financial assets in "good" times so that they can protect themselves from future financial hardship, it is clearly unrealistic to expect poor families who are experiencing severe financial hardship and who are often in debt to continue to build up such assets. Policy attention would be better focused on assisting families to escape from, and then avoid, debt, rather than having unrealistic expectations about "asset building". The experience of the very low levels of take-up of stakeholder pensions provides further supportive evidence for this recommendation.

Finally, given the relative lack of access to financial services such as bank accounts in the homes of severely poor children and other findings in the report about financial exclusion among the most severely poor, it would seem sensible to ensure that all children are taught in school about managing money and financial services.

2. Measuring Childhood Poverty and Social Exclusion

This final section draws out some of the implications of research for how childhood poverty and social exclusion might better be measured and defined.

2.1 Recommendations for Data Collection

There is a need for poverty measures which incorporate material deprivation to be collected, not just in annual cross-sectional surveys, as the government is currently considering, but also over time so that changes in children's circumstances can be properly understood. Whilst the Families and Children's Study has made a start in this area, too many of its indicators are of adult or household level deprivation, rather than direct indicators of child deprivation. This must also be borne in mind in considering indicators of childhood deprivation to be included in the Family Resources Survey. New poverty indicators need to be child-centred and developed in consultation with children themselves.

Both of the surveys analysed for this report have also shown the immense potential in developing social exclusion measures specifically for children and these, too, need to be developed by and with children themselves.

Our analysis of the impact of poverty on children's lives has also emphasised that we should be concerned about poverty in childhood, not just because of the effect it may have on children's later lives as adults, but because of its impact on children's current lives as children. This is why there is a need for a new survey of children in families, rather than families with children, which can follow children's circumstances over time and produce data relatively quickly (the Millennium Birth Cohort Study will be invaluable but, by definition, it will be 2016 before it is possible to gain even an initial picture of childhood). A split-age study would be the methodology proposed. This would take representative samples of children aged less than one year, five years old, 10 years old and 15 years old and follow each child annually, for five years in the first instance, incorporating a range of measures of children's lifestyles and living standards. A complete picture of childhood would then be available after five years. The survey should collect as much data as possible from children themselves as soon as they are old enough, but would obviously need to collect information about the household's financial circumstances, amongst other things, from parents. This is not to say that children's experiences can or should be divorced from those of their families, rather that, if the aim is to understand how childhood poverty and social exclusion might best be remedied, this is best understood from children's perspectives.

There is a group of children about whom our research and, indeed, research in general has been able to provide little evidence to date. Children from ethnic minority backgrounds usually appear in relatively small numbers in nationally representative surveys so that no analysis can be undertaken of the circumstances of children from different ethnic minority backgrounds. In our analysis, for example, we were only able to distinguish white from non-white children, which completely ignores the diversity of cultures and experiences among ethnic minority children. There is evidence, for example, that Pakistani/Bangladeshi children are amongst the poorest in Britain in terms of family income142. A large scale national survey of the circumstances of children from ethnic minority backgrounds is urgently required to ensure that the policies in place to remedy childhood poverty in general are appropriate to the particular needs and circumstances of these children.

[142]

There are also a number of significant gaps in the evidence that is available about children and their experiences of poverty. First, as with all surveys, the data analysed in this report exclude those who are likely to be the very poorest and most deprived children; children of asylum seekers and refugees, those who are homeless or living in temporary accommodation, traveller's children. Policy should not focus only on those whose circumstances can be easily measured and resources should be directed to assessing the size and nature of the problems experienced by these particularly vulnerable groups of children.

The research evidence summarised in this note has suggested that childhood poverty has multiple manifestations and that children experience social exclusion in a number of dimensions. We need to understand more about these manifestations and dimensions and, particularly about their inter-relationships, which means that they must be measured in the same survey. Currently, the indicators in Opportunity for All are not measured in this way and, therefore, lack this understanding.

2.2 RELATIVE INCOME MEASURES OF POVERTY

A relative income measure of poverty will, and should, remain important in measuring childhood poverty, not least because it is the only current measure that allows a comparison of children's circumstances over time and internationally. For example, the government's commitments to the European Union require that a measure of relative income poverty be included in the National Action Plan for Social Inclusion. Nevertheless, it is worth rehearsing briefly some of the difficulties of relying on relative income measures in measuring childhood poverty, since doing so provides indications of the direction in which childhood poverty measurement needs to go.

Relative income measures:

Are arbitrary. There is no rational, scientific justification underpinning the selection of 60% contemporary median equivalised household income" as a poverty line. There is no understanding of what standard of living this level of income does or should represent.

Are a moving target. As median income increases, so does the level of income represented by"60% of the contemporary median. This can lead to some strange results in terms of the proportions of children (and adults) identified as being in poverty. For example, in Ireland in the 1990s, during a time of rapid economic growth, levels of poverty increased as increases in the incomes of those towards the bottom of the income distribution were smaller than those towards the top of the distribution. This is one reason why the proportion of children in poverty in the UK has not fallen as quickly as might have been anticipated. Eventually, this may lead to a failure of public confidence in the measure, which would compound the already difficult task of convincing some sections of the population that childhood poverty in the UK is a serious and urgent problem.

Under-estimate childhood poverty? This argument is technical, relating to the equivalence scales that are used to make sure that the incomes of households with different numbers and ages of children can be compared. At its simplest, a family of two adults and four children with an income of £200 per week will be worse off than a family of two adults and two children with an income of £200 per week because income has to meet the needs of more people in the first than in the second family. Equivalence scales provide values for the proportions of income assumed to be consumed by adults and children of differing ages. Yet if these values are wrong, for example, if they under-estimate the proportion of family income required to meet the needs of children (as I would contend is the case with all commonly used equivalence scales), then the proportions of children measured as being in poverty will be under-estimates.

Assume that poverty is equally distributed within households. Relative income measures assume that if the household is poor then each member of that household will also be poor. Yet research evidence clearly shows that the parents of children in poor households go to great lengths to protect their children from the effects of poverty[143]. Women within households are disproportionately deprived, or deprive themselves of, resources in the interests of the remainder of the family. It is clearly important for policy to understand how resources are allocated within households.

Cannot describe what poverty (and social exclusion) means in children's lives. What is it that income poor children go without that non-poor children do not go without? The evidence presented above clearly shows the added understanding of material disadvantage and social exclusion that can be gained from moving beyond relative income measures of poverty.

2.3 THE NEED FOR "ADEQUACY" OR "MINIMUM INCOME" STANDARDS

Whilst the relative income measure of poverty will remain important, its limitations described above lead to the conclusion that there is an urgent need for agreement on levels of income that are adequate to keep children (and adults) out of poverty. In other words, adequacy standards or minimum income standards need to be established that can command widespread agreement and support both by government, the academic community, pressure groups, and the general public as a whole. These standards could solve many of the problems with relative income measures outlined above and would provide a clear and easily comprehensible definition of poverty.

Despite previous recommendations from a range of experts and academics, the government has, to date, resisted this proposal on the grounds that different methods of setting adequacy standards produce different results, and that it would be impossible to produce standards that could be adjusted to take account of changing needs over time. There are a number of points that can be made here:

1. As described above, the extent of childhood poverty captured using current relative income measures already varies according to the equivalence scale used and has the added disadvantage of a poverty line subject to the vagaries of fluctuating incomes at the national level.

2. The most commonly used equivalence scale in the UK, the McClements scale, has not been amended in many years to take account of changes that may have occurred in the relative needs of adults and children within households. In other words, poverty measurement is currently based on an out of date measure.

3. Although different methods of setting adequacy standards do produce different results, this is usually because of differences in the items taken into account, rather than differences in the amounts allowed for particular budget areas. In any event, this is not a reason to reject their potential, which is already accepted in many European countries. Rather, the results produced using the different methods can be evaluated and triangulated.

4. Adequacy standards that have been set in consultation with, and using the expertise of, ordinary people are more likely to command the support of the general public for policies to abolish poverty than are measures such of "60% of median". The general public has no idea of the actual monetary amount represented by this figure, whereas adequacy or minimum income standards that provide clear monetary amounts of weekly income, underpinned by the list of goods and services that could be bought with these amounts, would be much better understood.

5. Adequacy standards can be uprated with prices annually and can be revisited every five years or so to update them to take account of changing needs and priorities. The original standard could be retained and used in a similar fashion to the absolute measure of income poverty currently reported in government statistics. The revised adequacy standard would at least ensure that poverty was being judged by the standards of the time, irrespective of fluctuations in income caused by changes in the economy or out of date assumptions about the relative needs of adults and children within family budgets as is currently the case.

6. Properly developed adequacy standards can take into account not simply the needs of children and adults for goods and services that have to be paid for from the family's income, but also the minimum level of adequate, publicly provided services to which people should have access. They can also incorporate other dimensions of exclusion, such as adequate housing and neighbourhood. They can, therefore, increase accountability of service providers at both national and local levels.

7. It may be that the Government is concerned that adequacy or minimum income standards would show that levels of in-work and/or out-of-work benefits are insufficient to lift particular groups of children or households above these new poverty lines. Yet there is already concern that existing poverty reduction targets will not be met using measures over which the government does not complete control and which may not respond directly to increases in financial support. It would be in the Government's own interests to have other measures of poverty, in addition to the relative income measure, against which their progress can be measured. Further, the Government has already made the crucial and brave step of committing itself to abolishing child poverty within a generation. It is surely in their interests, as well as the interests of the nation as a whole, that everyone is clear about what we are trying to abolish and the standards to which we are aspiring for our children. Such a clear understanding could only assist the Government in its ambitions by harnessing public support.

134 Adelman, L, Middleton, S and Ashworth, K (2003) "Britain's Poorest Children: Severe and Persistent Poverty and Social Exclusion". Back

135 Sutherland, H (2001) "Five Labour Budgets (1997-2001): Impacts on the distribution of household incomes and child poverty". Microsimulation Unit Research Note no 41, May 2001. Back

136 Roberts, S, Adelman, L, Groenez, S, Middleton, M, and Nicaise, I, (2002) Traps, springboards and gaps in European minimum income systems in Kaliterna, L and Dahl S-A (Eds) "Employment Policies and Welfare Reform". Pilar Institute, Zegreb. Back

137 See Vegeris, S and Perry, J (2003) "Families and children 2001: Living standards and the children". Department for Work and Pensions. Research Report No 190. pp101-102. Back

138 Middleton, S (2003) Coping for the children: Low-income families and financial management. In "How People on Low Incomes Manage their Finances". Economic and Social Research Council pp27-29. Back

139 Department for Work and Pensions (2002) "Opportunity for all: Fourth Annual Report". Cmnd 4498. Back

140 Vegeris and Perry (2003) ibid . p. 68. Back

141 Middleton (2003) ibid pp31-34. Back

142 Department for Work and Pensions (2003) "Households Below Average Income 1994-95 2001-02". http://www.dwp.gov.uk/asd/hbai/hbai2002.pdf. Back

143 Adelman, L, Middleton, S and Ashworth, K (2000) Management of Household Finances and Intra-Household Poverty: Evidence from the Poverty and Social Exclusion Survey of Britain, CRSP 410, Loughborough: Centre for Research in Social Policy. Back