Poverty figures: what they do and don’t say


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Today the government released the latest official poverty statistics (for 2013-14). Anyone aware of the projections made by the IFS and the NPI think tanks may be feeling slightly confused that, essentially, child poverty rates haven’t shifted on the previous year (although half a million more children are in absolute poverty than in 2010).

So, what do and what don’t the figures tells us?

The Government is saying the big story is  “the percentage of individuals and children in relative low income at its lowest level since the 1980s”,   Evidently, despite the Prime Minister’s avowed doubts about the value of using a relative child poverty measure, it’s ok to use that measure when it’s not delivering bad news.  Ministers are also tight-lipped on the fact that the big falls in child poverty happened before 2011.

While today’s figures tell us there has not been a statistically significant decrease in child poverty levels, they also make it pretty clear that the government is significantly off track when it comes to fulfilling its commitment to end child poverty by 2020.

Child poverty remained static in 2013/14 for the fourth year in a row. 3.7 million children (on the after housing costs indicator) are still living in poverty. That’s 27 per cent of all children, or nine children in classroom of 30. 

Many are confused by how this fits with the projections that child poverty was set to rise. The IFS has projected that poverty would rise through analysing changes to tax and benefit policy combined with the labour market trends recorded by the Labour Force Survey. The data released today is based on the Family Resources Survey which samples 20,000 households, rather than the whole population, so naturally is subject to a margin of error. In the words of the statisticians behind today’s figures, the results are “estimates, not precise figures” which means there could in fact be increases or decreases in poverty levels which aren't picked up by the sample. They found changes to taxes, earnings and benefits combining so that incomes in the middle and bottom of the distribution remained largely unchanged. One possible reason for the difference in the two sets of figures is that the survey underlying today’s figures showed higher employment increases that the Labour Force Survey used by IFS.

Most importantly though, these figures for a single year should not detract from the robust projections that show child poverty set to rise significantly by 2020 – even before the £12 billion of cuts to social security are factored in. It’s the longer term trend we should pay close attention to, not individual years, IFS cautions. Fears about the looming child poverty crisis remain.

One notable figure amongst the many reams of papers that make up this release is around working families. Two thirds of children growing up in poverty are in working families. This has risen by 1 per cent, and while the size of the survey means that this is not statistically significant, it shows that the high levels of in-work poverty are not changing.

Iain Duncan Smith’s view on this is somewhat different: “We know that work is the best route out of poverty, with children in workless families around 3 times as likely to be in poverty than those in working families.” Yes, that’s right but not the full picture. Families are less likely to be living in poverty if they are working, but work has not provided a route out of poverty for 2.3 million children.

The Child Poverty Act legally commits the government to eradicate child poverty. To achieve this, child poverty rates need to be slashed to just over a third of the figures released today for 2013/14. Ministers should treat these figures as a warning, not as vindication.