Comparing child poverty using the Luxembourg income study
Brexit ruined our capacity to produce a whole range of socio-economic comparisons with other countries. The Office for National Statistics stopped sending UK data to the EU, including statistics on income and living conditions. There is no UK child poverty data after 2018 on the Eurostat database. Although we have UK child poverty data up to 2022/23 it is not consistent with the EU-SILC definitions. OECD still publish headline child poverty data and their latest is for 2019. In the context of the Labour government’s child poverty inquiry, we really need some more up-to-date comparisons. ONS have now reached an agreement with the EU to begin to provide some data to Eurostat, but it does not appear that statistics on income and living conditions are going to prioritised.
Meanwhile, to help fill that gap, we have undertaken an analysis of the Luxembourg Income Study (LIS) which has UK child poverty data for 2021. LIS uses a poverty threshold of 50 per cent of median income and an equivalence scale (the square root of the number of people in the household) which is different from the UK and EU-SILC. It also covers a much more eclectic mix of countries – basically those that submit their data. It is also only possible to make comparisons of child poverty before housing costs.
Figure 1 presents the overall child poverty rates before and after transfers. It can be seen that before transfers the UK has the second highest child poverty rate (second to Brazil). The transfer system in the UK therefore has to work harder than most countries to reduce child poverty and the UK ends up with a child poverty rate after transfers that is higher than most other EU and rich countries.
Figure 1: Overall child poverty rates (% of children in households with equivalent income less than 50% median)
Note: Countries are ordered left to right by the percentage reduction in child poverty achieved by social transfers; Source: Author’s calculations of LIS data, 2024.
Figures 2-5 present the same results for children in lone parent families and children in 1 child, two child and three or more child families. In figure 2 the transfers to single parent families are more successful in reducing child poverty risks than for all families but the after transfers child poverty rate in the UK is still higher than Ireland, Poland, Taiwan, Denmark, Norway, Netherlands and Mexico.
Figure 2: Child poverty rates for single parent families (% of children in households with equivalent income less than 50% median)
Notes and sources: See Figure 1.
The most striking conclusion to be drawn from Figures 3-5 is that the UK is much less successful in reducing the poverty in families with 3+ children – clear evidence of the impact of the restrictive two-child limit in the UK.
Figure 3: Child poverty rates in one child families (% of children in households with equivalent income less than 50% median)
Notes and sources: See Figure 1.
Figure 4: Child poverty rates for two child families (% of children in households with equivalent income less than 50% median)
Notes and sources: See Figure 1.
Figure 5: Child poverty rates for three plus child (% of children in households with equivalent income less than 50% median)
Notes and sources: See Figure 1.
Time to abolish the two-child limit?
Frankly, 2021 is not a good year for data on income poverty because of Covid. Nevertheless, the LIS data tends to confirm and update a picture of child poverty in the UK that was quite familiar from Eurostat data – comparatively high pretransfer rates, heavy work by transfers, but still comparatively high child poverty after transfers. This new analysis however adds to the national data that the UK does really badly on child poverty in three plus child families. Evidence that is high time to abolish the two-child limit!