1. The new UK child poverty measure
This presentation will briefly set out the background and context of the child poverty measure, the decisions which were made along the way and how work is now progressing to develop the child poverty measure for the long term.

2. A historic pledge...
March PM pledged to eradicate child poverty
September launched Opportunity for all annual report and indicators
SR set HMT/DWP ‘child poverty’ PSA target
As you all know, the pledge to eradicate child poverty made by Tony Blair in March 1999 started the process to determine a measure for child poverty.
In September of that year, the UK Government launched Opportunity for all – the document which sets out, and monitors progress against poverty and social exclusion.
As part of the spending review 2000, we launched our ‘child poverty PSA target’ – with the aim to quarter child poverty by 2004/05.

3. 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

4. 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
We know that poverty is complex. This is why our approach sets out to capture the multi-dimensional nature of poverty.
Opportunity for all – or Ofa – tracks many different aspects of poverty and social exclusion, across each of the lifestages.
In Ofa 6 – last years report – there were 20 indicators for children.
As a small plug, Ofa 7 will be launched on the 14th of October, at the Round Table in Glasgow, as part of the UK presidency of the EU.
We also monitor how we are doing via our Public Spending Agreement Targets, which I’ll come back to later.

5. 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
So, why did we decide to consult on a new measure of child poverty?
As I’ve already mentioned, the existing PSA target only took us as far as 2004/05 – results on this target will be available next year.
We wanted to build a consensus for our new measure – with as wide an audience as possible.
AND whilst the Ofa measures are good at monitoring progress over time, in the absence of a headline indicator, relative low income received the most attention.
But we know that relative low income has a number of drawbacks, which were set out by John Hills at the IPPR conference in 2001, and are noted in the consultation paper.

6. One clear headline indicator Broad range of indicators
The challenge we face
CLARITY
COMPREHENSIVENESS
One clear headline indicator
Broad range of indicators
It was clear from the start of the consultation that we would need to strike a balance; on the one hand between having one clear headline indicator – which would be clear and easy to communicate – to having a broad range of indicators to comprehensively encompass poverty and social exclusion.

7. Need the best measure
So that definitions of poverty resonate with people’s understanding of poverty
To target and monitor effective policies
We wanted to define a measure which would be meaningful, that could be understood and interpreted by all, but that could also be used to target and monitor effective policies.

8. 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)
We set out four options in the consultation – further details of which can be found in the document – I’ll give you all the web addresses at the end.
These briefly were:
Multi-dimensional headline indicators
Child poverty index
Consistent poverty alone
Tiered approach

9. 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
Our preliminary conclusions were published in May It will be no surprise to hear there was no clear consensus on what was the best measure, but there was widespread recognition that there was no such thing as a perfect measure of poverty.
Most people felt that income should be central, but this did not give the whole picture.
There was strong support for a tiered approach, for some kind of measure of material deprivation. There was also a clear message that Ofa should continue to monitor poverty and social exclusion through its indicators annex.

10. 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
The child poverty index approach received little support. Overall respondents agreed with the challenges to this approach as set out in the consultation document.
Using a solely consistent measure – whilst this option is attractive, most respondents agreed that its challenges and particularly because it was untested in the long-term meant that it would be unwise to use this measure alone. We continued to look at the possibility of using it in conjunction with indicators or as part of a tiered approach.

11. 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 people’s views?
The technical experts group was set up to input into the methodological work set out in our preliminary conclusions, and we also worked with other experts in the field – seeking advice where necessary. (Professors Nolan and Whelan on consistent poverty for example). The experts group were consulted on various methodological papers, but did not make the overall decision on the new measure.
The consultation process involved a wide variety of relevant interest groups, those with experience of poverty including children and parents.
Work was also commissioned to look at
appropriate indicators to include in Family Resources Survey
persistent low income and deprivation

12. 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
The new measure was officially announced in December 2003.
It has been highlighted by a number of experts in the field that using income and deprivation in combination would help to negate the problematic issue of choice associated with deprivation items alone.
The new measure was designed to resonate with public perception of poverty – and include practical effects of living in low income. Very similar to the Irish approach of ‘consistent’ poverty.
It was coupled with new (higher) 70% poverty line to capture people where high housing or childcare costs eat into disposable income.

13. 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
The PSA target set in the 2004 Spending Review to halve the number of children in relative low-income households between and , on the way to eradicating child poverty in 2020.
As part of this, the Government will set an additional target in the 2006 Spending Review to halve by 2010 the numbers of children suffering a combination of material deprivation and relative low income.
This new measure will commence with estimates taken from the 2004/05 Family Resources Survey. The target will be met if there is an equivalent proportional reduction to that required on relative low income between 2004/ /11.
Eradication for low income could mean being amongst the best in Europe, or 5%. (This get round the problem of inaccuracy at the lower end of the income scale).
Goal – by 2020, material deprivation child poverty rate approaching zero
Eradication and interim targets will need to be met across all tiers.

14. 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
So what are we doing to prepare?
Households Below Average Income data will be published in March This will provide the information for the income elements of the target only. Deprivation data along the lines of the material deprivation tier will not be included in the HBAI publication (likely to be a straight count).
Data for the baseline of the material deprivation tier from the Family Resources Survey – combined with 70% low income - will need to be published separately soon after HBAI in The material deprivation tier is combined with low income – and we wont know what 70% low income is until HBAI is published.
In the interim period, it is important that we learn as much as possible about constructing such a measure. Using the Families and Children Study, or FACS - a Department for work and Pensions longitudinal study, which has a number of material deprivation-type questions, we have drawn up a “proxy” index.
The Family Resources Survey (FRS) includes 22 deprivation items. Only 14 items in the FACS study in 2003 were judged to be comparable.
We also have access to 6-month test data for the FRS. This is test data, so I cannot show results on this, but we did find that a greater number of children on average lacked a greater number of items in the FRS than in FACs. This is true of those who were income poor and the not income poor. I can show some results from FACS…

15. FACS Preliminary Analysis
One of the first things we looked at was how this index behaves over time.
One of the first things we learnt is that comparing FACS 2000 with 2001 throws up anomalies – this is due to different survey periods and differences in the way the information was collected.
This also means that because FACS and FRS are asked at different times in the year, that these may be different too.
We also wanted to look at longevity of our items. As you can see, those reporting they lacked an item are reducing over time. Progress is not uniform across all the items, and gives us a feel for which items may need to be updated more quickly than others.
This is important in giving us a feel for how often we would want to look at and possibly rebase the measure.

16. FACS Analysis – Preliminary results
Deprivation
category
Income
poor
Not income
Lacking no items 8 36
Lacking 1-2 items 34 47
Lacking 3-5 items 42 15
Lacking 6 or more items 16 2
Using the FACS results, we can see that the material deprivation suite appears to be a good discriminator between the poor and the non-income-poor.
92% of the income poor lacked one or more items, whilst 64% of the non-poor (defined as above 70% median) lacked those items.
This is based on a simple count approach, although work is ongoing to produce indices based on a number of different approaches, including those weighted according to the proportion of those who already own the item.
No decision has yet been taken on which should be used.

17. The challenge we face Simple count approach Weighted approach CLARITY
COMPREHENSIVENESS
Simple count approach
Weighted approach
Of course, the other major issue we face is how do we communicate such a measure? Do we go for a simple count approach, easy to explain, easy to understand but that ranks widely owned in the same way as those items which hardly anyone has. We also know that in a simple count approach one item can have a disproportionate effect on the measure, it may also leave us open to misinterpretation – “you’re poor if you havent got a weather proof coat”.
Or do we opt for a weighted option, which whilst getting around some of the problems which the simple count approach, is also open to the criticism that it does not “resonate well” with the public – something which was outlined as imperative in the consultation results. It will certainly be more challenging to explain!
We are discussing these issues, and will be for the next few months, but it would be interesting to also get views from across the floor on this.

18. Future decisions Simple count vs Weighted approaches Threshold setting
Frequency of recalibration/uprating
Modelling material deprivation
There are a number of other areas where decisions will need to be taken in the near future.
We need to set a threshold in the coming months. This is important – we want to ensure we are capturing sufficient children as part of the measure, and do not want to leave ourselves open to the criticism that the target is too easy. BUT by the same token, there is no point setting an impossible threshold on which it is impossible to ever show progress.
There is widespread acknowledgement that the measure and its component parts will need to be updated – we could fit to the existing PSA cycle, so targets could be aligned to fit every 5 years, as recommended by the experts group as part of the consultation. This would help with the inevitable problem of a ‘jagged edge’ as commonly owned items are replaced with less commonly owned ones. (It would also help with the problem of no progress being observed if items are updated too regularly).
Part of the process to help us decide on these issues will be on working on ways to model material deprivation – we need to be sure that we can design the model in such a way that it picks up on the various aspects of material deprivation set out in the index. Again, it would be useful to have views from the floor on this. If anyone has experience of modelling material deprivation, please come and find me during the break – I’d be very interested in speaking to you!

19. Contacts and further information
Child poverty measurement:
Consultation documents:
Opportunity for all:
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
Alternatively, my contact details are set out here, along with more detail on how to get hold of the various child poverty consultation reports and the UK strategy on poverty and social exclusion.
Thankyou