Not poor but in a JAM

Feargal McGuinness

Poverty is typically defined in terms of having a low household income. ‘Material deprivation’ indicators, which look at whether families have access to key goods and services, can help illustrate what poverty is like for different groups. However, not all people who are materially deprived are in poverty – and not all people in poverty are materially deprived.

What families cannot afford

In order to measure material deprivation, families with children are surveyed as to whether they can afford various goods and services. For example, in 2014/15: for 35% of children in the UK, their parents cannot afford to give them at least one week’s holiday away from home; for 19%, their parents do not have money to decorate their home; 2% cannot afford celebrations on special occasions.

If households cannot afford a certain number of these goods or services, they are counted as materially deprived. The Institute for Fiscal Studies (IFS) calculates that 21% of children (around 2.8 million children) were materially deprived in 2014/15.

How does this compare with the headline statistics on poverty? Based on household income before accounting for housing costs, 19% of children in the UK were in poverty in 2014/15 (2.5 million children). This rises to 29% of children (3.9 million) based on household income after accounting for housing costs.

Material deprivation is not limited to ‘poor’ households

The prevalence of material deprivation drops off among those with higher incomes. But there are still some families with children not in poverty who are materially deprived, and vice versa.

Marked differences emerge when we look at particular groups in the population. IFS research found that among families with children who are below the poverty line, one in five people in owner-occupied accommodation were materially deprived compared to more than two in five people in private rented accommodation and three in five people in social rented accommodation. Turning to those families above the poverty line, still one in five private renters and two in five social renters were materially deprived.

Similarly stark results are found for workless households and households where at least one member is disabled. Again looking just at families with children, around a third of working households below the poverty line were materially deprived. However, over half of people in workless households above the poverty line were materially deprived.

In households where someone is disabled, around a quarter of people above the poverty line were materially deprived. In households where no one is disabled, fewer than one in ten people above the poverty line were materially deprived.

Complementing income measures of poverty

Clearly, a family will be more at risk of material deprivation if it has a low income, but there must be some other factors at play. Households’ perceptions of what they can afford are likely to be determined not only by their current income (which may be high or low temporarily), but by their past and expected future income as well. Some groups may also face additional costs, such as extra costs associated with disability.

Within the group of parents and children in poverty, previous IFS analysis has shown that material deprivation is much lower among households where someone is self-employed and those with savings of at least £1,500, as well as owner-occupiers. The fact these groups are less likely to experience material deprivation may be because some of them are only experiencing a temporary fall in income or they have other resources to draw on to support their living standards.

Material deprivation measures can therefore complement income-based measures to enhance our overall understanding of poverty. Indeed, alongside statistics on the number of people with income below different thresholds, the Department for Work and Pensions also publishes a series for children in combined low income and material deprivation.

In summary, we can see that for some groups the experience of economic disadvantage extends beyond the population typically counted as poor. Similarly, some people counted as being in poverty are better placed to manage a period of low income than others.