New Poverty Measure Release: Below Average Resources (BAR)

On 18^th January, the Department for Work and Pensions (DWP) released the initial work on the development of new poverty measures, called Below Average Resources (BAR). Our analysts at the National Centre for Social Research (NatCen) reflect on this release and how a new poverty measure can be useful for research.

The main poverty measure that is currently in use is Households Below Average Income (HBAI). It tells us what percentage of the population live in low income households. This measure is used for official statistics on absolute and relative poverty and there are specific estimates for children, older people, and adults of working age.

Do we need a new poverty measure?

To understand how people and families are coping financially, we want to know as much as possible about the resources they have access to and the costs they can’t avoid. For example, there are costs that households can’t go without paying, such as housing costs, costs related to having a disability, childcare costs, or debt repayments. Households Below Average Income (HBAI) data is available before and after housing costs, but to effectively compare how different groups in society are getting on financially, we need more information. That’s the data gap that this new measure seeks to fill.

What does the new Below Average Resources (BAR) data release cover?

This new data release gives us further insights into the resources people and families have available to spend. It offers estimates for the following measures for the UK:

• Liquid assets
• Inescapable childcare costs
• Inescapable disability costs
• New estimates of inescapable housing costs, which include mortgage capital repayments

Compared to Households Below Average Income (HBAI), the Below Average Resources (BAR) data considers more types of income and assets, as well as additional unavoidable expenses. It will be useful to researchers who want to understand how much money households have available to spend once inescapable payments have left the bank account.

How are the estimates of people in poverty changing between the poverty measures?

The estimates for the share of the population on low resources (BAR) and on relative low income after housing costs (HBAI) are highly similar. In the most recent data, 22% of the population are classified as on low resources and on low income respectively. 

Some differences between the measures are expected. 

It’s worth noting that 13% of pensioners are in low resources compared to 18% in low income. According to the DWP release material, this difference is primarily driven by that this group is more prone to having savings or other forms of liquid assets, which are taken into account in the low resources measure. However, the inclusion of adult social care costs in future releases is expected to increase the estimates of how many people in pension age are in a condition of relative poverty. 

The other notable difference is the poverty estimates for children. This estimate rises from 29% in the low income measure (HBAI) to 34% with the low resources measure (BAR). In other words, one in three British children are growing up in relative poverty according to this new measure. The difference between the estimates is likely to be caused by the inclusion of inescapable childcare costs in the low resources measure.

At NatCen, we look forward towards to further data releases from this project, and especially to the new measures yet to be released focusing on debt and on additional forms of inescapable costs, such as adult social care. 

Looking ahead, we would also recommend the development of simplified versions of the below average resources measure that can be operationalised in a larger number of studies. This would allow social researchers to collect poverty-related data and information on family resources – inspired by the Below Average Resources (BAR) design – in a larger number of policy and academic studies. This would contribute towards building an even stronger evidence base for targeted policy development and learning. 

What data are the measures based on?

The Below Average Resources (BAR) and the Household Below Average Income (HBAI) figures are the results of calculations based on the Family Resources Survey. This is a representative survey of around 10,000 households in the UK, with data collected by the National Centre for Social Research (NatCen). That means that both measures also have the same time series coverage as this survey – there’s data for Great Britain from 2000-01 to 2001-02, and for the whole of the United Kingdom for 2002-03 onwards.

Our analysts at NatCen have full accredited researcher status under the Digital Economy Act 2017, which enables us to access a wealth of published and unpublished data for research projects for the public good. There is a wide range of opportunities to use the data we collect and can access from other sources. If you would like to know more about the data analysis services we provide, please contact our Analysis team at analysis@natcen.ac.uk or visit the analysis page here.