Governmental Minimum Income Standards


John Veit-Wilson, University of Newcastle upon Tyne

The government has issued a consultation document, Measuring child poverty. It has invited responses on what kind of measure it should use to monitor the effectiveness of its anti-poverty policies. I want to spend my ten minutes in explaining why the kind of poverty measures which the government has in mind, are not the same as the governmental minimum income standards which the Social Security Select Committee recommended last year and which we have met to discuss.

Although the government is consulting about child poverty, we all know that this is inseparable from poverty in family settings. My remarks apply to the consideration of the poverty of all kinds of household.

People have always been confused about the difference between two distinct uses of the word ‘poverty’. One means the condition of lacking amenities and life-experiences, which a society defines as necessities which nobody should be without. The other use means the lack of the resources which enable people to achieve the participation in social life and avoid social exclusion. When I say ‘people’ I mean all kinds of people, especially politicians and journalists. No intelligence is exempt from this confusion, and it has got to be cleared up, because the difference affects the policies to deal with these poverties.

The government sees poverty as the first of these and wants a better picture of the whole condition. But if we focus on the other meaning, then we need a clear picture of what resources are required to avoid the condition.

Money is one of those resources, particularly in such a market-oriented society as ours. We all know it isn’t the only one. But, rightly or wrongly, it is among the most important resource as a means to achieve the ends which most people have, of being able to maintain their respect in society and take part according to social norms. Measuring how much money-income people have is a simple and practical proxy for the real question – which is whether or not they have that battery of resources with which to take a full part in society and behave as it expects. But we also need to know what levels of income give access to them. That is why sociologists study the question.

Not all aspects of social participation, experience or performance, can be achieved simply by spending money — though having enough of it almost always helps. For many aspects of participation one needs one’s health and qualifications. But this is a sequential process. One resource is needed to achieve an objective, which then becomes a resource for the next objective in the chain. Money is needed to buy, for example, the nutritional foods which we need from our conception onwards to build a physique and brain which perform fully and which avoid morbidities and premature mortalities later in life. So diet is a resource, but information about diet and health – another resource – is not enough in the absence of enough cash income to meet this need, at the same time as meeting all the other needs ordinary people have without causing detriment to any of them. For example, money for education and health is a resource to meet the need to earn money later in life. It’s a chain.

You can find similar examples across the range of human experience. Nor are the resources always individual. Look at the explanations the media are offering for the social issues surrounding the Damilola Taylor case – the enormous cuts in the public youth service programmes which have taken place over the past two decades, where the youth service might once have helped to avoid the social evils which are now identified. In each case, a resource gives access to the next objective, which may then be a resource for a further objective, the end of which is full social participation. In all of this, individual money resources are an essential part of this chain. Even having enough money income to pay direct and indirect taxes – which then help to pay for the collective resources – and having enough left over to be able to participate, is all part of this picture.

The government is rightly concerned about a range of social evils, as we all are. One of these is what it loosely calls poverty. But the poverty which the government is concerned about, is not the poverty which is a lack of the money resources needed for participation and performance. The government’s preferred view of poverty is that the term refers loosely to this condition, a wide range of social evils, of which lacking money is only one part. Judging by the consultation document as well as many previous statements, it does not think that the part which money incomes play in the condition called poverty needs or is amenable to precise measurement.

In every discussion like this, we have to be clear what the objectives are, before we can make any useful judgement on the best ways of achieving them. The government’s objectives are based on the commitments which it has made to abolish child poverty within two decades, and to reduce a number of social evils in a much shorter time span. Obviously it would be politically expedient to have achieved measurable improvements before the next election.

For these purposes the government needs measures which reflect the social evils, and which can be publicly accepted as a reflection of the wide interpretation of poverty which the government proposes. Its consultation document therefore offers choices from collections or even compositions of measures of various social evils – in the fields of health, education, housing, employment, material deprivations – and low incomes. Its objective is to able to say that it has reduced the social evils. But it doesn’t need to answer the question of whether the low incomes are enough to meet its definition of poverty, since that definition doesn’t depend on a cash income measure.

It doesn’t say what it means by low incomes here. Perhaps it is the same measure which it has been using for some years — in simple terms living in a household which has an income at or below 60 per cent of the median household income. That is indeed a low income, but no one knows if it is enough, too much or too little to achieve the avoidance of the social evils the government is concerned about.

Whatever it means, in talking about composite measures it is confusing means and ends, resources and social outcomes, and rolling them into one indigestible pudding. The money incomes are needed to avoid the social evils – you can’t measure them both simultaneously in one measure. And the time frame over which adequate family incomes can be measured to influence the health and performance of the next generation are as long as that – generational, not before the next election.

So the government doesn’t know what a minimally adequate income is – one which is just enough to avoid the social evils which low income causes or exacerbates. Please note that when I say ‘a minimum income’, of course I mean a different one for each kind of household, varying by size and composition. And the government’s consultation is not going to tell it the answer.

This is not a new problem. I have researched government policy on this topic back to the 1930s, and the evidence shows that governments of all parties have always been very reluctant to address the question of measuring the adequacy of the income maintenance system – wages, tax thresholds, social insurance benefits or social assistance [whatever it is currently called]. They all fear that if there were a criterion of adequacy, then it would cause trouble – the inadequacy of wages and pensions would be exposed, and so on.

Yet this doesn’t seem to be a problem in the ten countries which do have official governmental minimum income standards. For example, USA has had one since the 1960s and yet millions of people continue to have incomes well below this level, without there being a political outcry about it. The US federal states which make use of it do so only as a reference, which many of them ignore. But it does help them, and other countries which have governmental minimum income standards, to do the three things which they do best –

  • to act as a publicly defensible criterion of the adequacy of income maintenance;
  • to act as a guide to setting and ranking its provisions (– this includes tax thresholds and the income limits of court enforcement of debt in some countries);
  • and as a measure to count the poor.

It is only the last of these that the Blair government’s consultation is concerned with. We therefore still have a task to do. The Select Committee’s recommendations have not been superseded by the consultation. The government rightly wants to find the best way of monitoring its policies in the short run, while we want to find the best way of establishing what the minimum necessary incomes are now to avoid the range of social evils, in the longer run. They are not contradictory aims — they are complementary. It is sad that the government has confused these two distinct aims. It will still need an governmental minimum income standard as a component of its collection or composite indicator of policy effectiveness.

It is very strange that the government avoids recommending precise standards for minimum incomes. In every other field of its interests it has official committees studying the evidence and making official recommendations – think of nutrition, radiation, health, education – and many others. Further, the Blair government has set precise performance targets to be achieved in many fields – but in the poverty field it sets only trend measures – more of this and less of that – apart from the target of the abolition of child poverty a long way off. This strikes me as odd.

So let us agree with the government that what any measure needs is an examination and comparison of different bodies of evidence before coming to a conclusion. This is what I called triangulation in my evidence to the Select Committee. The government has repeatedly emphasised that not one of the many definitions and measures of income poverty which the academic researchers use is sufficient in itself for policy purposes, since they do not agree with each other. But we should note that a single measure which incorporates a body of triangulated evidence could credibly be used – for instance, the work of the Family Budget Unit which the Zaccheus Trust, Age Concern and UNISON have sponsored. After all, official budget studies have been used for decades in Nordic countries, either as governmental minimum income standards or as independent criteria of their adequacy.

To conclude, then – I deliberately coined the clumsy phrase, governmental minimum income standards, to emphasise that what other countries do is to make political judgements, basing them on some sort of politically credible relevant evidence about the minimum levels at which people could live decently in those countries. These are not individual social science measures of poverty – they were political measures of the adequacy of incomes to meet social as well as political goals. That is what we are asking the government to consult about now.