Topic Videos

2022 Exams - Policies to Reduce Relative Poverty

Level:
A-Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 17 May 2022

In this video we update students with the latest data on relative poverty; focus on policies designed to reduce it and consider some of the threats to poverty in 2022.

2022 Exams - Policies to Reduce Relative Poverty

Defining relative poverty

The most commonly used relative poverty line is set at 60% of median equivalised disposable household income

Deep poverty: Households with equivalised incomes below 50% of the median

Relative poverty can also be measured in a multi-dimensional way that goes beyond just income levels – for example, the risk of homelessness, or gaps in healthy life expectancy at birth

And the persistence (duration) of relative poverty is also crucial

Measuring relative poverty in the UK

  • More than 1 in 5 of the UK population (22%) are in poverty in our country – 14.5 million people.
  • Of these, 8.1 million are working-age adults, 4.3 million are children and 2.1 million are pensioners
  • Almost 1 in 3 children in the UK are living in poverty (31%)
  • Larger families, that is those with three or more children, have always faced a disproportionate risk of poverty.
  • Poverty rates are high in the North East (25%), West Midlands (25%) and Yorkshire and Humberside (24%).
  • Around two-thirds (68%) of working-age adults in poverty live in a household where at least one adult is in work

The main policy instruments for changing relative poverty in disposable incomes are government spending (including welfare) + impact of direct and indirect taxes

Other policies are also important including employment initiatives, housing reforms and regional policy

Macroeconomics also affects relative poverty – there are fears for example that the 2022 “cost-of-living crisis” will cause higher rates of poverty especially with the sharp rise in food and energy prices.

Threats to relative poverty in the UK in 2022

  1. Rising inflation - key components of food, housing and utility costs all rising – huge rise in the energy price cap – steep increase in fuel & food poverty.
  2. Falling real value of welfare benefits due to high inflation
  3. Rising food bank use and more children eligible for school meals – schools under pressure to offer smaller meals
  4. Rents – housing rents continue to rise and so too are evictions and homeless numbers
  5. Risks of another economic recession caused by a deep fall in real disposable income – threatens employment

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