Severe Child Poverty in the UK - SRMC Working paper · Note: This paper is an extension of an earlier work on measurement of severe child poverty in the UK conducted by the Centre

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Combining Household Income and Material Deprivation to Measure the Extent and

Risk Factors of Severe Child Poverty in the UK

Monica Magadi,

Department of Sociology,

City University, London.

Social Research Methodology Centre Working Paper

February 2009

Note: This paper is an extension of an earlier work on measurement of severe child poverty in

the UK conducted by the Centre for Research in Social Policy (CRSP) for Save the Children

UK1

The Extent and Risk Factors of Severe Child Poverty in the UK

1 Magadi, M and S. Middleton (2007) Severe Child Poverty in the UK. Save the Children Fund, London, UK.

www.savethechildren.org.uk/en/docs/sevchildpovuk.pdf

2

Abstract

This study uses a combination of household income and material deprivation to measure the

extent and risk factors of severe child poverty in the UK, based on the 2004/5 Family

Resources Survey. Given the multi-dimensional nature of poverty, its measurement

encompasses both material deprivation (child and parent deprivation) and low household

income. Principal Components Analysis is used to derive a deprivation index which is then

combined with household income to identify children experiencing severe poverty. The

results show significant regional variations in severe child poverty experience, ranging from

2% of children in South England to 9% in London. The multinomial logistic regression results

conform to what might be expected, showing relatively high risks of severe poverty among

children: with workless parents; whose parents have low education; in large families of four

or more children; from ethnic minority groups, especially of Asian origin; and in families

with disabled adult(s). However, the results with respect to benefit receipt and lone

parenthood show interesting patterns worth further investigating.

Key words: Severe child poverty; material deprivation; low household income; multi-

dimensional poverty; Family Resources Survey; UK

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The Extent and Risk Factors of Severe Child Poverty in the UK

INTRODUCTION

Study rationale and objectives

The UK has experienced a considerable recent decline in child poverty that has been mainly

attributed to government reforms. However, separate independent studies suggest that

children from the very poorest families remain a legitimate concern. Sutherland (2001) noted

that the income situation of the poorest children may have indeed worsened following the

government’s reforms. Recent evidence from the British Household Panel Survey (BHPS)

revealed that whereas the proportion of children in non-severe poverty declined significantly

after 1997, there has been no evidence of a corresponding decline in the proportion of

children in severe poverty (Magadi and Middleton, 2005). This was consistent with findings

from a separate study based on the Family Resources Survey (FRS) which observed that the

decline in child poverty between 1997/98 and 2003/4 was lower for more severe poverty

(below 50 per cent of median income) compared to the proportion below 60 per cent of

median income (Brewer et al, 2005).

Whilst currently and under the new measures the government will continue to monitor various

dimensions of poverty including persistent poverty, there are no plans to monitor severe

poverty. There has been a vast array of recent research on child poverty, but little is known

about the circumstances and characteristics of children in severe poverty for whom policy

responses may need to be different (Adelman et al, 2003)

This study aims at identifying an illuminating measure of severe child poverty, as well as

identify the risk factors of severe child poverty, based on the 2004/5 FRS. The child poverty

measure: takes into account the child’s own experience of poverty or deprivation; includes the

parent’s experience of poverty or deprivation, separately from that of their children; and

considers the income of household, since the contribution of low household income to the risk

of poverty in childhood cannot be ignored. The specific objectives are to:

(i) identify a measure of severe child poverty that discriminates between the

experiences of children defined as severely poor and other children:

(ii) examine the extent of severe child poverty in the UK; and

(iii) identify the risk factors of severe child poverty in the UK.

Overview of poverty measurement

Given the multi-dimensional nature of poverty, its measurement should encompass a variety

of dimensions and not just income (Perry, 2002). Focussing solely on income may miss out

important aspects of what it means to be poor (Nolan and Whelan, 2005). Furthermore, it has

been pointed out that poverty measures based solely on income are often limited given the

difficulty in obtaining an accurate calculation of a household’s income and widespread

misreporting of income by respondents in surveys (Willitts, 2006). The need to take into

account the multi-dimensional nature of poverty has been well recognized in international

poverty studies. In a descriptive comparative analysis of European poverty, Heikkila et al

(2006) argue that an indicator of poverty based on income, subjective and material

deprivations may be a more reliable measure of poverty than income alone. Material

deprivation indicators should compensate to some extent for the misreporting of income,

which is a particular problem at the lower end of the income distribution (Willitts, 2006).

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Our measure of material deprivation is based on an enforced lack approach which helps to

discriminate between those not choosing to have necessities and those forced to do without

necessities because of a lack of economic resources (Hallerod, 1995). We do recognize on-

going debate in deprivation literature on the role choice plays and how different groups may

respond differently (Cappellari and Jenkins, 2004). For instance, it has been noted that

younger people tend to say they cannot afford items, whereas older people tend to say they

don’t need items (Mckay, 2004). Nevertheless, our confidence in the use of the enforced lack

approach in this study is strengthened by the fact that research evidence has not highlighted

differential reporting of deprivation indicators by families with children - families tend not to

differ much from the general population (Willitts, 2006).

Although some researchers have highlighted the benefit of material deprivation measure over

income and vice versa, many experts recognize the complementary nature of the two

measures and support the use of combined income and deprivation tier for a more robust and

reliable poverty measure (Ringen, 1988; Muffels, 1993; Hallerod, 1995; Nolan, 1999;

Adelman et al, 2003; DWP, 2003). According to DWP (2003), a better measure of living

standards at any point in time can be obtained by measuring both low income and material

deprivation combined to identify households whose low incomes are leading to deprivation.

Furthermore, the combined measure helps minimize the role of choice in deprivation items.

Analogous to the methodology used to measure severe child poverty based on the Poverty and

Social Exclusion Survey (PSE) of 1999 (Gordon et al., 2000; Adelman et al.,2003; Bradshaw

and Finch, 2003), the measurement of severe child poverty in this study, based on the 2004/5

FRS, involves three indicators:

a. child deprivation – whether the child goes without items that the majority of parents in

the UK believes to be necessary for children, because parents cannot afford to provide

the item(s);

b. parent deprivation – whether parent(s) go without items that the majority of adults in

the UK believes to be necessary for adults because they cannot afford the items; and

c. income poverty of the household – below a given threshold of median household

income .

DATA AND METHODS

Material deprivation threshold

It has been noted that it is not necessary to include a long list of goods and services when

measuring material deprivation (DWP, 2003). The list of deprivation items included in the

FRS (see Annex A) was arrived at through a comprehensive analysis of existing UK

deprivation data to identify a set of questions which best discriminates between poor and non-

poor families (McKay and Collard, 2004). A range of analytical methods were used to select

the subset of questions, ranging from an examination of items that families were most

commonly unable to afford, and direct investigations of the ability of particular questions to

discriminate between poor and non-poor, to more powerful statistical methods based of factor

analysis and latent class analysis. The different methods identified a consistent set of

questions as having the greatest relevance. The data show that a significant proportion of

children were in families who could not afford specific adult-related necessities (Table 1a) or

child-related items (Table 1b).

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Table 1a: Per cent of children in families deprived of specific adult-related items

Item Adults

have

this

Would like

but cannot

afford

Do not

want

NA/

missing

A holiday away from home for at least one week

a year

57.0 38.3 4.0 0.8

Friends or family around for a drink or meal at

least once a month

58.0 16.7 23.4 1.9

Two pairs of all weather shoes for all adults in

the benefit unit

87.2 10.4 1.9 0.6

Enough money to keep your home in a decent

state of decoration

77.9 18.7 1.3 2.1

Household content insurance 74.8 17.7 5.2 2.3

Make regular savings of £10 a month or more for

rainy days or retirement

53.5 40.8 5.0 0.8

Replace any worn out furniture 59.1 30.6 7.9 2.4

Replace or repair electrical goods such as

refrigerator or washing machine when broken

70.4 21.7 5.4 2.4

Have a small amount of money to spend each

week on yourself (not on your family)

62.7 33.4 3.4 0.5

Have a hobby or leisure activity 56.9 18.6 23.2 1.3

Base Population: All children (n=16012) in 2004-5 FRS

Table 1b: Per cent of children in families who are deprived of specific child necessities

Item Children

have this

Would like

but cannot

afford

Do not

want

NA/

missing

A family holiday away from home for at

least one week a year

63.5 31.4 3.5 1.6

Enough bedrooms for each child of 10 or

over of a different sex to have their own

bedroom

14.4 3.1 0.4 82.1

Leisure equipment such as sports

equipment or a bicycle

85.8 8.2 3.6 2.4

Celebrations on special occasions such as

birthdays, Christmas or other religious

festivals

93.3 4.5 1.0 1.2

Go swimming at least once a month 58.6 10.6 27.0 3.8

Do a hobby or leisure activity 76.6 7.0 11.8 4.6

Have friends around for tea or snacks at

least once a fortnight

70.1 8.2 18.1 3.6

Go to toddler group/ nursery/ playgroup at

least once a week (for children under 6 not

attending primary or private school

25.3 2.6 7.5 64.6

Go on school trips (for those over 6, or

under 6 and attending primary or private

school)

75.7 5.1 2.5 16.6


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We used principal components analysis (PCA) to assign indicator weights and derive

summary indices of adult and child deprivation. The PCA is a powerful tool in identifying the

underlying patterns in the data and reducing the number of dimensions without much loss of

information. The resulting summary indices are linear combinations of the sets of indicator

variables used to derive the PCA scores. Although the underlying assumption of the PCA

approach is that the indicator variables are interval level or ratio measurements, it has been

widely applied to categorical variables broken into sets of correlated dichotomous variables to

determine the weights and apply them to form the index. For instance, independent

investigators have used this approach to quantify variations in household wealth based on

household assets and amenities (Filmer and Pritchett 2001; Rutstein and Johnston 2004).

In this analysis, rather than use a 0-1 dichotomy for the indicator variables, we have assigned

deprivation scores for each of the items used to derive the PCA scores of -1 (for those who

have the item), +1 (for those who cannot afford item), and a mid-value of zero for those who

lacked an item but said they did not want or need it. All the deprivation items used to derive

the summary child and adult deprivation indices loaded reasonably well on the summary

indices (see Tables B1 and B2 in Annex B), with the exception of ‘Enough bedrooms for each

child of 10 or over of a different sex to have their own bedroom‘, presumably due to the large

number of ‘not applicable’ cases (see Table 1b). It is important to note that the patterns of

severe child poverty observed in this paper based on PCA derived weights are quite similar to

those obtained using a simple additive approach which assumes equal weights for the

deprivation items (see Magadi and Middleton, 2007). Although the PCA is a useful way of

creating summary indices from related sets of indicators, the inevitable loss of information on

specific indicators is a major limitation. This implies that it would be impossible to identify

specific deprivation indicators that may be of particular importance in the analysis.

The resulting summary deprivation scores derived from PCA were then classified into

quintiles. Children in families falling within the bottom quintile (i.e most deprived 20

percent) with respect to both child and adult deprivation items are considered as having

‘severe’ material deprivation, while those in the bottom quintile with respect to either adult of

child deprivation are considered to have mild-moderate deprivation. Using this classification,

11 per cent of children in the UK are in families with ‘severe’ material deprivation, 16 per

cent are in families with mild-moderate deprivation and the remaining 73 per cent are not

deprived.

Severe income poverty threshold

Income used in this paper refers to household income, equivalised2 based on the modified

Organization for Economic Co-orperation and Development (OECD) equivalence scale,

consistent with child poverty measures to monitor progress on child poverty reduction in the

UK (DWP, 2003). Although the official UK measure of low income3 previously used the

McClements scale (DWP, 2006), the OECD scale is preferred for child poverty measures

since it assigns greater weight to the cost of young children and facilitates comparison with

other official statistics in the UK and Europe. The modified OECD scale is now the preferred

equivalence scale in the UK Households Below Average Income (HBAI) analysis (DWP,

2008).

Low income measures may be based on ‘before housing cost’ or ‘after housing cost’ income.

With an ‘after housing cost’ measure, the median income poverty line and the proportions

below it are calculated after deducting housing costs from the household income. On the other

2 Adjusted to take into account household size and composition. Equivalisation is necessary to make sensible

income comparisons between households - a larger family needs a higher income than a smaller family for both

households to enjoy a comparable standard of living. 3 Households Below Average Income series

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hand, housing costs are not deducted from the household income in a ‘before housing cost’

measure. This implies that with a ‘before housing cost’ measure, those with high housing

costs (e.g in London) could be wrongly classified as not being in poverty because their high

housing costs, if taken into account, might leave them with low income below the poverty

line. Those with low housing costs may also be wrongly classified as being in poverty.

Consequently, we have used an ‘after housing cost’ measure which is believed to be a better

measure of disposable household income. The measure is more suitable in identifying those

facing greatest financial difficulties – that is, those experiencing severe poverty.

Our income poverty measurement is based on relative (rather than absolute) poverty lines

which are considered more relevant in developed country contexts, such as the UK, where the

key challenge is to ensure that the whole population shares the benefits of high average

prosperity, and what is regarded as minimum acceptable living standards depends largely on

the general level of social and economic development (Expert group on poverty statistics,

2006). Three options were considered in identifying an appropriate income threshold for

severe child poverty measurement. The first involved an attempt to circumvent the well-

recognized drawback of using arbitrary income poverty thresholds. We considered using

median income support levels as a proxy for low income. However, a major shortcoming was

that the prevailing income support levels may not reliably reflect acceptable minimum living

standards. No reliable measure currently exists that can guide the setting up of a rationally

justifiable income threshold. Nevertheless, there is some scope for using this approach in

future when findings from recent and on-going works on ‘minimum income standard for

Britain’ can meaningfully inform the setting up of such a threshold (Bradshaw, et al, 2008;

Oldfield and Bradshaw, 2008).

The second option considered using the lower end of routinely published income thresholds.

The current approach in Opportunities for all is to report a range of low-income thresholds at

50, 60 and 70 percent of median. Measuring child poverty (DWP, 2003) uses the higher end

of income threshold of 70 per cent of contemporary median income, in conjunction with

material deprivation. Our focus in this study is on severe poverty, hence, a lower threshold is

appropriate. We considered using the lower end of income threshold of 50 per cent, or a more

extreme cut-off point of 40 per cent. According to the FRS 2004/05 survey, about 16 per cent

and nine per cent of all children in the UK were in households with income below 50 per cent

and 40 per cent of median income4, respectively. Previous studies on severe child poverty in

the UK have used the 40 per cent threshold (Adelman et al, 2003; Magadi and Middleton,

2005) or the 50 per cent threshold (Magadi and Middleton, 2007). While this approach is

desirable for its simplicity, the choice of thresholds remain rather arbitrary.

The final approach focused on the “poorest of the poor” - that is the bottom half of those

classified as being in poverty based on the commonly used standard threshold of 60 per cent

median income. This involved obtaining the median income for all individuals in income

poverty at 60 percent threshold, then classifying those in the bottom half (i.e below poor

median) as being in ”severe poverty”. This threshold corresponded to 45 percent of the

median income based on 2004/5 FRS. An examination of the proportion of children

classified as being among “the poorest poor” helps establish the extent to which children (or

families with children) are close to the conventional poverty line or disproportionately

experience dire financial difficulties. Using this definition, 12 percent of all children in the

UK are classified as being in ‘severe’ income poverty; 15 per cent are in mild-moderate

income poverty and 73 per cent are not in income poverty.

4 An ‘after housing cost’ income measure, equivalised using the OECD scale, modified to take a childless couple

as reference with an equivalence value of 1.00.

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Severe child poverty definition

Our approach is to measure severe child poverty based on a combination of severe income

poverty and material deprivation. The severe income poverty measure is based on ‘the poorest

poor’ classification, described above. For material deprivation, a weighted approach based on

principal components analysis is used to identify the most deprived 20 per cent with respect to

both adult and child items.

Children are classified as being in ‘severe’ poverty if they are in households with severe

income poverty (i.e. ‘poorest poor’ – bottom half of income poor at conventional 60%

threshold), in combination with ‘severe’ material deprivation (in the bottom quintile with

respect to both adult and child necessities). Those in households below 70 per cent of median

income, in combination with either adult or child deprivation are classified as being in non-

severe poverty. The remaining are classified as not being in poverty.

RESULTS

The extend of severe child poverty in the UK

Based on the above definition, about four per cent (0.52 million) of children in the UK are

classified as being in severe poverty, being in households with extremely low income (bottom

half of those in income poverty at 60 per cent threshold), in combination with severe material

deprivation (in the bottom quintile with respect to both adult and child necessities).The

poverty permutations and mean income for a one-child couple are presented in Table 2.

Table 2: Poverty permutations and mean income

Poverty permutation Mean income for a one-

child couple family (£)*

Per cent

of children

Not in poverty

- neither income poor nor deprived

- not income poor, some material deprivation

- income poor, no material deprivation

426

514

377

160

78.3

52.0

11.3

15.0

Non-severe poverty

- non-severe income poverty and deprivation

- income poverty and deprivation, one of

which is severe

193

211

179

17.7

7.6

10.1

Severe poverty (severe income poverty and severe deprivation)

112 4.0


Those in severe poverty have extremely low disposable household income averaging only

£112 per week for a one-child couple family, compared to £426 for those not in poverty.

Those classified as being in severe poverty have substantially lower average disposable

income than the other sub-groups, with the exception of those classified as having severe

income poverty with non-severe or no material deprivation. These sub-groups, especially

those having no deprivation are likely to comprise those for whom reliable income measures

are not available. Further examination shows that those in severe income poverty but not

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deprived comprise a disproportionately high proportion of the self-employed (see Annex C), a

group prone to income measurement errors. For instance 35 per cent of children in severe

income poverty but not deprived have self-employed parents, compared to only 13 per cent

for all children. It is also possible that some of those with no deprivation but low income

could be in a transitional stage of becoming poor (Gordon et al 2000).

We examine in Tables 3a and 3b the extent to which families of children in severe poverty

lack specific adult-related or child-related necessities. Children in severe poverty fair rather

poorly on each of the specific adult-related and child-related deprivation items. The data

highlight the extent of deprivation that children classified as severely poor are experiencing:

89 per cent live in households that cannot afford regular savings of £10 a month or more; 86

per cent live in households that cannot afford to replace worn furniture; 78 per cent live in

households that cannot afford to repair electrical goods; and 76 per cent live in households

without content insurance.

Table 3a: Percent of children whose families cannot afford specific adult-related necessities.

Item

Not in

poverty

Non-severe

poverty

Severe

poverty

A holiday away from home for at least one week a year 25.8 82.6 95.7

Friends or family around for a drink or meal at least once a

month

8.8 42.8 67.5

Two pairs of all weather shoes for all adults in the benefit

unit

4.0 31.1 46.1

Enough money to keep your home in a decent state of

decoration

9.9 50.1 68.4

Household content insurance 7.0 56.2 76.0

Make regular savings of £10 a month or more for rainy days

or retirement

29.2 83.4 89.2

Replace any worn out furniture 18.8 76.2 86.3

Replace or repair electrical goods such as refrigerator or

washing machine when broken

10.5 63.8 77.8

Have a small amount of money to spend each week on

yourself (not on your family)

21.5 75.6 88.5

Have a hobby or leisure activity 10.5 47.0 58.6

Unweighted cases 12394 2979 639


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Table 3b: Percent of children whose families cannot afford specific child-related necessities.

Item Not in

poverty

Non-severe

poverty

Severe

poverty

A family holiday away from home for at least one week a

year

19.4 74.8 91.7

Enough bedrooms for each child of 10 or over of a

different sex to have their own bedroom

10.9 35.7 52.0

Leisure equipment such as sports equipment or a bicycle 2.8 22.2 61.7

Celebrations on special occasions such as birthdays,

Christmas or other religious festivals

1.3 11.8 37.9

Go swimming at least once a month 4.3 31.1 56.8

Do a hobby or leisure activity 2.5 20.8 46.9

Have friends around for tea or snacks at least once a

fortnight

3.0 22.9 56.1

Go to toddler group/ nursery/ playgroup at least once a

week (for children under 6 not attending primary or

private school

3.2 15.4 35.5

Go on school trips (for those over 6, or under 6 and

attending primary or private school)

2.1 17.3 43.3

Unweighted cases 12394 2979 639


Characteristics of children in severe poverty

The proportion of children in severe poverty ranges from a low of about two per cent in South

England (South East and South West) to a high of about nine per cent in London (Figure 1).

Other regions with above average levels of severe child poverty are the Midlands (West and

East Midlands) and Wales. It is important to note that the average housing costs are highest in

London and South East, hence, these regions would be expected to show lower poverty levels

if income was based on a ‘before housing cost’ measurement. On the other, Northern Ireland

has considerably lower housing costs compared to the other regions, hence, would show

higher poverty levels, relative to the other regions, if income was based on a ‘before housing

cost’ measure. Although an ‘after housing cost’ is our preferred measure as explained earlier,

proponents of a ‘before housing cost’ income measure may argue that the impact of higher

housing is to some extent picked up in the deprivation measure (see for example Willits,

2006) since those with high housing costs cannot afford to buy items and activities.

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Figure 1 Regional variations of child poverty ranked by increasing severe child poverty levels

83 84 84 83 79 76 76 80 75 79 7667

15 14 13 15 18 20 20 17 21 16 1924

2 2 3 3 3 3 4 4 5 5 5 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sou

th w

est

Sou

th W

est

Eas

tern

North

ern Ir

eland

Yor

ks a

nd H

umbe

rside

North

-West

& m

erse

yside

North

Eas

t Eng

land

Sco

tland

Wale

s

Eas

t Midland

s

West

Midlands

Lond

on

Pe

r c

en

t o

f c

hil

dre

n

Not in poverty Non-severe poverty Severe poverty

The bivariate distribution of child poverty by socio-economic factors show a strong

association between economic activity of parents and severe child poverty status (Table 4). As

might be expected, children in severe poverty are highly likely to have workless parents and

unlikely to have parents in full-time work. The majority (69 per cent) of children in severe

poverty have workless parents, compared to 57 per cent of children in non-severe poverty and

only eight per cent of children not in poverty. Conversely, the proportion of children in severe

poverty who have parents in full-time work is considerably lower that that of children in non-

severe poverty or not in poverty.

It is interesting to note that the low economic activity among parents of children in severe

poverty is not matched with levels of benefit receipt. Children in severe poverty are generally

less likely to be in families in receipt of means tested benefits (except Jobseekers Allowance)

compared to those in non-severe poverty. In particular, children in severe poverty were

considerably less likely to be in families receiving child tax credit (CTC) or working tax

credit (WTC), compared to those in non-severe poverty. While the lower receipt of WTC

among families of children in severe poverty might be explained by the higher proportion of

workless parents among this group, the lower receipt of CTC is surprising since almost all

families in this group would be eligible for CTC since they have dependent children and are

on low income. We have assumed that all families receiving Income Support also received

CTC since some families who were in receipt of Income Support prior to the introduction of

tax credits and were still so doing in 2004-05 had not yet been ‘migrated’ to CTC as

originally planned and continued to receive a single Income Support payment which did

include CTC. The fact that even after this adjustment a lower proportion of children in severe

poverty than those in non-severe poverty were in families receiving CTC, coupled with an

overall higher proportion not being in receipt of any of the above benefits or tax credits,

suggests that take-up of benefits might be an issue for families of children in severe poverty.

12

Table 4: Characteristics of children in severe poverty Column per cent

Severe child poverty status Characteristic Not in

poverty Non-severe

poverty Severe

poverty

All children

Economic activity of parents - Self employed - Couple or single: all in full-time work - Couple: one FT one PT work - Couple: one FT, one unemployed - Couple or single: PT work, no FT - workless

14.7 20.7 27.8 19.2 9.7 7.9

5.8 4.0 4.4

13.4 15.8 56.6

4.1 0.8 0.9 9.4

15.9 68.9

12.7 17.0 22.6 17.8 11.0 18.9

Benefit receipt - Disability living allowance - Jobseeker’s allowance - Incapacity benefit - Income support - Working tax credit - Child tax credit

6.2 0.7 2.5 5.7

14.7 64.2

8.8 4.6 7.2

50.5 19.1 88.6

3.4 7.2 6.7

44.5 10.6 75.2

6.6 1.6 3.5

15.2 15.3 68.9

Age mother left education - Before 16 years - At 16 years - After age 16 years

6.6

41.9 51.5

18.7 52.4 28.9

25.9 45.1 29.0

9.5

43.9 46.6

Mother’s educational qualification - No qualification - Non-degree qualification - Degree level or above qualification

12.6 66.4 21.0

38.2 57.9 3.9

49.0 48.0 3.0

18.6 64.1 17.3

Housing tenure - Own outright - Mortgage - rent

10.2 69.8 20.0

4.7

22.0 73.3

3.3

16.2 80.6

9.0

59.2 31.9

Parents have savings/assets 30.3 3.9 1.7 24.5 Single parent 16.9 52.4 47.4 24.4 Number of children in family

- One child - 2 children - 3 children - 4 or more

25.2 46.9 19.7 8.2

22.1 35.6 24.2 18.1

26.4 33.7 19.8 20.1

24.7 44.4 20.5 10.4

Age of child - 0-4 - 5-9 - 10-14 - 15-19 years

25.1 27.4 31.0 16.4

32.1 25.7 27.7 14.4

34.8 20.0 27.1 18.1

26.7 26.8 30.3 16.1

Age of mother - 16-24 - 25-34 - 35-44 - 45 years or older

3.2

28.0 53.0 15.8

14.2 39.7 36.7 9.4

14.8 30.4 43.4 11.4

5.6

30.2 49.7 14.5

Ethnic background - White - mixed/other - Asian - Black

90.8 2.2 4.6 2.3

82.3 3.6 9.7 4.6

62.9 8.7

20.1 8.3

88.2

2.7 6.1 2.9

Disabled adult present in family 18.7 33.4 34.2 21.9 Disabled child present in family 12.8 17.6 15.4 13.8 Unweighted cases 12394 2979 639 16012

13

There is a strong association between parent’s educational attainment and severe child

poverty. A considerably higher proportion of mother of children in severe poverty had no

qualification (49 per cent), compared to mothers of children in non-severe poverty (38 per

cent) or not in poverty (13 per cent). Correspondingly, only three percent of mothers of

children in severe poverty had degree level qualifications, compared to 21 per cent of mothers

of children not in poverty. The patterns for age of leaving full-time education are consistent

with those of educational attainment, with children in severe poverty having a considerably

higher proportion of mothers leaving full-time education before age 16 years (26 percent),

compared to those in non-severe poverty (19 per cent) or not in poverty (7 per cent). It is

possible that the low educational attainment of parents of children in severe poverty might

contribute to the low take-up of benefits noted in the preceding section.

As might be expected, children in severe poverty were more likely to: live in tented

accommodation; have families with no savings or assets: have lone parent families; or come

from large families with at least four children. However, the relationship between age of

children or age of parents and experience of severe child poverty was not straightforward, but

there was some indication that younger age of mother was associated with higher experience

of child poverty, both severe and non-severe.

There was a strong association between ethnic background and experience of severe child

poverty. Children of Asian ethnic origin, and to a lesser extent, those of other ethnic minority

backgrounds comprise a disproportionately high proportion of children in severe poverty. A

considerably higher proportion of children in severe poverty are from Asian and Asian British

ethnic origin (20 per cent) than those in non-severe poverty (10 per cent) or not in poverty (5

per cent). Although the majority of children in severe poverty are of White ethnic origin (63

per cent), the proportions among those in non-severe poverty (82 per cent) or those not in

poverty (91 per cent) are significantly higher This suggests that children of White ethnic

origin are less likely to experience severe poverty compared to those of ethnic minority

background..

Finally, the presence of disabled adults in the family is strongly associated with the

experience of severe child poverty, but the same does not apply to presence of disabled

children. About one third of children in severe poverty (or non-severe poverty) were in

families where there were disabled adults, compared to 19 per cent of children not in poverty.

The fact that it is the disability of adults, rather than that of children that is strongly associated

with the experience of severe child poverty is not surprising since it is adult family members

who usually engage in economic activities, hence, their disability is likely to impact more

negatively on the families’ financial resources.

Risk factors of severe child poverty

The characteristics of children in severe poverty discussed in the preceding sections provide a

useful overall picture of the profile of children in severe poverty but do not tell us what the

precise risk factors of severe child poverty are. This sub-section examines the risk factors of

severe child poverty, controlling for the effect of other important factors. We recognize that

the associations described above may be influenced by the effect of other important related

factors. For example, parents with lower educational attainment may be less likely to

participate in labour force, hence, it is not straightforward to establish from the bivariate

associations whether it is educational attainment or labour force participation that is the

important risk factor in severe child poverty. The multinomial logistic regression analysis

presented in Table 5 allows us to examine the factors associated with higher odds of severe

child poverty, while holding the other important factors constant.

14

Table 5 Risk factors of severe and non-severe child poverty, relative to not being in

poverty

Factor Non-severe

poverty

Severe

poverty

Region (S & E England)

- North/ Yorks/ Humberside

- Midlands

- London

- Wales

- Scotland

- Northern Ireland

0.82*

0.92

1.25*

1.15

0.85

0.92

0.76

1.53*

1.67*

1.75*

1.08

1.38

Economic activity of parents (workless)

- Self employed

- Couple or single: all in full-time work

- Couple: one FT one PT work

- Couple: one FT, one unemployed

- Couple or single: PT work, no FT

0.34*

0.15*

0.15*

0.43*

0.60*

0.06*

0.01*

0.01*

0.07*

0.29*

Benefit receipt (no receipt)

- Disability living allowance

- Jobseeker’s allowance

- Incapacity benefit

- Income support

- Working tax credit

- Child tax credit

0.29*

2.65*

1.36*

2.84*

1.01

1.29*

0.08*

0.81

0.75

0.54*

0.41*

0.80

Age mother left education (post 16 )

- Before 16 years

- At 16 years

1.32*

0.96

1.96*

1.01

Mother’s educational qualification (degree )

- No qualification

- Non-degree qualification

3.45*

2.54*

6.27*

4.00*

Housing tenure (rent)

- Own outright

- Mortgage

0.31*

0.38*

0.07*

0.22*

Parents have savings/assets (no) 0.31* 0.14*

Single parent (couple) 1.32* 0.71*

Number of children in family (4 or more)

- One child

- 2 children

- 3 children

0.55*

0.60*

0.81*

0.66*

0.55*

0.57*

Age of child (15-19 years)

- 0-4

- 5-9

- 10-14

0.81*

0.66*

0.69*

0.80

0.49*

0.59*

Age of mother (45 years or older)

- 16-24

- 25-34

- 35-44

2.18*

1.37*

1.13

1.82*

1.08

1.56*

Ethnic background (White)

- mixed/other

- Asian

- Black

1.40*

2.39*

1.33

2.82*

6.08*

2.51*

Disabled adult present in family (no) 1.48* 1.49*

Disabled child present in family (no) 0.90 0.95 * - significant at 5 per cent level.

Reference categories are given in italics in brackets.

15

A multinomial logistic model enables us to retain the three categories of the outcome variable:

severe poverty; non-severe poverty; and not in poverty. Table 5 gives the risk factors of

severe and non-severe poverty, relative to not being in poverty. (The per cent distribution of

severe and non-severe child poverty by factors included in the regression analysis is given in

Annex D). A relative risk factor greater than 1.00 implies that the factor is associated with

higher experience of child poverty than the reference category, while a value less than 1.00

implies a lower risk.

The results of the regression analysis are largely consistent with the bivariate associations

described in the preceding sections, confirming a relatively high risk of severe poverty among

children:

• living in London, Wales and the Midlands;

• with workless parents;

• whose parents have low educational qualifications;

• living in rented accommodation;

• whose parents have no savings /assets;

• in large families of four or more children;

• from ethnic minority groups, especially of Asian origin; and

• in families with disabled adult(s).

As might be expected, most of these risk factors apply to non-severe child poverty as well, but

to a noticeably less extent. For instance, the relative risk factors of severe poverty for children

with workless parents (i.e. compared to those whose parents are engaged in economic activity

as full-time of part-time employees or self-employed) are more than double the risk factors of

non-severe poverty. Children whose mothers have no qualification are 6.3 times and 3.5 times

more likely to be in severe and non-severe poverty, respectively (as opposed to not being in

poverty) than those whose mothers have degree level qualification. Also, the risk of severe

child poverty among ethnic minority groups is considerably higher (about double) than the

risk of non-severe poverty.

DISCUSSION AND CONCLUSIONS

This study has adopted a measure of severe child poverty that incorporates both low income

and material deprivation. Children are classified as being in ‘severe’ poverty if they are in

households with very low income (i.e. ‘poorest poor’ – bottom half of income poor at

conventional 60% threshold), in combination with ‘severe’ material deprivation (deprived of

both adult and child necessities – i.e in the bottom quintile with respect to both adult-related

and child-related necessities). Those in households below 70 per cent of median income, in

combination with either adult or child deprivation are classified as being in non-severe

poverty. The remaining are classified as not being in poverty. Based on this definition, about

four per cent of children in the UK (0.52 million) are classified as being in severe poverty.

This is a fairly conservative estimate of severe child poverty in the UK with more stringent

criteria for classification of severe child poverty than used in previous studies (see for

example, Magadi and Middleton, 2007). The sub-group of children classified as being in

severe poverty show relatively high levels of deprivation on each of the specific child-related

or adult-related necessities.

There are significant regional variations in the experience of severe child poverty in the UK,

ranging from two per cent in the South (East and West) of England to nine per cent in

London. The analysis of characteristics of children in severe poverty largely conform to

expected patterns, increasing our confidence that the adopted severe child poverty measure is

16

indeed identifying the most disadvantaged children. The results show a relatively high risk of

severe poverty among children: living in London; with workless parents; whose parents have

low educational attainment; living in rented accommodation; whose parents have no savings

/assets; in large families of four or more children; from ethnic minority groups, especially of

Asian origin; and in families with disabled adult(s). However, the patterns with respect to the

parents’ age or the age of child are not straightforward, while interesting results are observed

with respect to benefit receipt and lone parenthood.

The results of the regression analysis suggest that older children aged 15-19 years are

significantly more likely to experience severe poverty than the younger age groups. A detailed

examination of the experience of severe child poverty by child’s age (not shown) suggests

that it is the 14-15 year olds who are at the highest risk of severe poverty. This may be partly

due to the fact that while benefits moved away from weighting by age, equivalence scales

have not changed, assigning children aged 14 years or older greater weight. The association

between mother’s and severe child poverty does not show a straightforward pattern, but there

is an indication that children of young mothers aged 16-24 years are the most likely to

experience severe or non-severe poverty.

One interesting pattern relates to children with lone parents who are more likely to be in non-

severe poverty, but less likely to be in severe poverty compared to those with couple parents,

when other important factors such as economic activity are controlled for. The apparent

strong association between having a lone parent and the experience of severe child poverty

observed in the bivariate association is largely due to the low economic activity of lone

parents. In fact, about half of children with lone parents (52 per cent) are in workless families,

while another 27 per cent of lone parents are in part-time work. When economic activity and

other important factors are held constant, children of lone parents are less likely to experience

severe poverty than those of couple parents. However, a recent study based on separate

analyses of income poverty and deprivation suggests that the equivalence scales used in the

official income-based measures of poverty tend to overstate the extra resources needed by

couples with children, relative to lone parents, to escape material deprivation (Brewer et al.,

2008).

It is important to note that since the demographic factors relating to lone parenthood, mother’s

age, age of youngest child and number of children are all interrelated, simultaneously

controlling for the effects of these factors in the model is likely to modify the risk factors

associated with specific factors. For instance, further examination of the data (not shown)

shows that lone parents are more likely than couple parents to be in the youngest mothers age

group (16-24 years old), a group associated with a higher risk of poverty. This means that the

risk of poverty for lone parents will appear reduced when the effect of mother’s age is

controlled for.

The regression results reveal particularly striking patterns with respect to benefit receipt. The

link between low take-up of benefits and the experience of severe child poverty warrants

special attention, especially since the same patterns do not apply to the experience of non-

severe poverty which does show the expected positive association with respect to receipt of

means-tested benefits such as Income Support and Jobseekers Allowance. The fact that non-

receipt of Working Tax Credit (after controlling for economic activity) and non-receipt of

Income Support are associated with significantly higher experience of severe child poverty

may suggest that this is a particularly vulnerable sub-group. These results might suggest that

benefit take-up is possibly an issue for families experiencing severe child poverty that is

worth further investigating. The fact that this group is associated with particularly low

educational attainment might suggest a lack of knowledge of benefit entitlement or the skill to

make a successful application among those eligible. Given the very low income of families

with children in severe poverty, one might expect most of these families to be eligible for the

17

means-tested benefits. On the other hand, it is also possible that a disproportionately high

proportion of children in severe poverty are in households not eligible for benefit receipt,

possibly due to such factors as residency status.

Nevertheless, the findings with respect to the Disability Living Allowance (DLA) is not

surprising. The fact that those in receipt of the DLA are highly unlikely to be in severe or

non-severe poverty may be attributable to the fact that the income equivalence scales do not

take into account the increased cost of living due to disability. Furthermore, given the amount

of time require to complete the FRS survey, it is possible that potential respondents caring for

disabled children or adults will be less likely to participate in the survey, resulting in a

response bias for this group which is not currently corrected by the standard FRS non-

response weights. In the absence of reliable adjustments for the increased cost of living due to

disability, coupled with possible non-response bias for this group, we suggest that results

relating to receipt of DLA be interpreted with caution.

The link between non-receipt of means-tested benefits and the experience of severe child

poverty has important policy implications. The current policy initiatives to reduce child

poverty in the UK through provision of various mean-tested benefits or tax credits are

unlikely to work for this group. Effective poverty alleviation efforts for this particularly

disadvantaged sub-group of the population would require further empirical evidence to better

understand the prevailing circumstances (e.g reasons for non-receipt of benefits).

Incorporating severe child poverty dimension within the on-going government child poverty

measures to monitor progress (DWP, 2003) would no doubt be an important step towards

such efforts.

18

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20

Annex A: Material Deprivation questions in FRS 2004 In the FRS 2004, respondents were asked: (a) Adult /parents deprivation “For each of the following things please tell me the number from the showcard which

best explains whether [you and your family /you and your partner /you] have it or not …”

Responses on the showcard were:

(1) We/I have this (2) We/I would like to have this, but cannot afford it at the moment (3) We/I do not want/need this at the moment (4) Does not apply

- a holiday away from home for at least one week a year, whilst not staying with

relatives at their home? - Friends or family around for a drink or meal at least once a month? - Two pairs of all weather shoes for [name all adults in the benefit unit]? - Enough money to keep your home in a decent state of decoration? - Household content insurance - Make regular savings of £10 a month or more for rainy days or retirement - Replace any worn out furniture - Replace or repair electrical goods such as refrigerator, or a washing machine when

broken - Have a small amount of money to spend each week on yourself (not on your family)? - Have a hobby or leisure activity/

(b) Child deprivation “For each of the following things please tell me the number from the showcard which

best explains your child/children have it or not …” Responses on the showcard were:

(1) Child(ren) has/have this (2) Child(ren) would like to have this, but we cannot afford it at the moment (3) Child(ren) do not want/need this at the moment (4) Does not apply

- a family holiday away from home for at least one week a year? - Are there enough bedrooms for each child of 10 or over of a different sex to have their

own bedroom? - Leisure equipment such as sports equipment or a bicycle? - Celebrations on special occasions such as birthdays, Christmas or other religious

festivals? - Go swimming at least once a month? - Do a hobby or leisure activity? - Friends around for tea or snacks at least once a fortnight? - Go to toddler group/ nursery/ playgroup at least once a week (for children under 6

not attending primary or private school? - Go on school trips (for those over 6, or under 6 and attending primary or private

school)

21

Annex B: Principal Components Analysis (PCA) results – PCA loadings Table B1: PCA Loadings for Adult deprivation items Item Loading 1 A holiday away from home for at least one week a year 0.692 Friends or family around for a drink or meal at least once a month 0.574 Two pairs of all weather shoes for all adults in the benefit unit 0.684 Enough money to keep your home in a decent state of decoration 0.656 Household content insurance 0.579 Make regular savings of £10 a month or more for rainy days or retirement

0.681

Replace any worn out furniture 0.568 Replace or repair electrical goods such as refrigerator or washing machine when broken

0.778

Have a small amount of money to spend each week on yourself (not on your family)

0.756

Have a hobby or leisure activity 0.683 Extraction method: Principal Components Analysis; One component extracted 1 – Equivalent to bivarite correlations between specific items and the extracted component

Table B2: PCA Loadings for Child deprivation items

Item Loading 1 A family holiday away from home for at least one week a year 0.413 Enough bedrooms for each child of 10 or over of a different sex to have their own bedroom

0.191

Leisure equipment such as sports equipment or a bicycle 0.624 Celebrations on special occasions such as birthdays, Christmas or other religious festivals

0.685

Go swimming at least once a month 0.588 Do a hobby or leisure activity 0.721 Have friends around for tea or snacks at least once a fortnight 0.632 Go to toddler group/ nursery/ playgroup at least once a week (for children under 6 not attending primary or private school

0.675

Go on school trips (for those over 6, or under 6 and attending primary or private school)

0.599

Extraction method: Principal Components Analysis; One component extracted 1 – Equivalent to bivarite correlations between specific items and the extracted component

22

Annex c Characteristics of children in severe income poverty but not deprived, compared to all children

Column per cent Characteristic*

Severe income poverty but not

deprived

All Children

Economic activity of parents

- Self employed - Couple or single: all in full-time work - Couple: one FT one PT work - Couple: one FT, one unemployed - Couple or single: PT work, no FT - workless

34.8 4.8 7.4 13.9 14.1 25.0

12.7 17.0 22.6 17.8 11.0 18.9

Benefit receipt - no - yes

60.2 39.8

70.9 29.1


23.5 57.9 18.6

18.6 64.1 17.3

Family type - Single parent - Couple parents

21.3 78.7

24.4 75.6

Number of children in family - One child - 2 children - 3 children - 4 or more

18.0 43.8 17.3 21.0

24.7 44.4 20.5 10.4


21.0 26.6 31.7 20.7

26.7 26.8 30.3 16.1


2.3 26.7 54.6 16.5

5.6

30.2 49.7 14.5

Ethnic background - White - mixed - Asian - Black - Chinese or other group

84.4 2.0 8.6 3.7 1.2

88.2 1.0 6.1 2.9 1.7

Disabled child present in family - Yes - No

10.4 89.6

13.8 86.2

Unweighted cases 752 16012 * - only significant factors (p<0.05) are included

23

Annex D Per cent distribution of non-severe and severe child poverty in the UK by background characteristics

Row per cent Severe child poverty status Characteristic

Not in poverty

Non-severe poverty

Severe poverty

Unweighted Cases

Economic activity of parents - Self employed - Couple or single: all in full-time work - Couple: one FT one PT work - Couple: one FT, one unemployed - Couple or single: PT work, no FT - workless

90.6 95.6 96.4 84.6 68.9 32.7

8.1 4.2 3.5

13.3 25.3 52.8

1.3 0.2 0.2 2.1 5.8

14.5

2019 2679 3472 2756 1780 3306

Benefit receipt $ - Disability living allowance - Jobseeker’s allowance - Incapacity benefit - Income support - Working tax credit - Child tax credit - No benefit

74.3 32.0 55.5 29.4 75.2 72.9 92.0

23.6 50.2 36.8 58.9 22.0 22.7

5.1

2.1

17.8 7.7

11.7 2.8 4.4 2.9

1140 271 612

2669 2410

11204 4473

Age mother left education - Before 16 years - At 16 years - After age 16 years

54.4 74.8 86.5

34.7 21.1 11.0

10.9

4.1 2.5

1514 7025 7473


53.1 81.1 95.4

36.3 15.9 3.9

10.5 3.0 0.7

3089 10147 2776

Housing tenure - Own outright - Mortgage - rent

89.3 92.3 49.2

9.3 8.6

40.7

1.5 1.1

10.1

1388 9126 5498

Parents have savings/assets - no - yes

72.3 96.9

22.5 2.8

5.2 0.3

12151 3861

Family type - Single parent - Couple parents

54.2 86.1

38.0 11.1

7.8 2.8

4203

11809

Number of children in family - One child - 2 children - 3 children - 4 or more

79.9 82.8 75.2 61.6

15.8 14.2 20.9 30.7

4.3 3.0 3.9 7.7

3652 7022 3432 1906


73.6 80.1 80.2 79.7

21.2 16.9 16.2 15.8

5.2 3.0 3.6 4.5

4304 4578 4686 2444


44.6 72.7 83.5 85.4

44.8 23.2 13.1 11.4

10.6 4.0 3.5 3.1

829

4923 7899 2361

Ethnic background - White - mixed/other - Asian - Black

80.7 64.2 59.1 61.2

16.5 23.2 27.7 27.5

2.9

12.6 13.1 11.3

14368

393 801 450

Disabled adult present in family - Yes - No

66.8 81.6

27.0 15.1

6.2 3.4

3520

12492

Disabled child present in family - Yes - No

73.0 79.2

22.6 16.9

4.5 3.9

2267

13745

All cases 78.3 17.7 4.0 16012

Severe Child Poverty in the UK - SRMC Working paper · Note: This paper is an extension of an earlier work on measurement of severe child poverty in the UK conducted by the Centre

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