I have three separate things to say. One is that when we think about measures, the limitations of measurement unfortunately become relevant. For example, there is an argument that, just as the persistent poverty measure exploits the fact that we have data on the same households over multiple years and might be interested in patterns of poverty over that longer timeframe, there might be a good case for being interested in patterns of poverty over a shorter timeframe. Rather than just having that annual capture, you might want to see whether people are moving in and out of poverty. The challenge there is that I do not know of any good source of data that would allow you to do that in a reliable way.
There is a challenge for Scotland in particular. The UK Government was armed with a UK-wide survey, and although the levels of precision in that survey are not great, they give a reasonable guide to what is actually going on. I assume that the plan is that, like the whole-UK targets were, the targets will be based on family resources survey measurements. That will be a challenge in itself.
That takes us to Jim McCormick’s point about severity of poverty. Intellectually or conceptually, we absolutely want to measure how deep in poverty someone is. The challenge is measurement. Colleagues at the IFS have shown that, for the vast majority of the people who record their income as zero in the family resources survey, their consumption and living standards are higher than those of the people who report weekly incomes of between £1 and £300. They have been mismeasured—they are people who have just not bothered to fill in that bit of the survey, so we cannot say that that is the group that we really need to worry about. When we think about destitution, there is an argument that at least some of those people are exactly the kind of people who will not answer the door when the survey man knocks. There are therefore difficult issues around measurement.
On housing plus, when you think about what costs you deduct from income before doing a comparison with a poverty line, the tricky element is that there is a trade-off between trying to capture some sense of disposable income—the income that people have to live on—and not wanting people’s genuine choices to determine whether they are or are not in poverty.
Let me explain what that means. To measure income after housing costs, for example, has a lot of benefits. However, there is also a disadvantage. Imagine two households with exactly the same income: family 1 values the quality of the house that they live in more than the quality of the food that they eat, and family 2 values the opposite. Therefore, family 1 spends more on rent and less on food, and family 2—because it values those two things differently—chooses to spend less on rent and more on food.
On the AHC measure, one of those households will be measured as being in poverty and the other will not. You might not want that to be the case, because the only difference is that they prefer one thing over another—it is nothing to do with essentials. That is the challenge when you start trying to widen the definition. You might want to capture energy costs but people will make different choices about how much they want to spend, and you might not want that to be reflected in the measure.
The third and final thing is, as Jim McCormick was hinting at, the importance of separating targets from the other things that you want to measure. You can say, “These are the targets and this is what we want to achieve”. To do that well, you are going to have to measure a ton of things that are not the targets. You would really want to know about the wage rates of lone parents, the employment rate of parents, childcare provision, benefit take-up rates and so on. There is a huge number of variables and, if you are serious about hitting a set of targets such as these ones, you need to know what the answers are. However, they are not the targets; they are just measures to help you think about what the targets are. That is an important conceptual distinction that, as we have said before, the UK Government has lost hold of to an extent. The consultation document that it issued in 2013 made no clear distinction between measuring poverty and measuring a cause or a consequence of poverty. The challenge that you face when you are thinking about including more measures is to ensure that, in doing so, you do not start to muddy the waters.