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Fighting poverty – it’s not just about money

Written by Claire Melamed

Debates on poverty in the UK are starting to mirror debates on poverty in developing countries more and more closely.  A new report on poverty and inequality in the UK, carried out at the request of the coalition government by the Labour MP Frank Field, argues that it’s not just about money, but that education is key to improving the ‘life chances’ of poor children in the UK.  

In a letter responding to the report, the Prime Minister and the Deputy Prime minister say: ‘Income is one of a wide range of factors that define and describe poverty.  We need to look at people's experience of poverty in all its dimensions, and in real life, not merely in narrow statistical terms.’

A lot of new thinking on poverty in developing countries aims to do just that.  The Multidimensional Poverty Index (MPI) launched earlier this year by the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford, and the ‘wellbeing’ approach developed at the Universities of Bath and Sussex  both attempt to capture the different dimensions of poverty into a single framework. 

But where the UK debate diverges from the development debate is in thinking through what this means for policy.  In the UK context, each new way of thinking about poverty comes with a policy lever attached.  So when the Labour government started to be concerned about assets as well as incomes, the Child Trust Fund was developed as a way of ensuring that all children should have a basic level of assets as they reach adulthood, regardless of their parents’ income.  And today’s report says that, since educational achievement is a key indicator, more resources should be put into measuring educational achievement and improving the outcomes of children who are shown to be struggling. 

There’s an implicit prioritisation going on here.  If unequal outcomes in education are seen as the main thing that traps people in poverty, then put more resources into education, even if this means less for something else.  With scarce resources, not all the dimensions of poverty  can be given equal weight when it comes to government action – so, for example, the coalition government scrapped the Child Trust Fund but ringfenced the health and education budgets.

Sadly, the proliferation of different ways of measuring poverty in developing countries hasn’t led to similar clarity in prioritising what should be done about it.  Of course, in the hundreds of thousands of poor communities around the world, priorities are going to be different.  But it’s quite striking that, in all the intellectual vigour of the debate on the different ways to measure poverty (see, for example, the debate that raged on different blogs between Sabina Alkire and James Foster of OPHI and Martin Ravallion of the World Bank on the MPI), we don’t seem to have thought much about how donors or national governments might go about translating these new insights into priorities on the ground.

One concrete example is in country classifications.  The first decision a donor needs to make is which countries are even eligible for consideration for funding.  There have traditionally been two ways to do this (that is, when it’s not just a question of politics) – ask how rich a country is, and, latterly, whether it’s a ‘fragile state’ in need of particular assistance.  But the primary category is the level of average per capita income in that country. 

But if poverty is about more than money, how much does that really tell us about the level of need in that country compared with the government’s ability to meet it?  Surely we need other ways of measuring what the need is, and what the likely cost is of meeting that need, if we are to put countries into the right categories and make sure that aid is spent where it will do the most good?  Moving beyond the narrow categories of ‘low-income’, ‘lower-middle-income’ and ‘upper-middle-income’ countries might mean we make better decisions about where to put our money. 

There are a lot of interesting questions here.  In answering them, it would be exciting to see more dialogue and crossover between UK efforts to fight poverty at home and overseas – which might mean better outcomes for both. 

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