What is poverty?

Poverty affects millions of people in the UK. Poverty means not being able to heat your home, pay your rent, or buy the essentials for your children. It means waking up every day facing insecurity, uncertainty, and impossible decisions about money. It means facing marginalisation – and even discrimination – because of your financial circumstances. The constant stress it causes can lead to problems that deprive people of the chance to play a full part in society.

For many, the gap between someone’s needs and their incomes or other financial resources is the key factor in determining whether they are in poverty. Poverty will worsen when the cost of essentials, like food or energy, rise faster than incomes. Some people experience deep or persistent poverty, meaning the gap is bigger or they have faced it for a long time.

Bringing these together gives us how JRF defines poverty:

When a person’s resources (mainly their material resources) are not sufficient to meet their minimum needs (including social participation).

There is no single best measure of poverty. It is a complex problem that needs a range of measures telling us different things. Poverty is often measured in relative terms, comparing incomes to typical living standards in a country, or in absolute terms, based on whether incomes of poorer households are growing faster than inflation.

Measures include:

• relative income poverty, where households have less than different thresholds of median income, adjusted for family size – the most commonly used poverty line is 60% of median income, but JRF also look at households with incomes below 50% of median income (deep poverty) or 40% of median income (very deep poverty)
• JRF’s Minimum Income Standard (MIS) – MIS itself is not a measure of poverty, but is what the public have told us is sufficient income to afford a minimum acceptable standard of living which is then costed to show what different families need
• absolute income poverty, where households have less than 60% of the median income in 2010/11, uprated by inflation
• Social Metrics Commission measure, where households lack a certain level of resources, such as costs of childcare and disability, savings, and access to assets
• material deprivation, where you can’t afford certain essential items and activities
• destitution, where you can’t afford basics such as shelter, heating and clothing.

Relative and absolute poverty can be presented before and after housing costs (these include rent or mortgage interest, buildings insurance and water rates) and are presented after direct taxes and National Insurance, including Council Tax.

The causes of poverty are things that reduce your resources or increase your needs and the costs of meeting them. Some of these causes can also be consequences, creating a cycle that traps you. Life events and moments of transition – getting sick, bereavement, redundancy or relationship breakdown – are common triggers for poverty.

Some of the causes of poverty in the UK today are:

• unemployment and low-paid jobs lacking prospects and security (or a lack of jobs): too many jobs do not provide decent pay, prospects or security – low pay and unemployment can also lead to inadequate savings or pensions
• low levels of skills or education: young people and adults without the necessary skills and qualifications can find it difficult to get a job, especially one with security, prospects and decent pay
• an ineffective benefit system: the level of welfare benefits for some people – either in work, seeking work or unable to work because of health or care issues – is not enough to avoid poverty, when combined with other resources and high costs
• the benefit system is often confusing and hard to engage with: this causes errors and delays and the system can also make it risky and difficult for some to move into jobs or increase their working hours – low take-up of some benefits also increases poverty
• high costs: the high cost of housing and essential goods and services (e.g. credit, gas, electricity, water, Council Tax, telephone or broadband) creates poverty
• some groups face particularly high costs related to where they live: because of increased needs (for example, personal care for disabled people) or because they are paying a ‘poverty premium’ – where people in poverty pay more for the same goods and services
• discrimination: discrimination against people because of their class, gender, ethnicity, disability, age, sexuality, religion or parental status (or even poverty itself) can prevent people from escaping poverty through good qualifications or jobs, and can restrict access to services
• weak relationships: a child who does not receive warm and supportive parenting can be at higher risk of poverty in later life, because of the impact on their development, education and social and emotional skills – family relationships breaking down can also lead to poverty
• abuse, trauma or chaotic lives: for small numbers of people, problematic or chaotic use of drugs and alcohol can deepen and prolong poverty, and neglect or abuse as a child or trauma in adult life can also cause poverty, as the impact on mental health can lead to unemployment, low earnings and links to homelessness and substance misuse
• being in prison and having a criminal record: this can also deepen poverty, by making it harder to get a job and weakening relationships.

UK Poverty is our annual flagship report and essential guide to understanding poverty in the UK.

Read UK Poverty 2024