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Poverty and Income Inequality: A review of the evidence

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Key evidence gaps

141. The evidence base concerning poverty and income inequality is broad and complex. Poverty has many different facets and affects people in different ways. For certain areas, the evidence base is well developed. However, there remain evidence gaps in our current knowledge that ultimately prevents a complete and holistic understanding of poverty.

142. Poverty is about more than just income. Poverty is about opportunity and the chance to participate in society, not just economically, but socially and culturally. However, current estimates of poverty rely on income measurement which takes no account of the broader meaning and experience of poverty. The third tier of 'material deprivation and low income combined' used to measure child poverty is a step towards improving official measurement; however, these figures are currently focused only on child poverty. It is important to progress analysis that investigates more than just income poverty in order to enhance understanding of how poverty impacts upon all aspects of life, while not losing sight of the fact that official poverty statistics and targets are currently income-based.

143. In the same way that poverty is not merely a function of income, neither is it a static experience. Many people move into and out of poverty, which can significantly impact upon life chances over time. At present, the sample sizes of current longitudinal surveys are not large enough to enable effective statistical analysis of those affected by persistent poverty. Qualitative research suggests that the benefits and tax credits system does not respond well to rapid and repeated changes of situation. This leads to income uncertainty and can create a financial disincentive to enter employment. Improved longitudinal data is required to investigate the experience of poverty over time and transitions into and out of poverty.

144. There is qualitative evidence to suggest that certain social groups have a greater risk of entering poverty than others. However, as the data currently stands there is little opportunity to disaggregate data by all of the equality strands. As an example, the Scottish Government obtains income data from the Family Resources Survey which includes ethnicity questions; however, recorded numbers are too small to enable detailed analysis of poverty by ethnic group.

145. When thinking about evidence requirements in relation to poverty and geography, better income/poverty estimates for small areas, not just at local authority level, may be helpful so that a greater understanding of localised poverty can be achieved.

146. In relation to rural poverty, evidence suggests that the experience of poverty can be significantly different in rural areas and therefore may require a different policy approach than what is designed for urban areas. People in rural areas also have different needs in order to participate fully in society and to access employment and training, particularly in respect of access to transport. Rural areas may also provide additional challenges for elderly or disabled people in poverty, but the evidence in this area is not well established.

147. The current global economic downturn, and the associated unemployment, wage cuts and reduction in hours are likely to have significant impact upon the poverty profile of Scotland. The precise nature and scale of these impacts is currently unknown, owing to the normal delays in obtaining, processing, analysing and verifying data. Poverty data for the 2007-08 financial year was published in April 2009, and 2008-09 data is expected in 2010. The recession may result in median income levels dropping, and therefore the poverty 'threshold' may fall, bringing some people out of 'technical' poverty if they are able to maintain their income while the median falls. However, the overall effect of the recession remains uncertain, and the full effects will not be known until well into 2010.

148. The Scottish Government is committed to enhancing the evidence base in this area to address the problems associated with poverty and income inequality.