Introduction

Unlike in the US, there is no ‘official’ poverty line in the UK. Although the Scottish Executive acknowledges that there is a “poverty problem”, it has not introduced a poverty line that could be used to direct their policies aimed at poverty reduction. The UK government does produce ‘low income’ statistics based on the so-called ‘Households Below Average Income’ (HBAI) approach (for example, DWP, 2003). However, the HBAI reports do not routinely include estimates broken down by region. In addition, there are well-known problems with the approach that it uses, which has led to a growing dissatisfaction with it among poverty researchers.

There is also no official poverty line in the European Union (EU). However, there has been a series of European poverty programmes aimed at comparing poverty across the member states. Much of this comparative research has been carried out using data from the European Community Household Panel study, of which the British Household Panel Survey (BHPS) is a part, and utilises a poverty line set at 60% of the median equivalised disposable household income. There is a growing view that the EU should have an official poverty line and that it should be set at this level. In several member states, this poverty line is de facto official.

The purpose of this chapter is to examine trends in absolute poverty in England and Scotland in the 1990s using data from nine waves of the BHPS. In the BHPS, disposable income is not directly collected. However, it is estimated on a regular basis from gross income and other information collected in the survey (see Bardasi et al, 2002). With these variables, it is not only possible to replicate the HBAI estimates but also to explore with much rigour a variety of other interpretations and measures of poverty.

The BHPS also allows one to extend the analysis of poverty to an exploration of what can be termed the ‘dynamics of poverty’. Since the data is longitudinal in nature, and the same households and people are interviewed through time, it is possible to use the data to study movements into and out of poverty (see, for example, Cappellari and Jenkins, 2002).