Reference budgets and the importance of working with beneficiaries in Belgium

Newsletter 2010-5

Publication date : 2011-02-08

In 2008, the EU Commission emphasised the importance of adequate income as part of achieving the broader goal of Active Inclusion. The recommendation underlined that when the resources necessary to lead a life of dignity are determined, living standards and price levels by type and size of household in the Member State concerned should be taken into account using the appropriate national indicators. Reference budgets can be a useful tool with their focus on adequate income support to combat poverty.

A study carried out in Belgium (“Minibudgets: What is the necessary income to live a life in dignity in Belgium?”) calculated what monthly budget would be required to purchase a basket of goods and services deemed necessary to live a dignified life and participate fully in society.

Researchers outlined the products and services people need to live a dignified life (such as nutritious food, protective housing, appropriate health and personal care, suitable clothing, refreshing rest, significant primary relationships, physical security, security in childhood, mobility and cultural participation and entertainment) and drew up a list of the corresponding goods and services which was then taken to a focus group for feedback.

A total of 21 budgets for different households and family- types (pensioners, singleparent households etc) were designed to meet their particular needs.

The novel aspect of this measure is that, in comparison to other measures like the EU-SILC at-risk-of-poverty indicator, the potential recipients themselves participate in deciding what should be included. As expected, there were differences between the two comparable indicators. In particular, the reference budgets indicated that certain households would receive insufficient support on the basis of the EU-SILC indicator.

The Peer Review took place in Namur, Belgium, on 26th November 2010. In addition to representatives from the host country, officials and experts came from Austria, Cyprus, Finland, France, Ireland, Italy, Luxembourg and Sweden. Contributions were made by two European stakeholders: the European Anti-Poverty Network (EAPN) and BUSINESSEUROPE. A European Commission official from the Directorate-General Employment, Social Affairs and Inclusion also participated in the exercise held in the Walloon Parliament.

Lessons learned

An important lesson drawn from the Peer Review was that it is not so much the items in the basket that are important as who decides what these should be. Each country will naturally differ on the finer details of the reference budget’s composition as cultural and political differences manifest themselves, however the principle that beneficiaries should be involved is applicable throughout.

As a result, there was emphasis on the need to work towards a common methodology which used the complementary contributions from experts and the general public for subsequent reference budgets. Social partners could also contribute to progress and overall stakeholder participation was essential.

The following methodology was outlined from the Belgium example: first and foremost the reference budget’s purpose is to ensure a life of dignity and to define the basic needs (not “wants”) required to achieve this. Secondly the products and services which are necessary to do this should be outlined, with the participation of potential beneficiaries. Thirdly, certain goods and services which are listed will already be provided for in some way by the government’s existing policies for social benefits (or will potentially fall under their responsibility) – they should be identified. The final step is the monetary step where it is established if the basket reflects reality or not, in which case it is necessary to establish the size gap between it and social benefits and how that gap can eventually be closed.

Reference budgets have to be updated as prices evolve, so they should be flexible.

The more rigorously, accurately, and transparently a reference budget is constructed the more political weight it will have.

The participants at the Peer Review underlined putting reference budgets into existing frameworks such as the EU2020 strategy on smart, sustainable and inclusive growth is crucial to achieving those goals and helps put reference budgets on the agenda. Similarly, reference budgets could gain better visibility through their inclusion in the Open Method of Coordination in the Poverty Platform, for example. Monitoring the impact of reference budgets on achieving targets for poverty alleviation gives it credibility and the EU Social Protection Committee could be entrusted with this responsibility.