Reference budgets are baskets of goods and services that are considered necessary to reach an acceptable standard of living for an individual household within a given country, region or city.
These budgets are designed taking into account:
- the household composition,
- the disposable income and
- other aspects, such as the housing situation and transport needs.
They can be based on either empirical data or on a participatory approach (focus groups).
Reference budgets have been developed in various countries across Europe in the last few years. They are used for a variety of aims, including:
- money and debt advice,
- poverty measurement,
- budget information,
- credit scores,
- purchasing power calculations.
They can also be used to assess income support – in particular minimum income schemes – in the EU.
The European Reference Budgets Network
The European Reference Budgets Network is a pilot project, funded by the European Commission, which aims to:
- develop a common methodology to construct high-quality comparable reference budgets in all EU Member States, and
- establish a network of experts that will provide intellectual and practical support to the design and development of complete reference budgets in all EU Member States, in line with this common methodology.
Why a common methodology?
A common theoretical and methodological framework is needed to ensure that reference budgets:
- reflect acceptable standards of living that are comparable across Member States
- take proper account of the social needs and the institutional context at local, regional and national level.
Reference budgets constructed with a common methodology can:
- help Member States to design effective and adequate income support measures
- facilitate mutual learning and identification of best practices in the fight against poverty
- facilitate the Commission’s task of monitoring and assessing the adequacy of income support in Europe
- be a helpful tool for the implementation and monitoring of the 2008 active inclusion recommendation and the 2013 Social Investment Package.
In addition to the common methodology and the network, the project will:
- Provide an overview of the current state of play on reference budgets and an analysis of political, methodological and analytical features
- Develop full, cross-nationally comparable reference budgets in selected countries and a food basket for all countries for 3 types of households in the capital regions of Member States
- Analyse the robustness of the approach and formulate recommendations for developing complete reference budgets in all EU Member States
- Disseminate results: publish an online database and organise a final conference to discuss the results of the project and to consider future possibilities