Monday, 9 August 2010

Should the Coalition redefine poverty?

I'll admit, this is not one of those long-gestated articles that I post from time to time - this is something of a polemical quicky that could full well be completely wrong, or based on some tragically basic misunderstanding on my part. You have been warned.

How should government measure poverty? To me, it seems logical that poverty should measure standard of living - malnourishment, lack of access to basic necessities etc. would contribute to what I would consider a meaningful poverty line. I suspect that I'm not alone in this view, so I'm always surprised when the government announces that a significant minority of people in the United Kingdom are living below its 'poverty line'.

"Really?" I think, "In a country where the main nutritional problem is obesity and where, according to an article in the Telegraph a few years ago, '96% of 15- to 24-year-olds own a cellphone'?* In a century when incomes have multiplied and the costs of basic necessities such as food and clothing have fallen, there are still significant numbers below the poverty line in Britain? Surely that represents a colossal failure on the part of the government?"

Not really, no. Because the government definition of poverty - used since the early 1960's - is not a direct measure of standard of living at all; rather it is a measure of economic equality. The government definition of poverty, for those unaware of it, is that anybody earning less than 60% of the national average income is in poverty.

Now, some may argue (as a new-to-blogging friend of mine put to me when we discussed this piece) that 60% of the UK national average income (which stood at £24,700 in 2004*) is not a lot of money (£14,820), and cannot deliver a high quality of life. Not only is this debatable and very dependent upon regional economic conditions, but this argument also misses a couple of points.

The first is that there is (or rather, should be) a substantial difference between 'not having much money' and 'poverty'. The concept of poverty is debased in the minds of the public if the word contains leeway for a mobile telephone or a flat-screen television. The second and more important point is that the government isn't focusing on the £14,820 or any other objectively assessed sum of money that can deliver a minimum quality of life considered to be out of poverty: it is focused entirely on the percentages involved.

Under the present system, a household can move in and out of poverty without any change in their personal circumstances at all. For example, if the incomes of those with above-median incomes were to double, a whole swathe of people would be moved into "poverty" who are currently judged not to be in poverty. Similarly, if the incomes of above-median earners were halved then a swathe of people would be "lifted out of poverty" without any improvement in their circumstances. You wouldn't even need redistribution for this to happen - poverty could be greatly reduced by confiscating the assets of the wealthy and throwing them off a bridge.

So why did this shift take place? Keith Banting, a historian who has observed this change in the use of the word 'poverty', refers to it as "explicitly political".** Why? James Bartholomew explains that: in the late 1950's, Labour had lost three successive elections. Barbara Castle, the chairman of the conference, said in an aside that "the poverty and unemployment which we came into existence to fight have been largely conquered". Thus, elements of the left moved to redefine poverty in order to give the Labour Party a new (and some might say insoluble) raison d'ĂȘtre. By unhitching poverty from standards of living and essentially turning it into a measure of wealth disparity, "combating poverty" became a false justification for continual redistribution on a vast scale. Rather than openly debating with the electorate the merits of this, the word 'poverty' was invoked instead. I mean, who doesn't want to stop poverty, right? Given this definition, the logical (and as far as I can see, only way) to abolish poverty in this country is a regime of stringent wage controls and strict regulation of private assets - but for some reason Labour hasn't suggested such things in recent times.

So to go back to the question in the title, the government should have the courage, at this time of national stringency, to introduce a more honest definition of poverty. Recognising genuine poverty whilst ceasing to treat it as a catch-all justification for state intervention in wealth distribution would allow for a greatly reduced welfare budget, continue to target help at those who genuinely need it, and allow for a later reduction of taxes to stimulate the economy. If this is a government willing to make tough choices, abandoning this half-century long deception of the taxpaying public should be one of them.

*Daily Telegraph, 27 November 2003
**Quoted in Nicholas Trimmins, 'The Five Giants: A Biography of the Welfare State' (Harper-Collins, London, 1995) p. 255

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