The poverty of the poverty measure
Fraser Nelson 9:40am
‘400,000 children will fall into relative poverty by 2015, says IFS’ we read
on The Guardian’s front page today — yes, one of the most pernicious ideas of recent years is back. It’s the definition of
‘poverty’ as being figures on a spreadsheet, households deemed to fall beneath an arbitrary threshold. It’s almost entirely meaningless, and diverts energy and resources away from
a real fight against poverty. I really do believe that, as ideas go, this one has damaged Britain more than almost any other over the last two decades — and it’s high time it was
confronted.
The ‘poverty’ that the Institute of Fiscal Studies is talking about is defined by Eurostat as having an income below an arbitrary threshold: 60 per cent of the median income. It
occurred to Gordon Brown in about 1999 that he didn’t need to fight real poverty at all. Instead, he could get his tax credits to precision bomb benefits on those just below the threshold, so
they moved just above. They could be deemed ‘lifted out of poverty’ for just £10 a week. The danger here lies in the language. As Brown worked out, the media talk about it in
binary terms. You are ‘plunged into poverty’ or ‘lifted out of poverty’ — so if he fiddled with tax credits enough then he would have great applause lines in his
speeches. Here’s one from 2004:
The politicised DWP would repeat this, claming in its literature that “some 700,000 children have been lifted out of poverty since 1998/99” and “A further 1.1 million children need to be lifted out of poverty”. Except nothing was happening to the children. Welfare was being given to the parents. This idea — child poverty — rejected the idea that poverty can be alleviated by one’s actions and behaviour. One might say that adults could climb out of poverty by finding work, but no such complaint can be levelled at children. The ‘child poverty’ measure also exaggerates the problem because, in Britain, the poor tend to have larger families which the welfare state will fund.“So far, measured by absolute low income, 2 million children have been lifted out of poverty; so far too, measured by relative low income, half a million children have been lifted out.”
When I was at the News of the World, we sought to find and interview people who had been ‘lifted out of poverty’. They were staggered to find themselves so described: life was pretty tough for them, and hadn’t changed much. But so far as the government was concerned: the box had been ticked. Job done. This poverty measure is not actually about people in poverty. It’s about making people who live in big houses feel better about themselves, delivering applause lines for politicians’ speeches and making the case for greater state spending. The energy of thousands of campaigners, who have genuinely good intentions, was thus diverted – as were the billions of taxpayers’ money that could have been so better used. It was a tragedy of epic proportions.
This ‘child poverty’ target was put into law, a device which Labour used to basically govern after defeat. The target remains, and while Iain Duncan Smith has done very well the idea
has not been properly confronted. It deserves to be now. There is all too much poverty in Britain, but this fight-poverty-by-manipulating-spreadsheet approach will do nothing to solve it. The
reason that this agenda is not just useless but pernicious is that billions upon billions were spent trying to manipulate the IFS spreadsheets, so every year they would declare another 100,000
(this is their basic unit of measurement, so rough are the estimates) have been ‘lifted out of poverty’.
With everyone’s attention placed on those just below this arbitrary poverty line, those at the bottom were ignored. Despite economic growth and the redistributed billions, the poorest 10 per
cent were better-off ten years ago than they are now (see graph below), but no one remarked upon this (save for the now-defunct Sunday Business) because the think tanks had been suckered by
Brown’s ruse. ‘Fighting poverty’ had become a game of financial manipulation. The left loved this because the project was, in effect, one of income redistribution.
The surest way to fight poverty — working — was not used. Sure, employment rose under Labour but as we in Coffee House have shown, 99.9 per cent of this is accounted for by a rise in
foreign-born workers. It was a rotten economic model: expand the economy by sucking in workers from overseas, pretend to fight poverty by giving one man’s money to another while leaving no
fewer than five million on benefits and ignoring those at the very bottom.
I am a great believer in the power of ideas, and their capacity for good and ill. This IFS ‘child poverty’ idea is a woeful substitute for true poverty fighting — and I do hope
that ministers say so. It is time to confront the poverty of the poverty measure.
Previous
Rhoda Klapp
October 11th, 2011 10:08am Report this commentGood stuff. Needs saying more often. But does it suit politicians to have poor people to hang around as political footballs? One might say it does, and they have no intention of actually tackling any of the things that make life so bad for the underclass, for all their actions have the reverse effect. Yes, all.
Dan Grover
October 11th, 2011 10:11am Report this commentI find it difficult to believe that anyone could genuinely disagree with the arguments put forth in this piece.
Magnolia
October 11th, 2011 10:16am Report this commentHow about defining poverty as those primary school leavers of normal intelligence who can't read or write, or those who don't eat five portions of fruit or veg per day or those who don't have a warm winter coat or a good mac?
That would define the child's need as being the responsibility of the parents and schooling system and ultimately also that of government in producing policies which enabled parents to provide for their own families.
Hugo Chav
October 11th, 2011 10:16am Report this commentFraser,
Why is no political party or politician standing up for the old and poor who are getting decimated by the BoE's manufactured inflation?
The rich, I include myself, have been bailed out with ZIRP and QE as we bought bank bonds and shares in 2009 and 2010. We made a packet, courtesty of the BoE, whilst inflation let rip and hammered peoples standard of living. This will only get worse with more money printing. It is deeply immoral.
I think there is going to be very big social problems if this money printing policy continues. Remember it is the BoE that overleveraged the UK economy with debt from 1997 to 2007, now they are printing money like it was Xmas, this is insane.
Stuart Seacole Smith
October 11th, 2011 10:19am Report this commentThanks very much for this article, which I believe goes right to the very heart of the worst aspects of the Labour years. All of it driven by valuing presentation over outcome, and ideology over reason. Depressing beyond words, and very difficult to reverse given how deep Labour embedded it into the fabric of society. But for the optimists, I suppose it is just possible that the power of ideas as you put it could start the painful reverse, and sow the seeds for a future worth having for those trapped on benefits. A future worth having means a working future, not a future with an additional 10 pounds a week in benefits.
Gibbon
October 11th, 2011 10:27am Report this commentThis may be the first time I have ever agreed with you... it was all going so well... then you just had to trot out that pernicious nonsense statistic, debunked elsewhere, of 99.9% of jobs created under New Labour going to foreign-born workers. You do your arguments such a tremendous disservice by returning to this theme. The depression of wages by inward migration does not need just a patently ludicrous statistic to buttress its obvious truth.
Anyway, that aside, there is a profoundly important point for political culture here and the debasement of social science to score political points. It is clearly absurd to say that a £20, £30, £40 tax credits mean you are 'out of poverty'. The idea that improving somebody's lives can be so positivistic is nonsense. It is not, step-forward Maurice Glassman, social science that is the problem, but it's manipulation and debasement by the entire Whitehall machine. Unfortunately, this appears to be another tactic from the Blairite playbook that the coalition appear intent on copying.
Disraeli (if indeed he actually ever said it) got it about right.
R2-D2
October 11th, 2011 10:43am Report this commentRelative poverty is a clever euphemism for envy. In a healthy society it is the driving force that makes people work harder. The worst thing about GB's tax credits is that they discourage this by increasing the effective marginal tax rate just where it matters. Of course, the same applies just as well to any other "targeted" benefits.
R5-D4 (the red one)
October 11th, 2011 11:00am Report this commentIf children are not staggering around with TB, filthy faces, dressed in rags with no shoes, and starving, they're not poor in this country. And if you want to invoke "it's all relative", let's do that. The rich in this country now are no where near as rich as the rich were at the peak of the Victorian era. No where near it.
normanc
October 11th, 2011 11:04am Report this commentOne week family A gets £80 income, child living in poverty, dressed in rags, begging in the streets for food, etc.
Next week income rises to £95, parents celebrate by adding a cheap bottle of vodka, extra packet of rolling baccy, and a dozen supermarket brand beers to the weekly list and the child is home free!
Baffling.
tom jones
October 11th, 2011 11:24am Report this commentI was disgusted when I first started reading the article. Even though I'm a Tory I felt like it was going to be an ulta-right wing "laissez-faire" article, but as I read on I was pleased to be proved wrong. This article shows everything that was wrong with Labour's approach to poverty. The problem is though, we attacked them when immigrants came here and took up many jobs, but it's still happening now! I feel really sorry for those Brits desperate to work and being made to feel terrible for being on benefits when there aren't enough jobs to go round. Those on benefits who never work and have no intention? They don't have my sympathy, but those who are looking and seeing a lack of jobs - our work programme won't work if there aren't jobs being created.
Haldane
October 11th, 2011 11:28am Report this commentVery good indeed! Insightful,well argued and clear. We need more perspectives like this, and the points contained therein need to be hammered home repeatedly. It's called campaigning!
Heartless Perry
October 11th, 2011 11:42am Report this comment'Meaningless' ... the defining word of LieBore years, and in particular the 'Poverty' twaddle.
Thank you Fraser. Much more please.
History Lover
October 11th, 2011 12:28pm Report this commentExcellent article Fraser, like IDS you really do "get it". Being on benefits isn't easy especially for people who have been made redundant but for people who make a career of worklessness benefits give them the basics of life. While working for a community charity and calculating how much a young mum with two children would get in benefits it suddenly struck me why she was on benefits. The total amount including rent and council tax came to over £300 a week and there was no way that she would have been capable of earning that amount.
As is mentioned above benefit recipients receive enough to keep their child out of poverty if they are careful with their money and don't spend it on cigarettes and alcohol or even worse drugs. That is what tips children into poverty along with poor schools and inadequate social workers. IDS's policies will make a huge difference but it will not happen over night.
Ian Walker
October 11th, 2011 12:32pm Report this commentI have worked in service management for all my adult life, and I can guarantee you one thing.
If you set a target, people (considered as a whole) will do the absolute minimum necessary to achieve that target, and more pertinently, will do nothing more.
The only effective measure is to take a sample of your customers and ask them the simple yes/no question of "Are you happy with the service"
Almost a bit like Cameron's much derided happiness index.
George Wright
October 11th, 2011 12:41pm Report this commentI am correct in thinking that the stats do not add to people's income the value of goods and services provided free by the State? If not then adding these back to each household should lift millions out of poverty.
Hexhamgeezer
October 11th, 2011 12:54pm Report this commentAs others have said, its not lack of money that causes Eurostat style child poverty but a lack of parental self discipline and values coupled with a well developed sense of entitlement.
Thinking you are poor having <60% of the median national income demonstrates a poverty of imagination and nowt else. And if any guardanista winker had described us as 'in poverty' as childdren they would have got a smack in the gob.
Next up - the tragedy that 50% of people in Britain earn below the national average.
James Beattie
October 11th, 2011 12:55pm Report this commentI dearly wish you and your supporters in this blog were reduced to living on 60% of median earnings. You make me ashamed to be a Scotsman Mr Nelson.
Kingstonian
October 11th, 2011 1:38pm Report this commentReally good post, Fraser! You have taken a bit of stick recently old son, but this was well up to the mark, and argued with some passion too.
Tiberius
October 11th, 2011 1:38pm Report this comment"It occurred to Gordon Brown in about 1999 that he didn’t need to fight real poverty at all. Instead, he could get his tax credits to precision bomb benefits on those just below the threshold, so they moved just above. They could be deemed ‘lifted out of poverty’ for just £10 a week. The danger here lies in the language. As Brown worked out, the media talk about it in binary terms. You are ‘plunged into poverty’ or ‘lifted out of poverty’ — so if he fiddled with tax credits enough then he would have great applause lines in his speeches".
And while such bollocks doesn't mention the Tories, it does have the bonus of implying that they were, are and always will be the party that sends children to sweep chimneys.
I can only imagine that no one dared to tell Brown that the children in poverty would almost exclusively have access to a DVD player (videos were already obsolete and so were replaced), because they wouldn't want to have one thrown at them as they left the Commons (or find one under their pillow with all the cables shredded).
Dave B
October 11th, 2011 3:17pm Report this commentI thought Frank Field was supposed to come up with a new poverty measure, but he has advocated some "supplementary" measurements. Disappointing.
http://webarchive.nationalarchives.gov.uk/20110120090128/http://povertyreview.independent.gov.uk/media/20254/poverty-report.pdf
The Taxpayers' Alliance advocate an absolute poverty measure, as used in the USA.
http://www.taxpayersalliance.com/waste/2010/07/redefining-the-poverty-line.html
mongoose
October 11th, 2011 4:52pm Report this commentThanks for your insightful deconstruction of Brown's poverty industry. The gullible broadcast and print media dutifully report these measures with no questions asked. It is quite scandalous.
Edward McLaughlin
October 11th, 2011 5:50pm Report this commentCould there be a long-overdue shift in the Spectator mindset here?
"It was a rotten economic model: expand the economy by sucking in workers from overseas, pretend to fight poverty by giving one man’s money to another while leaving no fewer than five million on benefits and ignoring those at the very bottom."
Not very long ago, and on repeated occasions, the persistent message which you, Fraser, put across, was that immigrants created the very positions they came here to fill, and this mass movement of labour could only be a welcome sign of a healthy UK economy.
This message was illustrated usually by lots of colourful charts and graphs, which totally failed to take into account the consequences for those who work(ed) in the sumpen sector.
Stuart Seacole Smith
October 11th, 2011 6:19pm Report this commentJames Beattie, think about it man! A working, wealthier country means everybody's better off. Brown's game had nothing to do with making people wealthier, and everything to do with fooling people like you. You've been had for a sucker. Be angry about it.
Dimoto
October 11th, 2011 6:42pm Report this commentI don't believe "the think tanks had been suckered by Brown’s ruse". I think they know exactly what they are doing.
Robert Chote is a bit of a one off.
Since he left the IFS, it has become pretty obvious that it is just another "think tank" with a Labourite agenda.
It has shed any pretence of balance.
Baron
October 11th, 2011 7:06pm Report this commentFraser, good stuff, you realize of course it won’t change anything at all, but as a piece of powerful journalism guided by common sense it should be savoured.
Richard
October 11th, 2011 7:51pm Report this comment"One might say that adults could climb out of poverty by finding work, but no such complaint can be levelled at children"
Naturally it suits Nelson's line of argument to overlook the fact that the majority of children in poverty - some 60% - live in households with working parents.
Richard
October 11th, 2011 8:10pm Report this comment"the poorest 10 per cent were better-off ten years ago than they are now (see graph below)"
And what do we see in the intervening years? They were better off in six of those ten years and only since the economy hit the rocks have the poorest taken a hit, like every other income category. Nelson's line might make for a good line in a TV or radio studio, but what it hides makes him guilty of the same deceit and sleight of hand he levels at Brown.
Ruby Duck
October 11th, 2011 10:48pm Report this commentThanks for the anger.
Best thing I've read here in ages.
Robert W
October 12th, 2011 11:18am Report this commentFraser, could not have put it better myself! Spot on - good to see some passion too!
M. Rowley
October 12th, 2011 11:41am Report this commentThere are good livings to be had out there in the poverty industry. The last thing many of these beneficiaries would want is to eradicate the real problem as it would put them out of a job.
John B (UK)
October 12th, 2011 2:52pm Report this commentGood Post Fraser - it needed saying and you said it well.
To define poverty purely by the median earning figure - if you test the definition by taking an extreme - means that everyone in this country could be earning over a million pounds a year and some would still, by definition, be in poverty - it's just meaningless.
fuzzymacfuzz
October 12th, 2011 7:33pm Report this commentSo what is your solution Fraser? If you have a viable measure that you think will work better, then say what it is. It doesn't really matter which one you choose; relative income, various minimum income standard measures, material deprivation, fuel poverty or whatever, they all show the same thing, poverty in the UK is reaching dire proportions. Even an absolute poverty measure like the minimum income for a healthy lifestyle one shows that huge numbers cannot afford the basics they need for their physical and mental health. You are very unfair on Blair and Brown. I am no fan of either but do recognise the child poverty commitment as hugely significant. And once made, they had to find a way of measuring progress. The 60% measure is the standard OECD measure and at least it gives a clear benchmark. I suspect the real agenda here, and among many of those posting comments, is to deny the reality of poverty in the UK today, by debunking the stats. Of course we're not the Third World or the old Eastern bloc but just go for a walk in some of the less desirable areas of any of our big cities and you'll soon find poverty staring you in the face.
Edward
October 12th, 2011 8:22pm Report this commentThere's a surprising number of complacent and contented, ‘let them eat cakes’ folks here…
To repeat Richard’s comment:
"One might say that adults could climb out of poverty by finding work, but no such complaint can be levelled at children"
Naturally it suits Nelson's line of argument to overlook the fact that the majority of children in poverty - some 60% - live in households with working parents.
To repeat Edward Mclaughlin’s comment:
Could there be a long-overdue shift in the Spectator mindset here?
"It was a rotten economic model: expand the economy by sucking in workers from overseas, pretend to fight poverty by giving one man’s money to another while leaving no fewer than five million on benefits and ignoring those at the very bottom."
Not very long ago, and on repeated occasions, the persistent message which you, Fraser, put across, was that immigrants created the very positions they came here to fill, and this mass movement of labour could only be a welcome sign of a healthy UK economy.
This message was illustrated usually by lots of colourful charts and graphs, which totally failed to take into account the consequences for those who work(ed) in the sumpen sector.
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