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The poverty of the poverty measure

11 October 2011

9:40 AM

11 October 2011

9:40 AM

‘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
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:

“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

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.

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.

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