Dead Men Left

Monday, April 04, 2005

"Poor getting poorer under Brown"

During discussion with Jim at Our Word is Our Weapon over the changes in poverty rates reported by the IFS, something rather odd became apparent. Poverty is relative; what matters in a developed society like Britain is not absolute, edge-of-starvation poverty, but relative deprivation. This means that the where we choose to place the poverty line is slightly arbitrary and depends on our subjective opinions about deprivation, rather than an absolute standard of, say, nutrition, or access to clean water.

Taking all figures before housing costs, if we say that those earning below 70% of median income are in poverty, there has been some slight improvement: a small fall in their numbers has occurred since 1998, of 1.4%, leaving 26% of the population in poverty by this measure. If we take the divide at 60% of median incomes, we find the same story: a small decline in the numbers below this line, leaving 18% of the population in poverty. If we set the bar at 50% of median income, though, we find that there has been no improvement. There is statistically no difference between the percentage of the population in poverty by this measure in 1998, and today. The conclusion would be that New Labour's reforms have made essentially no impact upon the very poorest 9-10% of society.

This impression was startlingly confirmed yesterday:

The poorest 5.8m Britons are the only group whose take-home incomes are falling, according to figures discovered by The Business buried in a 357-page Department of Work & Pensions (DWP) study slipped out last week.

The real income after tax, welfare and housing costs of the poorest 10% of households fell from £91 (E131.90, $170.20) a week in 2001-02 to £90 in 2002-03 and £88 in 2003-04. Their annual incomes are down 3.3% to £4,576 a year, suggesting that an underclass is being left behind despite a relatively strong and prosperous UK economy. The incomes of this poorest group are also down over the past two years before adjusting for housing costs...

In spite of Brown's numerous anti-poverty drives and job-creation schemes, the poorest 10% of Britons are being pushed further to the fringes of society. Their total income has fallen from 3% of the UK total in 1997-98 to 2.8% in 2003-04. The study confirms that welfare is the main source of income for the poorest 20% in Britain - 11.6m people - who rely on benefits and tax credits for 53% of their income. In this group, earnings account for only 39% of income.

Over the same period, the richest 10% saw their average post-tax incomes rise by 1.4% - not much, but pretty galling when set beside the decline in the poorest 10%. (The original DWP report, as completely unread by myself, is available here.)