From the TUC

Duncan Smith and Field: Poverty redefined

18 Jun 2010, by Guest in Society & Welfare

Behind the high profile appointment of Frank Field to review Government poverty policy seems to be a hidden agenda – the redefinition of poverty in absolute rather than relative terms. Iain Duncan Smith, the Work and Pensions Secretary, has more than hinted that he would prefer the adoption of an absolute definition.

The official numbers in poverty – roughly a fifth of the population – are based on those with incomes below 60% of the median ( the mid-point in the income distribution ). Duncan Smith has openly criticised the use of the median , telling the Guardian last month: “You get this constant juddering adjustment with poverty figures going up when, for instance, upper incomes rise”. Frank Field seems to share this view, arguing that the use of the median is essentially self-defeating.  As he has written: “As families are raised above the target level of income, the median point itself rises”.

Yet both these assertions are totally false. If the rich get richer, as they have, there is no effect on the median – the poverty line stays exactly the same. If all households below 60% of the median were to rise above it, poverty would be eliminated, but the median would stay the same. Both Duncan Smith and Field are, inexcusably or deliberately, confusing the median with the mean, which is the average income calculated by dividing the sum of all incomes by the number of people in the distribution.

There is nothing new about the Conservatives’ sudden preference for an absolute definition, as laid out most clearly by Sir Keith Joseph in the 1970s. This absolute philosophy – although not officially stated – was effectively enshrined in Conservative measures from 1979-1997 and is the main reason why poverty and inequality soared over this period. In particular, from the early 1980s, benefits – from unemployment benefit to the state pension – were raised in line with prices not earnings, thus condemning benefit recipients to minimal improvements in living standards.

Although the average level of prosperity rose sharply under the Conservatives, low and middle income groups found themselves slipping behind the rest of society. Although they failed to cut poverty, Labour at least ensured that, in contrast with the Conservative era, most sections of society shared roughly equally in the proceeds of growth.

Relativism is a core principle of a civilised society. Abandoning it would mean the introduction of a multi-speed Britain, with lower income groups condemned to living standards that slip further and further behind those higher up the income ladder. As shown in the  Breadline Britain surveys, carried out from 1983, the public embrace the idea that poverty is relative. Asked which of a long list of items – from food and housing to clothing and leisure – they considered essential to avoid poverty in contemporary Britain, respondents defined items as necessities which they had considered luxuries in earlier surveys.

If the new Government redefines poverty in the way that is being hinted – by holding the poverty line steady in relation to prices, instead of allowing it to increase with rising prosperity – this would indeed be thinking the unthinkable. It would transform the unofficial thinking of the 1980s into official state policy. The Government might be able to claim, over time, an historic cut in the numbers of the poor. But far from cutting poverty, this would merely condemn a large minority of the population, through no fault of their own, to the living standards of the past.

GUEST POST:Stewart Lansley is the author of Rich Britain and the co-author of Poor Britain on the methodology behind the Breadline Britain surveys. He has written two pamphlets in the ToUChstone series: ‘Do the Super-Rich Matter?‘ and ‘Life in the Middle‘. His latest book, written with Mark Hollingsworth, is ‘Londongrad: From Russia With Cash‘, the story of how the London-based oligarchs built vast personal fortunes from Russia’s historic wealth, and spent them in Britain.

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