Nailing relative poverty

Government strategy for tackling child poverty is penalising two-parent families, a think tank has suggested.

The study by Labour MP Frank Field for Reform says tax credits discriminate against working couples and discourage single parents from finding partners.

Nearly a quarter of children in two-parent families live in relative poverty - almost the same as when Labour came to power in 1997, he said.


There’s something rather satisfying about seeing New Labour hung on its own ‘relative poverty’ petard. Ever since that ridiculous Unicef report I have taken the trouble to give the concept of relative poverty a long hard stare, and have also read some pretty good attacks on it (such as Jamie Whyte’s ‘Bad Thoughts’ – recommended).

The Unicef debacle helped in that it came up with an obviously wrong conclusion: that children in Britain were ‘poorer’ than children in genuinely poor countries. So given that the conclusion was wrong, there must have been something wrong with the way the conclusion was reached.

Since then, it has come to my attention that New Labour came to power in 1997 promising to end child poverty, which they said affected one in four children. I don’t remember questioning this clearly absurd claim at the time, so let’s do so now, since Labour has apparently failed to reduce it.

What is ‘poverty’? To my mind, poverty is a word with a meaning. It has connotations. It conjures up an image of a level of hardship whereby such things as food, clothing and housing are difficult to come by. Children in poverty would probably be unhealthy and uneducated. They would have no access to luxuries such as all-you-can-eat Chinese buffets. Cars, holidays, mobile phones, satellite television and extensive DVD collections would be but distant dreams.

Does this sorry state describe one in four British children? It does not. So New Labour’s ‘poverty’ must mean something different to my ‘poverty’. In fact, it turns out that a household is ‘poor’ if its income is less than 60% of the national median after housing costs are deducted.

One big, fat objection should begin screaming in the face of any intelligent person at this point. If this is how you define poverty and you are in it, then the Government could lift you out of it by actually decreasing your material wealth – so long as they also decreased the wealth of everyone richer than you by a sufficiently larger amount.

But even ignoring this, using household income in isolation as a measure of real poverty is stupid, especially for Britain. This is because we live in a state with considerable welfare benefits (it would be even more stupid in France and slightly less stupid, but still stupid, in the US).

In Britain, the state will pay for a ‘poor’ child’s education, health, housing, and give allowances for food, clothing and bills.

Suppose Peter is a ‘poor’ child because his household income is only 35% of the national median, and David is non-poor because his is 70%. Would this make David twice as well off as Peter?

Peter and David could live in the same street, go to the same school, the same dentist, wear the same jeans and eat at the same MacDonald’s. Their lives would be virtually identical, except perhaps David might go on slightly nicer holidays – to Benidorm instead of Bognor, perhaps. Yet Peter is adding to the ‘poverty’ stats and David is adding to the rich stats.

An analogy would be this: suppose Jeff gets £1 a week pocket money and Martin gets £2. If we only count this income, Martin is 100% richer than Jeff. Martin is a prince and Jeff is a pauper.

But both Martin and Jeff’s parents spend £100 per week on their schooling, clothes, food, doctor, tennis lessons and haircuts. So Martin’s real spending capacity is £102 and Jeff’s is £101 – a measly 1% difference. Clearly, it is absurd to call one a prince and the other a pauper just because Martin can buy an extra can of Irn Bru every week.

But this is just the logic on which the relative poverty merchants operate.So why do it? Why use the term ‘poverty’ for one in four children instead of ‘those who live in households where income in isolation of welfare and benefits is less than 60% of the national average after housing costs are deducted’?

Because ‘poverty’ is an emotive word with the kinds of connotations of shoeless street urchins I mentioned earlier.

I am a decent human being and if you ask me if I think we should do something to help end ‘poverty’ I will say yes. But if you ask me if I think we should do something to lower the number of people whose income is less than 60% of the national median, then I’ll have to think about that one. I might ask: can’t we just keep making everybody richer?

The BBC uses the word poverty in its relative sense because it provides nice headlines (“Poverty crisis!”); leftists use it to try to prove the failures of capitalism, and New Labour used it because they were idiots.