Wednesday, March 28, 2007

Poverty: Reality Bites

So poverty is increasing again. And judging from the hysteria on both C4 News and Newsnight last night, you'd have to think the world's very foundations are shaking.

Specifically, the annual Households Below Average Income report from the Department for Work and Pensions shows that in 2005-06 the incomes of some groups fell relative to the median. The IFS briefing summarises:
  • The number of people living below 60% of median income after taking into account housing costs (AHC) rose from 20.5% 0f the population to 22%, or 12.7 million

  • The number of people living below 60% of median income before taking into account housing costs (BHC) rose from 17% 0f the population to 18%, or 10.4 million

  • The number of children in relative poverty rose for the first time in six years, taking it further away from the Government’s targets. BUT "the increases in child poverty of 100,000 to 2.8 million BHC and 200,000 to 3.8 million AHC in 2005/06 are probably not statistically significant"

Er... what? Not statistically significant? That last bit somehow seems to have got lost in all the screaming from the likes of ex-but-I'm-not bitter-civil servant, Martin Narey, now head of Barnardos.

I've blogged before about how I grew up on a council estate in what would have been classed as poverty under current definitions, but it didn't feel like poverty because it was a loving supportive home. And anyway all our neighbours were in exactly the same position so we didn't feel disadvantaged relative to the people at the posh end of town who were in a completely separate realm. And there was a world of opportunity ahead of us. So I won't blog that again.

But a couple of other points do need picking up:

  • "The number of working-age adults without children in relative poverty is at its highest level since comparable records began in 1961"- childless working age people throughout the income distribution have lost out Big Time under Labour, and you sort of wonder why they still vote for it

  • "The increases in poverty seen during 2005/06 reflect weak income growth towards the bottom of the income distribution rather than rapid income growth in the middle"- and much of that has almost certainly been caused by the influx of cheap labour from Eastern Europe: it's the other side of the much vaunted inflation dividend.

In our famously globalised economy, trying to control the income distribution is like trying to control the weather. A classic socialist delusion.

And defining poverty in terms of a crude 60% financial Plimsoll line was always a gimmick, designed primarily as a "proof" that brave crusading Labour were eradicating the whole beastly business. As everybody surely knows, the real world is a much more difficult place, where money is usually the least of the problems.

Well, now it's blown up. And as always, there's nothing more rib-tickling than watching a bunch of scheming politicos hoist by their own petards.


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