Poverty rate 'rose under Labour'

**ShadesWolf** · 05-17-2006, 14:47

Relative poverty in the UK may have risen since 1997, rather than fallen, says the Institute for Fiscal Studies.
The usual measure is the proportion of households whose income is less than 60% of the median household income.

That suggests that the poverty rate fell from 25% to 22% of households between 1996/97 and 2002/03.

But the IFS says that if household spending is measured instead, then over the same period of time the poverty rate rose from 20% to 22%.

Using spending as a measure, the IFS also finds that the poverty rate among children increased by 11% during that time, compared to the government's assessment that child poverty, measured by income, fell by 15%.

The IFS argues that "while the government has made some inroads into reducing income inequality, it is yet to reduce spending inequalities, which arguably better reflect longer term differences in society."

Does it matter?

Reducing relative poverty has been one of the key aims of the Labour government since Tony Blair was first elected in 1997.

The government has instituted sweeping changes to the country's social security system, largely driven by Chancellor Gordon Brown, such as the introduction of means-tested tax credits and pension credits.

This week, the government's National Statistics office reported that these policies - alongside changes in taxation - had led to a further shrinking in the income gap between the rich and poor.

Meanwhile, the government is still in the process of devising a new index of material deprivation to measure the effect of its policies, a plan which was first announced in 2004.

The IFS does not argue that the government's policies to reduce poverty have failed. Rather, it says simply that measuring changes in spending is a useful additional tool to find how many people are poor.

"Spending provides a more direct measure of people's material well being, since it more directly captures the consumption of goods and services," it said.

The classic one liner in here is But the IFS says that if household spending is measured instead, then over the same period of time the poverty rate rose from 20% to 22%.

So not only are we in debt up to our 'eye balls' but we are worse off than when Labour came into power.

**Duke Malcolm** · 05-17-2006, 15:56

You haven't grasped the principle of this Socialism lark.

It isn't poverty rising, it is wealth-equality rising.
It isn't anything bad, rather the end of the classes. Don't bother with this new-fangled social mobility, just make everyone poor, then there is nothing to aspire to and make one realise one has an unfortunate life.

**econ21** · 05-17-2006, 21:52

Originally Posted by ShadesWolf

The classic one liner in here is But the IFS says that if household spending is measured instead, then over the same period of time the poverty rate rose from 20% to 22%.

So not only are we in debt up to our 'eye balls' but we are worse off than when Labour came into power.

It's an interesting study, but of course it does not say we are worse off than when Labour came to power. It says real incomes for the median person have grown by around 3% per annum since 1997. For most below average income people, the rise has been even faster (slower for the very poorest 10% though).

Also remember, in the UK, poverty is measured in relative terms. Even if you get richer in absolute terms, you are officially "poorer" if your income rises more slowly than the average.

The point about the difference between income and consumption trends is interesting. But maybe it just means that poorer people are saving more (borrowing less), which would seem to be the opposite of your "up to our eyeballs in debt" point.

The press release is pretty uninformative. More details are given here:

http://www.ifs.org.uk/conferences/hhspend_170506.ppt

**Idaho** · 05-18-2006, 12:12

This Labour government have done little but continue the work of the previous Conservative government. Contrary to the piffle Malcolm comes out with, they have as much to do with Socialism as I do with cross-stitch.

**Duke Malcolm** · 05-18-2006, 12:28

Indeed, Socialism would ruin the country even further.

**lancelot** · 05-18-2006, 12:31

Well, Im sure what ever happens, Labour will introduce some new tax to combat the problem, being standard labour response to any situation...errrgh...

**Idaho** · 05-18-2006, 12:48

Originally Posted by Duke Malcolm

Indeed, Socialism would ruin the country even further.

Possibly Malcolm. And had you the wit to argue the point, I would enjoy discussing it.

**econ21** · 05-18-2006, 15:13

Originally Posted by Idaho

This Labour government have done little but continue the work of the previous Conservative government.

I don't think this is true of poverty-related measures. The study that sparked this thread does not provide a clear estimate of the effect of Labour's policies - that wasn't it's focus. But the slides are rather suggestive. They say income poverty "fell in the latter 1990s as policy measures were enacted". To me, that suggests the authors believe Labour's policy had an impact. By contrast, it says income poverty only stabilised in the earlier 1990s and of course rose in the 1980s.

The slides show that the poorest 10% have seen their real incomes rise by around 2.5% per annum under Labour, whereas they fell by around 1% in the 1980s. The trends in the graphs for income poverty are pretty striking too. Especially for child poverty and pensioners, there seems a marked change (for the better) starting around 1997.

I am not sure what to make of "spending poverty". Do we worry if the poor have money but don't spend it? But anyway, it's interesting that income poverty is what the government has targeted and so it has fallen. Spending poverty was not targeted and has risen. This is consistent with the Labour government policy making a difference.

I think we've had redistribution by stealth. Redistribution is what people like Gordon Brown believe in. But I suspect the calculation is that trumpeting the policy won't win them many votes and may lose some.

**Duke Malcolm** · 05-18-2006, 16:13

Originally Posted by Idaho

Possibly Malcolm. And had you the wit to argue the point, I would enjoy discussing it.

And had a reasonable point to argue, I would also enjoy discussing it. Unfortunately, Socialism doesn't quite work that way...

**English assassin** · 05-18-2006, 17:03

I think we've had redistribution by stealth. Redistribution is what people like Gordon Brown believe in. But I suspect the calculation is that trumpeting the policy won't win them many votes and may lose some.

We have indeed. If Idaho and co feel that all that has happened is the continuation of Tory policies, I have to say it doesn't look like that from the other side of the fence. Stamp duty, council tax, fiscal drag, abolition of ACT relief for pension funds, inheritance tax, etc.

Not that I am especially sore about that, they got elected, they are entitled to govern.

As for socialism, is there any point discussing it? Does anyone, even on the left, seriously advocate "common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service" anymore?

**Duke Malcolm** · 05-18-2006, 17:06

The Scottish Socialist Party and the Scottish Green Party.

**English assassin** · 05-18-2006, 17:07

Originally Posted by Duke Malcolm

The Scottish Socialist Party and the Scottish Green Party.

Scotland doesn't count.

**Duke Malcolm** · 05-18-2006, 17:34

Originally Posted by English assassin

Scotland doesn't count.

Racist!
I might have inclusded the Scottish Executive, too. They introduced common ownership of estates and compulsory sale of estates if the estate is privately owned...

**ShadesWolf** · 05-18-2006, 19:09

Originally Posted by English assassin

We have indeed. If Idaho and co feel that all that has happened is the continuation of Tory policies, I have to say it doesn't look like that from the other side of the fence. Stamp duty, council tax, fiscal drag, abolition of ACT relief for pension funds, inheritance tax, etc.

Not that I am especially sore about that, they got elected, they are entitled to govern.

Well said. The ACT relief for pensions is quite a point with me at the moment.

My works pension scheme has £20 million in the bank and has to pay out £60 million. So thats 12 years of paying into a wasted scheme. It all started to go pear shaped in 1998/9.