When listening to the Prime-Minister’s speech to the Labour Party spring conference last week, I thought that it was only the cause of ending child poverty by 2020 and some utopian ‘world’ projects, such as abolishing malaria, that triggered any real audience applause and enthusiasm. Even the party faithful seem to be finding it hard to express their passion for the many re-announcements, such as rebuilding schools or the minimum wage. I know this observation is widely shared and quietly voiced in government and there is now sufficient political impetus to try to make progress on ending child poverty in the UK by 2020; however, is this a credible project? Could we really be living at such an amazing point in history, when child poverty was about to be abolished? The signs are frankly not good, with headlines such as ‘Whitehall forecasts child poverty failure’ http://www.guardian.co.uk/society/2008/mar/03/children.tax and ‘poor children pay for non-doms’ tax break’ or http://www.guardian.co.uk/politics/2008/mar/03/economy.economics or ‘child poverty targets ‘will fail’’ http://news.bbc.co.uk/1/hi/uk/7273808.stm
However, it may surprise regular readers of this blog that I am not as pessimistic as these commentators. There are two reasons for this. First, a technical statistical point but one that is often misunderstood and confuses this debate: note that the government always speak of poverty being defined by 60% of median income; that’s average defined by the numerically middle household (whose income is then taken as a statement of average) this is not the way average is more commonly used (where total income for the population is divided by the number of its population to get the average income) which in statistical terms is called the mean. Why does this matter? It matters because as long as the magical median household remains on a static or only slowly rising income then what happens below and above them i.e. the rich and the poor, makes no difference to the calculation of average income and hence the income that represents the 60% poverty target. So it is statistically quite possible to upgrade everyone to beyond the 60% target without having to downgrade those above median income in order to keep the ‘average’ at the same level.
Secondly, I think some recent research has shown that specific and often localised factors seem to be highly influential as to why some families remain in poverty. For example, the recent London poverty review http://213.86.122.139/docs/capital-gains.pdf found that high housing costs were a major disincentive to work and suggested that changes to housing benefit rules might have a significant effect. While elsewhere in UK, such as the north-east of England, the emphasis would probably be on getting people off incapacity benefit and into work. There is also the question of rural poverty http://news.bbc.co.uk/1/hi/england/7273516.stm . I would argue that it is possible to analyse each of these areas, in turn, and identify specific and often relatively minor changes that would make a major difference to people. For me, this finding is a cause for optimism.
I’m not suggesting these things are going to be cheap or easy, far from it, but with serious money going into job training and support (see below) combined with localised measures, such as for example, changes to London housing benefit, then I see a real basis for taking another major bite out of the poverty figures. I don’t know if we will reach zero poverty by 2020, but as Larry Elliott concedes in the article above; to get to the Scandinavian level of 5% poverty would still be a stunning achievement.
