Category: Poverty

Confusion about poverty

An editorial in Friday’s Scotsman complains:

“People are classified as being poor if their income is less than 60 per cent of the UK median. Given this is a relative, as opposed to absolute, measure, then we can say with mathematical certainty that the poor will always be with us.”

I gave some examples of similar muddles in a paper I wrote last year (Why refer to poverty as a proportion of median income?, Journal of Poverty and Social Justice, Volume 20, Number 2, June 2012 , pp. 163-175.) The researchers who introduced the measure explained that the test “does not mean that there will always be poverty when there is inequality: only if the inequality implies an economic distance beyond the critical level.” However, people don’t understand averages or distributions – and journalists usually get where they are by studying words rather than numbers.

There are problems with the use of 60% of the median, but the supposition that it invents poverty isn’t one of them. The main problems are that it compares poor people with incomes that are not much better, that it assumes it’s always impossible for more than half the population to be poor, and that it’s not well understood. The main defence is that it works, more or less, for Europe and for the OECD countries. 60% of the median is primarily a test of very low income, and in countries where income distributions are more equal, poverty is much lower.

A 'tragedy of wasted human potential'

The Centre for Social Justice has announced the publication of a new report, Signed on – written off, with a press release that says:

  • Benefit ghettos of Britain exposed by CSJ in major new inquiry into welfare state
  • Total spending on social security in the five years of this Parliament will top £1 trillion
  • CSJ says these areas represent the tragedy of wasted human potential

I can’t comment on the report itself, because it’s not been released yet, but I can comment on the press release. The first point, which I can’t disagree with, is that some wards in some cities have more than half the households where people are out of work.  That’s what happens during a slump in the economy.  Nor is it in dispute that “Across the country, 6.8 million people are living in a home where no one has a job.”  What I can dispute is the assumption that the first statement is a reason for the second.  It’s the other way round.  If lots of people are out of work, and the distribution varies between areas in any way, then there must be some areas where even more people are out of work.

The report’s other main contention is that the concentration of workless people is somehow the reason for the rise in the benefits bill.  Benefits will indeed cost £1 trillion over five years, if we include HMRC benefits and benefits for working families in the figures; but even with that inclusion, more than half of the cost is down to pensioners.  That raises the horrifying spectre of the ‘benefit ghetto’, a sea of grey heads trapped in a cycle of tea dances and complaining about the younger generation.   The Royal Geographical Society’s resources for schools, Where is Granny Going?, reveals the truth: some places have becomer ‘retirement towns’ and pensioners are increasingly blowing their idle savings on beauty, fashion and electrical goods.   Watch out, Worthing: the CSJ is coming for you.

Are attitudes hardening?

The Joseph Rowntree Foundation claims that attitudes towards the poor are hardening. They report:

Fifteen per cent of the public in 1994 thought people lived in need because of laziness or lack of willpower, compared to 23% in 2010. Support for the view that people live in poverty because of injustice in society fell from 29% to 21% over the same time period.

The evidence they’ve cited isn’t persuasive. 1994 was the point when fewest people agreed with this statement in over thirty years. In 2003, 28% agreed with the statement; in 1976, it was 43%. See e.g. P Dorey, A Poverty of Imagination, Political Quarterly 81(3) 2010. So 23% in 2010 is at the lower end.

The undeserving poor

The Daily Mail describes Mick Philpott as “the vile product of Welfare UK”.  For George Osborne,  “There is a question for government and society about the welfare state, and the taxpayers who subsidise the welfare state, paying for lifestyles like that.”

The first accusation is that welfare produces the sort of behaviour that Philpott engaged in, most obviously the decision to have a very large family.  I reviewed the evidence for the effect of benefits on family size this in an earlier posting. The evidence shows the  opposite – there are slightly more large families on benefit than in the wider population, but people who get benefits for longer periods are less likely than others to have further children.  In May 2011, there were 1,354,280 families with children in receipt of benefits: 25,980 had five children, 8,780 had six, 3200 had seven, 1080 had eight, 360 had 9, 130 had ten and 50 had 11 or more. Those figures add up to less than 3% of families on benefit. A large family is not itself a sign of dysfunction – my grandmother was one of twelve, large as many families  were before the Great War.  If there is a problem, it’s a small one – but there is no clear sign here that there is a problem.

The second comment invites us to ask whether people who receive benefits are deserving or undeserving.  The only way to decide that is to have a system which checks people’s moral worth, and to do that, we have to ask questions.  It’s been obvious for centuries – I mean that literally – that this approach does not, and cannot, work.  It does not work because because the vast majority of poor people are not poor because of any moral fault – in the days of the Poor Law, it was because of old age and sickness; because the minority who are undeserving are still in need; because the administration required to make the judgments is insufferable; because there is no way to hold the boundaries fairly; and because the moral judgements poison the system.  I don’t want to have to live with a system that is intrusive, presumptuous,  expensive and ineffective, even if  George Osborne does.

Public employment as a protection from poverty

Working in preparation for the budget, I’ve been looking at some stats from the OECD.  I was interested to find out to what extent  public sector employment could be thought of as a way of protecting the economy, and that led me to the nearest approximation I could find,  “Employment in general government and public corporations“.  The figures don’t show any clear relationship to economic performance, but I wondered if they might show a different kind of effect.  Here is a table tracking the OECD’s listings of public sector employment and child poverty.

Employment in general government and public corporations Poverty among children, %, late 2000s
Norway 29.3 5.5
Denmark 28.7 3.7
Sweden 26.2 7
Finland 22.9 5.2
France 21.9 9.3
Hungary 19.5 7.3
United Kingdom 17.4 13.2
Belgium 17.1 10
Canada 16.5 14.8
Israel 16.5 18.7
Australia 15.6 14
Ireland 14.8 11
United States 14.6 21.6
Italy 14.3 12.2
Czech Republic 12.8 8.8
Spain 12.3 17.2
Portugal 12.1 18.7
Netherlands 12.0 9.6
Austria 11.4 7.2
Turkey 11.0 23.5
New Zealand 9.8 12.2
Germany 9.6 8.3
Chile 9.1 24
Mexico 8.8 25.8
Greece 7.9 13.2
Japan 6.7 14.2

There are reasons not to trust the figures here – is child poverty in the UK only 13.2%? – and simple statistics can mislead, but a correlation of the two columns comes out on Excel at -0.56, which is unusually high for social data. It does look as though public sector employment and job creation in the public sector are key elements protecting people from poverty.

The churches condemn attacks on the poor

Several Christian churches have joined together to condemn lies and myths about poverty and welfare dependency. The lies we tell ourselves is an angry, impassioned attack on some of the dominant images of welfare in the press and government statements. I don’t agree with everything in the report – if anything, I think there is even more misinformation than they suppose – but I’m giving the link here for people to decide for themselves.

Sustainable growth and poverty

A paper for the World Bank questions whether green growth policies are good for the poor. Stefan Dercon argues: “High labor intensity, declining shares of agriculture in gross domestic product and employment, migration, and urbanization are essential features of poverty-reducing growth. … trade offs are bound to exist. … the poor should not be asked to pay the price for sustaining growth while greening the planet.”

The argument is not new; it is perhaps more remarkable for its source. In The Future of Socialism, Tony Crosland argued that higher personal consumption – consumption, not just formal economic growth – is fundamental to the living standards of the poor. The policy he advocated was not to achieve maximum growth, or even high growth relative to other countries, but to improve people’s position over time, because that was necessary to achieve greater equality. Later, in Socialism Now, he added a crucial rider: that without growth, redistribution would be impossible. “I do not of course mean that rapid growth will automatically produce a transfer of resources of the kind we want … but I do dogmatically assert that in a democracy low or zero growth excludes the possibility.” Those arguments seem to me to apply with equal force to the developing world; and they raise the question whether it is possible to be pro-green and pro-poor at the same time.

Measuring Child Poverty: a formal response

I’ve previously posted my immediate reaction to the consultation on measuring child poverty. I’ve now prepared a more considered academic response, which is attached here. The submission argues that the approach will not achieve what the government says it wants to achieve, which is a measure of poverty as a multi-dimensional experience.

Fog in Channel: rest of world cut off

I’ve read some parochial comments about British social policy in the last week. A chapter in the new Routledge Handbook of the Welfare State claims that “In no country did social exclusion become more prominent as a basis for social policy than in Britain.” France, which has led the world in this, developed the concepts of “exclusion” and “insertion”, and restructured their benefit system around them in the 1980s; the European Union treaties, influenced by the French speaking directorates, depend on “combatting exclusion”; the model has now spread to places like Portugal and Brazil. A report from the IEA claims that “Social expenditure in the UK stands at one of the highest levels in the world.” That’s true in one sense – any relatively rich country is likely to spend more through social expenditure than a relatively poor country. More relevantly, the UK is just above the OECD average (24.5% social expenditure, compared to the OECD average of 22.1%). Its expenditure is exceeded by, for example, France, Germany, Austria, Belgium, Denmark, Italy, Portugal and Spain – in other words, by most long-standing EU members.

The heading I’ve put on this entry is admittedly unfair – I couldn’t resist it. The problem with these comparisons isn’t so much that they’re insular, as that they’re looking in the wrong direction. People making policy in Britain tend to focus on the example of other English speaking countries – notably the US and Australia – rather than its European peers, or any review of broader international developments. That’s our loss.

Smart cards and silly proposals

Earlier this week a Conservative MP proposed a ten minute rule bill to issue claimants with smart cards that would stop them from buying unapproved items like alcohol or cigarettes.  I ignored this at the time, because it’s hardly worth taking seriously, but this morning it’s reported in the Mail and the Sun that Iain Duncan Smith, the Secretary of State for Work and Pensions, thinks it’s a good idea. He’s quoted as saying: “I’ve been looking at this process to figure out whether it’s feasible, how would it work, how does it match with legal obligations, so we’ve already been examining this”.

He can save the expense, because we already know. The voucher scheme for asylum seekers is “ineffective, inhumane and results in unnecessary suffering.” That comment comes from a detailed report by the Refugee Council. The scheme left people hungry, unable to pay for necessary services, exposed to hostility in shops and looking for ways to subvert the system.

The way vouchers are used and abused is obvious. Anything marketable can be sold. Some traders will pass off some illicit goods like cigarettes as food; people will go to the supermarket with their friends and exchange food for cash or other goods; drug dealers will get their clients to exchange goods for the drugs. Among asylum seekers, 79% reported that they swapped vouchers to buy items they couldn’t otherwise get, and 68% said that they got less than the face value of the voucher as a result. It is hard to imagine that claimants with drug dependencies will demonstrate a higher level of compliance.

Further note, 9th February 2016:   A report from Georgia in the USA offers a neat demonstration of the principle that ‘anything marketable can be sold’:  the cards are beng traded criminally at a discount.  The DWP issued a contract in 2015 to test how such a scheme would work. The answer is: just as you’d expect.