In praise of absolute poverty

It strikes me that we may need to rewind the clock and recapture something a bit simpler. It might help some members of the political elite talk more sense.

There is a continuing academic debate over how to measure poverty. Broadly speaking, thinking on poverty has moved away from using absolute poverty measures – such as the $/day that has been frequently used to assess the extent of global poverty. Emphasis is now much more on the use of relative poverty measures, such as those who fall below 60% of median income, or consensual measures, which, crudely speaking, identify what constitutes an acceptable standard of living within a particular society and work backwards to the level of resources needed to achieve it. Relative and consensual measures of poverty get at an important additional dimension to the problem of poverty – it is not only that lack of income leaves people hungry or cold but the absence of income also frustrates meaningful social participation.

Those on the political Right tend to favour a return to absolute measures of poverty. It is only when using an absolute measure that it is possible to declare poverty to have been banished or to deny the existence of poverty, as it was so publicly attempted by the Thatcher government.

While that move was criticised as statistical shenanigans, there may be a need to reintegrate a concern with absolute poverty into the debate. For two reasons.

Yesterday David Cameron spent some time in front of the House of Commons Liaison Committee for a wide-ranging discussion on the theme of the Big Society. The discussion touched on the summer riots and the Government’s response. When discussing appropriate punishment for rioters, or benefit recipients who break the law more generally, it is reported that Cameron:

defended plans to increase the amount of benefit that can be withdrawn from a claimant if they break the law and are fined. The government has announced it intends to increase the maximum benefit withdrawal from £5 a week to £25 from 2013, the point at which universal credit is introduced.

He said “otherwise the man in work is forced to pay a fine whilst the person next door who is living on benefits gets off much more lightly”.

This statement is constructing the issue as addressing one type of injustice. Yet, we can look at it from the other direction. A single person over 25 on benefit currently receives £67.50. So £25 will represent 37% of their income. We might say that they have broken the law so they deserve it. But if a more punitive stance on fines reduces their income below the level required to survive then what is the likely result? Further criminality, in order to survive, can hardly be ruled out. The punitive response would be counterproductive, as is so often the case.

Of course, we don’t yet know what benefit levels in 2013 will look like. But it is doubtful they will be more generous. Particularly if the moves George Osborne appears to be contemplating come to fruition.  Over the weekend, a number of newspapers reported that he was exploring possibilities for not uprating benefits by September’s rate of inflation because of the aggregate cost. Reference was made to the mantra “we’re all in it together”. It appears that these proposals are creating tensions within the Coalition, and not entirely along party lines.

Leaving aside the fact that we’re clearly not all in it together to the same degree, we need to remember what the uprating of benefits represents. It isn’t some sort of unearned bonus given to poor people. It is an adjustment made to recognise that as a result of inflation benefits are no longer sufficient to secure a given standard of living.  Without the uprating people reliant on benefit will get poorer. They will be forced to make even more difficult compromises between eating and heating.

Now, if Britain possessed one of the most lavish welfare states in the world then perhaps we might argue that there is a bit of latitude. That there is sufficient headroom for us to restrain increases this time around and no one will suffer unduly. But this is just not the situation. Out of work benefits in Britain are low by international standards and current levels are below some measures of the poverty line.

The welfare benefit bill in Britain is high because there are lot of people receiving benefit, not because benefits are extravagantly generous. There are a lot of people on benefit because large chunks of the British economy have underperformed for many years and the country has been kept afloat by the financial sector and unsustainable borrowing. The solution lies in strategies to rebalance the economy and enhance the competitiveness, quality and innovation of its productive sectors. It shouldn’t lie in screwing the poor.

£67.50. That’s one mid-price dinner if you’re a Westminster MP dining  out in London. Every publicity stunt I can think of over the years where an MP has tried to live on benefits for a week – to demonstrate that people are whinging about nothing – has ended in failure. Admittedly I may have forgotten a success. Benefits are barely enough to manage on for one week – without any major one-off item of expenditure cropping up – let alone to live on for months or years.

If we were to reintroduce the notion of absolute poverty into these discussions then it would clarify how low is unsustainably low. How poor is too poor in twenty-first century Britain. And it might curtail some of the less humane and counterproductive proposals regarding who bears the cost of austerity.

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2 replies »

  1. A lot of people live under financial stress in Britain but the real absolute poverty exists of course in the so called underdeveloped countries. Can you imagine a construction worker paid on a daily basis that will live in the half constructed building or the thousands of migrant workers that are forced by poverty to work illegally in other countries.
    Thailand has many Burmese who work without any legal protection, proper healthcare and access to education for their children.

  2. @Manfarang – You are right, of course. My post was directed at a UK audience. My point is about distribution and policy priorities. The difficulties facing many hundreds of millions living in truly desperate poverty elsewhere are severe, and should not be forgotten.