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Nothing to be smug about Print E-mail
Written by Dr Eamon Butler   
Friday, 16 May 2008

Britain's Prime Minister Gordon Brown seems very smug that his government has 'taken a million people out of poverty'. But has he any right to be so? The truth, as always, is more complex and less rosy than Mr Brown presents it.

The government's poverty target is 60% of median income: below that, you are in poverty, above that, you are not. And yes, by giving people just the wrong side of the line a little extra cash, you can move them to just the right side of the line. A great deal of politicians' time and effort (and our money) has been expended on achieving just such a change. Look at a graph of income distribution and you see a slight shift from one side of the line to the other. This does of course represent millions of people. But it doesn't mean that previously they were in abject poverty and now they are enjoying la dolce vita. A few extra pounds might be very welcome, but all this political effort hasn't exactly changed people's lives.

And what has happened to those who really are in abject poverty – say, those who have incomes below 40% of the median? Well, that depth of poverty is the highest in thirty years, both in terms of numbers (over five million) and as a proportion of the population. Two-fifths of those who the government defines as being in poverty are in fact in this, severe poverty.

Then, of course, you have to remember that many people would fall below the government's poverty target were it not for in-work benefits. And the number of us receiving those has rocketed – from around 4% of working-age households in 1997 to around 15% today. We've taken people out of 'poverty' by making them more dependent on the state.

There's something rotten with this. Our over-regulated, state-dominated economy with its perverse tax and benefits system – which taxes people who are below the minimum wage – is not encouraging self-help, hard work and enterprise. So we distort it even more in order to cover up the fact. It's time to restore incentives and trust the market.

Comments (5)Add Comment
Lifting people out of poverty
written by Mark Wadsworth, May 16, 2008
It's just a mantra, along with 'making work pay with the National Minimum Wage and Tax Credits', the problem is that they have been saying it for so long that many people believe it.

On Question Time yesterday, people tried laying in to Alan Johnson (only neither they nor he actually understands the maths or economics of the whole tax/welfare thing so the debate was a bit pointless) and he just kept bleating "But we have lifted pensioners", he didn't even bother saying "...out of poverty".
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written by Steve Giess, May 16, 2008
A tax and social security system that makes a Klein Bottle look quite a simple concept...
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written by Dave, May 16, 2008
And don't forget the cost of the army of civil serveants who administer this redistribution and I guess the cost of those on Job Seekers Allowance would be less than their costs of salary and more particularly pensions commitmnet to the future. Who knows some of them may actually go on to get jobs that add value to GNP rather than consume it.

By the way has anybody noticed the the Age Allowane (Tax threshold) is now wired out at an income of £27800 rather than £29000 as a result of the £600 increase in Personal Allowance?
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written by Border Reiver, May 16, 2008
Some, like the Duke of Edinburgh, would argue that there is no such thing as abject poverty in this country. The proles have their Nike trainers and processed food. Yet, the moral and physical degradation of the great swathes of those dependent on the UK welfare state is almost Third-World. The Socialists and bureaucrats cannot seem to acknowledge that generations are being lost to drugs,violence and hopelessness on our great sink estates. Of course it was Maggie's fault.

So as Dr Butler observes the Treasury give the poorest a few more quid to take them out of statistical poverty. It was a bit embarrassing to see Indonesian gap year students in Glasgow doing the sort of relief work you'd normally associate with Indonesia.

Will the Tories propose pulling the lowest out of the tax system, along with sweeping 'Wisconsin style' reforms? My God it might even lead to an inner city Tory MP north of the Border. Unlikely. It seems they will ignore Lord Forsyth's tax proposals.

P.S. Dave you are absolutely correct. There is a veritable army that administrates welfare. This has been argued why it is electoral suicide to try and dismantle it. Unlike the lowest of the low, they vote. It does remind me of a tragi-comic scene in Rab C. Nesbit. Rab, to a jobcentre (plus) employee, "See bams like us, wee gie ye a job".
re-calibration of "poverty"
written by martin sewell, May 17, 2008
As with so much of this Government, the statistical re-calibration of definition obscures the truth in the service of political expediency. The definition of poverty in percentage terms means that if Bill Gates and Warren Buffet moved to London the number of people living in "poverty" would rise. I am grateful for the further clarification of the real poverty of the lower 40% which I had not previousy considered but would plainly want to help.

The biggest obstacle to helping the poor is the widespread reluctance to seek to change cultural attitudes which would be necessary to introduce Wisconsin- type reform. If we do not grasp that nettle however we will never give back to the multi generational client /ensioners the self -esteem they lack and which manifests itself in all manner of poverty-related anti -social and self- destructive behaviors.

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