There is a persistent problem in addressing poverty in
developed country. People often cannot agree on where we should draw the line
between poverty and an acceptable standard of living. This is one of the core
issues behind discussions of redefining poverty, benefit levels and work
incentives. Everyone agrees that people
in destitution are in poverty and, asylum seekers aside, our benefit system
mostly prevents that. However once we go beyond destitution there can be
massive amounts of disagreement about who is experiencing “actual poverty” and
consequently who must be helped. Some people view destitution as synonymous
with poverty whilst others would say that those who do not have an acceptable
standard of living are in poverty.
The Labour government in 2010 introduced the Child Poverty
Act which included three definitions of poverty: those who have less than 60%
of the median net household income this year, those who have less than 60% of
the median household income of a fixed base year, and those who experience
material deprivation. These definitions suggest many of the people on the
benefits system in poverty, especially those who do not work. This definition
flies directly in the face of stories repeatedly reported in large swathes of
the mainstream media that benefit claimants have a comparatively high standard
of living. It also contradicts many people’s personal experience who report to
have lived on lower amounts than the official poverty figures without feeling
deprived instead feeling that they “managed to get by”. Whilst some of this
reporting can be explained by a time lag (many of those reporting will be
looking at the current poverty line and comparing it with earnings which their
family had in an earlier period) and rising cost of living, this comment
shouldn’t be simply dismissed. If people feel that the level of poverty defined
by the government and charities is above what they consider poverty then it may
diminish support for action to fight poverty.
This has lead to a large amount of criticism of the
relative definition of poverty (60% of the median). The suggestion is that this
measures inequality rather than poverty itself. Whilst some of this criticism
comes from a misunderstanding of averages confusing the median with the mean,
there is a certain amount of truth to this. For example poverty officially fell
in the year 2010/11 and this is partly explained by the fact that the median
household income fell. This produces the jarring fact that poverty fell whilst
standard of living for all involved decreased. In response the government have proposed to
redefine how we measure poverty but none of the measures they have mentioned
are decent measures of poverty (I may explain why in another post but it’s too
long for this one).
Another approach would be to look at what a person would
need and working out the level of income needed to achieve that. This is the
approach taken by the JRF in their Minimum Income Standard research which they
have just updated today.
Their research is based upon focus groups of the wider public looking at what
is needed to have an acceptable standard of living. You can see how the budget
works out here.
As you can see from this it advocates a larger budget than the relative poverty
line and a lot more than the level of benefits. It doesn’t measure the bread
line as much as it measures the bread, butter and jam line.
But looking through the research you can see that by cutting down different
budget elements you decrease the overall amount but also gradually decrease the
standard of living. It’s also important to remember if you remove elements such
as the amount spent on household goods then when these items break (as they do)
a family may have to take out a high interest loan to replace or repair them
which greatly damages their budgeting.
A breadline isn’t easy to spot from the JRF research. Whilst
it’s a great piece of research it doesn’t provide a simple answer to the
welfare policy problem (nor does it intend to). If the benefits system were to provide a
standard of living equal to the minimum income standard it would be far more
expensive than it currently is. This is the case even if the aim was only to
support those on full time minimum wage to that standard. But it does show that
what we call poverty at the moment is well below an acceptable standard of
living when people are asked to define one.
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