Poverty at its lowest since 2004/5?

A report by the Joseph Rowntree Foundation (pdf) shows that 13 million people in the UK were in poverty in 2011/12, a poverty rate of 21% which, while still too high, is the lowest it has been since 2004/5.

There is a mixed picture behind this: improvements for pensioners and children, and declines for adults in work, the latter being the angle picked up by the BBC.

The data predates some of the more recent benefit changes, which are not likely to help, although even a 1% uprating of benefits will be faster than many people’s wages, which is significant for a relative measure of poverty.

But rightly, there is some discussion of the impact of falling median incomes “lifting” people out of poverty, as defined as living at under 60% of median income, adjusted for household size.

We have always said in these reports that proper interpretation of the statistics means looking at what is happening in relation to both the contemporary (same-year) and fixed-year poverty thresholds. The same-year threshold is the more important (poverty is, by its very nature, relative). However, a fall in this ‘relative poverty’ can only be a good thing if the number below the fixed threshold falls too. The fixed threshold is a matter of choice; the DWP use 2010/11 as a staging post towards the 2020 Child Poverty Act targets. But to fully examine the impact of the falling median, the obvious one to take here is the 2007/08 high point. Choosing our words carefully, we find that alongside the 13 million people in poverty in 2011/12 are a further two million with incomes that would have been low enough to count as poverty in 2007/08. That is the effect of the recession and its prolonged aftermath.

It seems to me that the JRF and campaigners against relative poverty have been bitten in the rear by their own consistency. What the “relative poverty” idea is really about, surely, is the insistence that it is not good enough for the rich to get richer, if the poor are not also getting richer, and getting richer faster. If the rich (or the median) is on occasion getting poorer, then it is better to temporarily switch to an absolute definition of poverty and decry that. It is not inconsistent to demand that the poor get richer and are not left behind; that the potential and therefore duty of a nation to tackle absolute poverty goes up as its overall wealth does.

The effects of a recession on absolute poverty will always be terrible. But we can still ask how fairly the horror is shared, and on that the UK is very rare in hitting the rich as hard as the poor.

Meanwhile, the economy has begun to recover. Let’s hope the investment in skills and in rebalancing the economy pays off, alongside a fairer tax system, to keep hold of and build on the perverse decline in relative poverty that the recession has given us. But I suspect that we will need to do more.

* Joe Otten was the candidate for Sheffield Heeley in June 2017, is a councillor in Sheffield and is Tuesday editor of Liberal Democrat Voice.

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33 Comments

  • So, in a nutshell, the figure would have been 15 million if median earnings hadn’t fallen in real terms, because the study defines poverty relative to median earnings.

  • Staggering. The levels of spin designed to assauge the party’s moral conscience is getting way out of hand. Ask yourself truthfully what you would have thought of the report and this response prior to being government. When a body as respected as the Rowntree Foundation (a body frequently quoted when I worked for a Lib Dem MP) reports an ‘unprecedented’ and ‘sustained’ fall in living standards that has seen 500,000 more working families fall below the poverty line in the last 12 months it seems churlish in the extreme for this websites response to be ‘poverty at its lowest since 2004’. Deride their interpretation of poverty if you wish, interpret their stats in a self-serving manner if you wish but please don’t turn this into triumph of progress in the fight against poverty. Who does this party fight for now; the people or its reputation?

  • Helen Dudden 9th Dec '13 - 11:34am

    It’s reputation.

  • A careful reading of the report from Page 6 is recommended. Particularly the several paragraphs between the two positive quotes above.

  • Hi Joe. I did. I read it three times to be sure. The part I most agreed with is your final sentence.

  • Robert Wootton 9th Dec '13 - 12:01pm

    I am a town councillor, OAP, part time worker (16.5 hours) as a supermarket checkout operator and trolley porter and a discharged bankrupt (1989). All I know is from my experience is that I am worse off now then I was 5 years ago. WTC went from £60 per week to zero. My partner’s boys left school so her child benefit payments reduce. Most jobs require a person to have a driving licence or one is required as ID. The jobs that are available tend to be care assistants which are not usually a first choice of a career for kids leaving school.
    So one lad goes to college but EMA has ceased. Anyway the upshot is kids leave school. They are not earning but eat more. And benefit income reduces; result poverty.

  • Like some others who have commented I have not reacted favourable to what Joe Otten has written.
    The level of spin and complacency in Joe Otten’s approach is breathtaking.

    He starts are by referencing the Joseph Rowntree Foundation and provides a pdf link.

    This is what the report actually says –
    Analysis of the latest data on poverty in the UK.

    This annual report by the New Policy Institute gives a comprehensive picture of poverty in the UK, featuring analysis of low income, unemployment, low pay, homelessness and ill health.

    A focus on the geographical distribution of disadvantage reveals that national averages mask huge variations between areas in unemployment, educational achievement, and life expectancy. The research shows that:

    + more than half of the 13 million people living in poverty in the UK in 2011/12 were in a working family;
    while the labour market has shown signs of revival in the last year, the number of people in low-paid jobs has risen and + average incomes have fallen – around five million people are paid below the living wage;
    + there is substantial movement in and out of work – 4.8 million different people have claimed Jobseeker’s Allowance in the last two years;
    + the proportion of pensioners in poverty is at its lowest for almost 30 years, but the proportion of working-age adults without children in poverty is the highest on record.

    Joe Otten’s VERY SELECTIVE SPIN on this report is SHAMELESS..

    Would he like to explain here exactly what he means when he says – ” It seems to me that the JRF and campaigners against relative poverty have been bitten in the rear by their own consistency. “

  • A FEW OTHER KEY POINTS FROM JRF which Joe Otten has not made too much of –

    Average incomes have fallen by 8 per cent since their peak in 2008. As a result, around 2 million people have a household income below the 2008 poverty line but are not considered to be in poverty today.

    The number of people in low-paid jobs has risen. There are now around 5 million people paid below the living wage.

    Following recent changes to the social security system, many people on means-tested benefits have reduced incomes.

    Around 500,000 families face a cut in housing benefit via the under-occupation penalty and a reduction in Council Tax Benefit.

    The number of sanctioned jobseekers with a reduced entitlement to JSA doubled in 2010 to around 800,000.

  • @Joe
    My objection was – and remains – to the tone. 10 years ago we as a party would have been dismayed and outraged by these findings. That would have been the headline.

    Your piece shows some concern but it also reads as a series of ‘yeah but’s designed to absolve the party. Your headline seeks a positive where a negative would be as equally, if not more, valid. You point out that the JRF and ‘campaigners against relative poverty’ have been bitten in the rear which reads to me like you think we some how stand apart from campaigning against relative poverty and further that the credibility of the JRF has been undermined. You make the claim the rich have been hit as hard as the poor (an opinion which is surely a question of semantics – losing some of a lot is not as bad as losing some of not much in my book). Finally you sign off by discussing an economic recovery which the JRFs chief exec points out does not alleviate the problems they have identified.

    You say you suspect we will need to do more – why ‘suspect’ when it is evident that there is so so much more to be done. The party of old would have made that its’ focus.

  • Paul in Twickenham 9th Dec '13 - 2:21pm

    I would like to think that you are all agreeing loudly. It seems to me that the issue is that a definition of poverty based on median income is meaningless when median income is declining in absolute terms. Given that the cost of (what should be) non-discretionary spending such as rent and energy has increased sharply in recent years, a definition of poverty that assumes a constant rise in real median income becomes especially perverse in an era of stagnating income and rising living costs.

    In a similar arithmetic vein I find myself wondering about the average wage for all those jobs that are being created. Does anyone know the average salary for jobs created in (say) the last two years?

  • Paul Pettinger 9th Dec '13 - 3:15pm

    Even Joseph Rowntree is persona non grata under the New Order. Instead we have to praise the investment in skills and rebalancing of the economy, despite it not actually happening.

  • Joe Otten 9th Dec ’13 – 1:53pm
    @JohnTilley
    You have switched seamlessly to decrying absolute poverty, which is the approach that I endorsed.

    I have done no such thing! I ‘cut and pasted’ words from the JRF report which you cited. I then added the following –

    Joe Otten’s VERY SELECTIVE SPIN on this report is SHAMELESS..
    Would he like to explain here exactly what he means when he says – ” It seems to me that the JRF and campaigners against relative poverty have been bitten in the rear by their own consistency. “

    Can I assume that you did not answer this direct question, because you cannot?

  • John Broggio 9th Dec '13 - 6:08pm

    @ Joe Otten

    “That the rich have been hit has hard as the poor in percentage terms, not just absolute terms, is clear from the graph in the Independent article I linked to.”

    Even if the Indie’s graph is completely accurate, the fact remains that someone with an income of £10k will almost certainly feel a 5% fall far harder than someone with an income of £1m would taking a 10% fall in income. The graph in the Indie isn’t completely accurate because it’s only plotting the change in incomes, not net wealth.

  • A Social Liberal 9th Dec '13 - 6:42pm

    Two points from the very beginning of the JRF report :
    *First, the latest poverty statistics are two years old. For many children and working-age
    adults with low household incomes, the ongoing squeeze on incomes of the last two
    years can only have increased both the extent of poverty (the numbers affected) and
    its depth (how far their household incomes are below the poverty line). This is true for
    both children and adults and for those both in working and non-working families.

    *Second, the headline poverty rate understates the squeeze there has been on those
    with low incomes. That is because the extent of poverty in any year is measured
    relative to median incomes in the same year. Over the four years to 2011/12 median
    income fell by an unprecedented 8 per cent. The effect of this is that the threshold
    against which poverty is measured also fell. A family could be in poverty in 2008,
    see no rise in their income over four years, and yet not be in poverty by 2012 simply
    because the median had fallen

  • Eddie Sammon 9th Dec '13 - 10:35pm

    Joe, a good article, which mainly serves to point out the problems of the poverty definitions that these groups use, whilst also defending the party. However, there is one criticism that I think is merited: the link that says the rich have been hit as hard as the poor is not an accurate description of reality.

    I checked out the link and, as I predicted, it is based on income and not wealth inequality, which seems to have gone up, but that isn’t clear from the text of your article. I think we need to stay away from measuring inequality by income.

    Best wishes and keep up the good work.

  • If poverty isn’t defined in relative terms (i.e. that the most important human need is keeping up with the Joneses) then actual poverty in the UK is pretty low.
    Come to Eastern Europe and watch non-integrated members of the Roma community going through the bins looking for food – then move those same people to life on UK benefits (after the appropriate minimum period of work) and ask them if the fact they are at less than 60 percent of the UK median wage is a problem for them.

  • Liberal Neil 9th Dec '13 - 11:23pm

    “It seems to me that the issue is that a definition of poverty based on median income is meaningless when median income is declining in absolute terms. ”

    No, it’s just as meaninful as it always was. It’s a measure of how many people are on a level of income that should be considered too low compared to the rest of society.

    You should either define poverty in relative terms, against a proportion of median income, or not.

    I took Joe’s point to be that those who for years argues that relative poverty was the right way to measure poverty are, now that incomes are falling overall, moving the goalposts.

    It’s surely inconsistent to measure poveryy on the basis of relative poverty in some years and then measure it as an absolute in another.

    The fact is that, in terms of income, our country has got fairer under the coalition, in that richest have lost income more quickly than the poorest. As someone who has believed that the income gap is too wide for a long time, I think that’s a good thing. Joe is also right to point out that this trend is pretty much unique among developed countries.

  • Graham Evans 9th Dec '13 - 11:54pm

    Richard S is so right. Yesterday I met a young Pole who came to the UK six months ago. He was in a responsible, medium status job, but his father became ill and the family couldn’t afford the medical bills. He now works in the UK in a low status, minimum wage job, but earns enough money not only to cover his own living expenses but to pay his father’s medical bills. Rather than debating the merits of defining poverty in absolute or relative terms, perhaps we should be asking whether indeed the concept of the deserving poor and the undeserving poor has indeed some truth, even if the thought does disturb our liberal conscience.

  • Reading some of the above comments it’s clear there are some who are utterly outraged by the suggestion that despite possibly the worst economic crisis since the Great Depression the Liberal Democrats have been doing something right. They prefer to demonise rather than give credit where credit’s due.

    No matter that Britain appears to be the only country having gone through such a downturn that’s seen the richest 10% lose more – even %-wise than the poorest 10%. No matter that while countries that have denied the scale of the economic downturn and failed to cut back are now in the mire, while Britain is moving ahead faster than any of them. No matter that more people are in jobs than before the crisis when our opponents suggested the opposite would be the case.

    No let’s ignore all of that. We’e heartless, Tory-loving turncoats who’ve betrayed all their values, if they ever had any. And let’s ignore any facts that might suggest otherwise.

  • Michael Cole 10th Dec '13 - 12:36pm

    Of course people are worse off.

    But why blame the present government ?

  • Michael Parsons 10th Dec '13 - 12:47pm

    John Tisi
    Perhaps it depends what you count as jobs and what you count as poverty, absolute or not, and what meaning yu give to the growth in the numbers of working poor. Equality might mean equality of opportunity? Otherwise if everyone except the few were on £10 000 a year you coud say we were all rich, yes? But: If you can’t take the family to a decent restaurant now and then, can’t take a holiday, can’t enter higher education without running up massive debt (thanks to False Flag Clegg) and are still not regarded as “poor” perhaps as a society we need to raise our sights a little, don’t you think?
    To me,suggesting the Big Bankers are down by 10% plus woulkd be very cheering if true: lower wages is bad, and not the same as confiscating ill-gotten gains and losing bets. We are better of if the share of GDP accruing directly to Labour rises, and that does not seem to be the case unkess you select a very low startinbg point. Or do I have to starve in the gutter before you will agree I am poor?

  • Wrangling over definitions of poverty complete with quotes selected, or so it would seem, to bolster the impression that the coalition is doing okay in difficult circumstances is just the sort of thing that turns voters off formal politics. For the vast majority the lived experience is of declining income coupled with greater insecurity. They see that the government doesn’t have a credible plan for economic revival because the politicians are too busy scoring points off each other and probably don’t have any idea how to get the economy moving anyway.

    For years Tory policy has been to drive working wages down and corporate profits with the promise that doing so would lead to a virtuous circle complete with “trickle down” prosperity. It’s a mirage of course and it’s actually taking us further and further from a sustainable solution. In particular there is NO example from history of a country with its own currency that has experienced a ‘balance sheet depression’ which has recovered by a policy of austerity except in a few cases where surging exports (usually minerals) have more than offset the bad effects of austerity. Osborne (or at least his advisors) ought to know that but no, we are being put to the rack for the sake of a failed ideology.

    So, unless we have a change of course which doesn’t appear to be on the cards, the poor are going to go on getting poorer. I fear the date in the headline will soon have to be revised to a much earlier year.

  • Tubby Isaacs 10th Dec '13 - 8:32pm

    Don’t see why the decline in relative poverty is regarded as “perverse”- this happened last time, when the City had a prolonged downturn under John Major.

    And anti-poverty organisations spend plenty of time talking about absolute poverty. It’s just that relative poverty rates get picked up by the media to rubbish their whole agenda.

    I’d also like to know where this rebalancing is. The 90s recession and aftermath got the trade balance (briefly) into surplus.

  • Tubby Isaacs 10th Dec '13 - 8:36pm

    And as Joe admits, if benefit and tax changes haven’t been taken into account, that won’t be good for (absolute) poverty figures.

    See the terrifying numbers for sums coming out of poor local economies here:

    http://ig.ft.com/austerity-map/

    I’ve seen very little pressure from anyone in the Lib Dems to get more money into these local economies.

  • Paul in Twickenham 11th Dec '13 - 9:40am

    Over the last 5 years, median incomes have declined while non-discretionary expenditure – e.g. on rent, energy, food and public transport – has risen sharply. If a definition of poverty is simply “60% of median income” then what happens if and when the absolute minimum cost of living exceeds 60% of median income? Do we simply ignore Micawber’s equation?

  • An echo of Joe Otten? A coincidence? Or is there some organisation behind this spin?

    Mark Pack writes in his blog –
    Four facts that paint a rather different picture of Britain from the one usually told
    1. Income inequality in the UK is at its lowest since 1986 (source).
    2. Wealth is distributed more equally in the UK than in Germany, Norway, Sweden or Holland (source).
    3. The proportion of pensioners in poverty is at its lowest for almost thirty years (source).
    4. The proportion of our income that goes in direct or indirect taxes in the last four years has been lower than at any time since the way the figures are counted changed in the mid-1970s (source).
    Not quite the usual picture that gets told, is it?

    Perhaps if you tell people often enough that they are better off than they were. they will start to believe it.
    Didn’t we used t ocall that sort of thing “The Big Lie”.

  • If you are really interested in the debate about poverty and the official statistics I recommend –
    http://www.theguardian.com/science/2013/dec/12/press-releasing-poverty-at-the-dwp

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