The claim
“The number of people in deep poverty has risen by 900,000 since 1997”
George Osborne, Shadow Chancellor, An Unfair Britain, 19 August 2008
The background
While Gordon Brown has been dispatched off with a bucket and spade, the summer of opposition trench warfare continues. This week, the Tories are fighting on the economy front.
In advance of a speech to the think tank Demos tomorrow, the shadow chancellor, George Osborne, released a dossier detailing the ways that Britain has become more unfair under Labour.
The first statistic quoted, which is also reported in the likes of The Times and the front page of The Express, claims nearly a million more people are seriously badly off under Labour.
Tackling poverty – and in particular child poverty – has been one of the government’s boldest aspirations.
But official figures released in June showed the number of people living in poverty had increased for the second year running.
Still, are things at the poverty deep end really as crowded as the Tories claim?
The analysis
The usual definition for poverty – used in official statistics and government targets – is those living on below 60 per cent of the median income.
If all the households in the country were lined up, the median would be the one in the middle, so using this kind of average means things aren’t skewed by Wayne Rooney-type pay cheques at the top end.
According to this measure, the number of people in poverty in the UK has decreased by either 200,000 or 400,000 (depending on whether housing costs are taken into account) since 1996-97.
This is despite recent rises, and the decrease since 1998-9 (the baseline year the government uses in setting its targets) is more marked: 500,000 or 800,000.
However, the Tories cite figures from the Institute for Fiscal Studies, which show that in 1996-97 there were 2.4 million people living at 40 per cent of the median income.
By 2005-06, this had risen to 3.1 million, and in 2006-07, the most recently available figures, it was 3.3 million.
IFS figures are published here although the institute pointed out that the Tories had correctly used more consistent unpublished data based on Britain, which do not include Northern Ireland, in recent years.
So subtract 2.4 million from 3.3 million, and you get the 900,000 rise, right?
There’s a reason figures of people living at below 40 per cent aren’t included in the official figures – and it’s not just that the government is embarrassed about them.
“A lot of people who in surveys appear to have a low income also have higher spending than people who are better off,” says Mike Brewer, director of the IFS’s direct taxation and welfare programme.
“The mismatch between the levels of spending and incomes leads us to think the label of severe poverty is not particularly accurate.”
Why is this? The nature of a survey of household incomes – on which the poverty figures are based – means some people show up as having very low incomes in the short-term, such as self-employed people with a more erratic income stream.
They still borrow money or use savings to fund a longer-term standard of living that wouldn’t be considered “poor”.
Such people would also skew the figures at less severe definitions of poverty, such as the 60 per cent measure. But it becomes more pronounced further down the income distribution as they start to make up a greater proportion of the group.
The verdict
Although the Tories are quoting independent figures accurately, uncertainty around the figures makes it seems unlikely that there are quite as many people living in extreme poverty under Labour as the numbers suggest.
This doesn’t necessarily torpedo the Conservatives’ point, however. It is relevant that the number has increased, says Brewer, as it’s not purely made up of rich people being misleadingly included.
But the 900,000 figure should be treated carefully – more carefully than a headline-grabbing opposition report is inclined to do.
The sources
Conservatives: An Unfair Britain
IFS: poverty and inequality in the UK 2008
DWP: households below average income 2006-7
