Miscellany
24 November 2006
By Peter Kenway
Today’s Conservative attack on the failure of the government’s anti-poverty policy to do anything about the millions of people living in ‘deep’ poverty would have been unthinkable even a year ago.
Until David Cameron’s landmark speech in January setting out Conservative thinking on the subject, poverty was something that the Tories, were quite prepared to leave to Labour. No longer.
Cameron’s philosophy may remain under-developed and this attack may be opportunistic but that does not detract from the fact that the criticism is both correct and pertinent. Depending on whether housing costs are taken into account in calculating net income, the number of people in deep poverty has either gone up under Labour or at best remained the same. Given the steady and undisputed progress that has been made since 1997 in reducing ‘headline’ poverty, Labour is vulnerable on deep poverty. How on earth has Labour allowed that to happen?
Deep poverty, like headline poverty, is measured relative to median household income, that is, the income of the household exactly half way up the income distribution. The money value of the median depends on the age and number of people living in the household. In 2004/05, the median (on the ‘after housing costs basis’) was worth about £440 a week for a couple with two children, £300 a week for a couple with no children and £170 a week for a single adult. The deep poverty threshold used by the Tories is defined as 40% of this median while the threshold used by the government is 60%.
The 4½ million people in deep poverty ‘after housing costs’ are in that predicament for two reasons. First, nearly half them, chiefly pensioners and working households with children, are in that situation only because they are not receiving the benefits or credits they are entitled to, that is Pension Credit, or the Child and Working Tax Credits.
For a Government that relies so heavily on means-tested support, non take-up on any appreciable scale undermines the strategy. Non take-up of benefits and entitlements is a failure of policy implementation and perhaps policy design too. With the Tories at last on the attack on poverty, Labour’s chronic failure here may start to carry a political cost.
Second, the other half of the people in deep poverty are in workless, working-age households, mostly single people living alone. If they have no other source of income, these people rely on the basic, means-tested social security benefits: £57 a week for a single adult aged 25 or over and just £46 a week for a single adult aged under 25.
As a proportion of median income, these sums of money are breathtakingly low: for example, 27% - just a quarter of median income – for the under 25 year-old. They are also much lower than when the Tories left office in 1997. That is because Labour’s policy has been to increase benefits for working-age adults in line with prices rather than earnings. In taking this line, Labour has just carried on with the policy it inherited from John Major
By contrast, Labour has taken a completely different line as far as means-tested benefits for pensioners and children are concerned, increasing both sharply. As a tactic in the late 1990s, at the start of its anti-poverty policy, this made sense. But if, as has happened, the tactic turns into a strategy, the result after a few years is incoherence.. Thus, in contrast to the £46 and £57 for single working-age adults, means-tested support for the first child in the family now exceeds £60 a week while that for a single pensioner exceeds £100.
The government has never tried to justify these differences which have come about as the result of policies pursued for disparate reasons. They are insupportable. And the Tories, who at least used to be consistent in their meanness, have found them out.
If Labour is not to remain vulnerable to opportunistic attacks, it will have to grasp the nettle and develop a coherent policy for out-of-work benefits in place of the current sorry mess. This will inevitably mean raising benefits for working-age adults. And it will have to be ready to do this without being pushed by big charities because, unlike those representing children and pensioners, powerful advocates for workless, working-age people are conspicuous only by their absence.
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