24 August 2018

The UN’s idea of UK poverty is all wrong


Philip Alston, the United Nations Special Rapporteur on extreme poverty, is coming to the UK soon to tell us all how meanly we treat the less fortunate in our society.

He’s got a bit of a record on such matters, as his report on poverty in the US showed. In his initial report he tried to measure poverty without taking into account all the things the US government does do to reduce it, which  really is not the way to do it. His second stab at it made a different mistake – it didn’t try to measure poverty at all, it measured inequality.

Inequality is doubtless an interesting thing, but it’s important not to get the two concepts confused with each other. Inequality isn’t poverty and poverty ain’t inequality.

At which point perhaps we’d better point out what poverty is. On a global level, the World Bank defines absolute poverty as living on less than $1.90 a day. That’s not cash income, but the value of all consumption, including housing, the medical care you don’t get and the pension you’ll not live to collect. That’s at US prices too – imagine trying to buy your entire life at Walmart with $1.90 per person per day.

This sort of poverty does not exist in today’s UK. Barbara Castle, of all people, pointed  this out back in 1959, we’ve conquered dire need and want. There is almost no one, absent significant addiction or untreated mental health problems, at this level of income or standard of living.

What everyone is actually talking about is relative poverty, living on less than 60% of median household income (adjusted for household size). But this is a measure of inequality, not poverty. Despite that rather obvious problem, this is the measure that the UN Rapporteur will be using. He’ll have to, given there’s so little of that true extreme poverty to investigate. Nor will Mr Alston’s chosen measure illuminate whether living standards are getting better or not.

We also have a cod version of absolute poverty measurement for the UK where we take that 60% of median income but fix it to a particular year, then see how people fare over the decades relative to that fixed income.

This sort of “absolute” poverty has halved over the past two decades. That means the living standards of at least half the poorest Britons have definitively improved – not something we normally get told.

Instead, we’ll be told that the rise of food banks shows that poverty is rising, whereas the truth is that food banks alleviate poverty – the more food banks, the greater alleviation of poverty, which is the whole point of them. The underlying problem that leads people to food banks is the Government’s inability to pay out benefits in a timely fashion, not a new problem as anyone who has ever interacted with earlier versions of the welfare state knows.

As The Guardian’s list suggests, the poverty industry is lining up to tell how awful it all is. One such story tells us that “he is living off £95.35 a fortnight in universal credit payments and that after paying for his electricity and gas, fuel for his adapted car, broadband connection, TV licence and baby milk for his youngest son, he is left with £10.50 for two weeks.”

This isn’t, of course, true. Someone, somewhere, is paying the rent. And as he has at least two children there should be at least another £70 a fortnight from child benefit, which isn’t rolled into universal credit.

But think upon what is being described here as poverty.  While clearly not well off, this gentleman is housed, with a car, internet, heat and cooking covered, with about £80 a fortnight for his major other expense, food. The average food budget for a British household is £55 a week. OK, he’s a little short on that but that’s not even poverty, let alone extreme poverty.

Actually, even if we took just that universal credit payment and didn’t include all the other things being paid for (rent, healthcare, pension contributions, his kids’ education and so on) he still has an income in the top 30% globally, even after we adjust for UK prices.

As it happens, I did actually correspond with Alston over his US report back when it came out, pointing out much of the above.

His response was that there is “no clear agreement on what index to use” to measure poverty. To which one might reply that, if that is the case, then we ought to be very shy about making sweeping pronouncements about poverty in whichever country we are talking about.

Or we might point out that inequality – some having more than others – is very different indeed from poverty, some having next to nothing. The UK has almost none of the latter. Is that really so difficult to understand?

Tim Worstall works for the Continental Telegraph and the Adam Smith Institute