For a rich economy, Britain has high rates of relative poverty. A household is in poverty if its income, corrected for its composition, is less than 60 per cent of median income. Of British households headed by someone of working age, a little over 20 per cent are in poverty—much greater than the rate in Sweden, for instance.

The problem is the large body of working-age Britons with very low skills. This group is around 23 per cent of the working-age population, more than twice as many as in Sweden. Given the kind of market-based economy that we live in, it is difficult for those with very low skills to earn a wage which will lift their households out of poverty. Furthermore, the very low skilled are much more likely to be out of work.

So how could we eliminate poverty? In the long term, we should provide higher levels