As the government prepares to overhaul Britain's welfare system, Steven Webb, the Liberal Democrats' spokesman on social security, examines how much we really know about poverty. How do we measure it? Do we define it in absolute or relative terms? Can one household in four really be labelled poor?by Stephen Webb / November 20, 1997 / Leave a comment
Poverty has been described by the government as the biggest problem facing Britain. A few years ago, a social security minister declared that poverty no longer existed here. Who is right? What do we actually know about the numbers and the types of people on the edges of society?
The closest thing we get to an official set of poverty statistics is the annual Households Below Average Income (HBAI) series produced by the Department of Social Security (DSS). There is no reference to poverty either in the title of the series or in the content of the report. These are simply statistics about the distribution of income, in particular about the lower part of the distribution. None the less these figures do provide the best snapshot of the numbers of people in Britain with relatively low incomes.
The most recent figures (which relate to 1993-94) indicate that 13.3m men, women and children live in households whose income?after they have met their housing costs?is less than half the national average, a common benchmark used in international studies of poverty. These represent almost one quarter of the British population. Of this proportion, nearly 5m are working age couples with children, about 2.5m are pensioners and about 2.3m are single parents and their children.
Although the official series of statistics only goes back to 1979, the Institute for Fiscal Studies has constructed results on the same basis for each year back to 1961. It is clear from the graph that the 1980s were very different from the previous two decades. The percentage of the population with income below half the national average fluctuated somewhat during the 1960s and 1970s; but these fluctuations are dwarfed by the upswing during the second half of the 1980s. Between the late 1970s and late 1980s, the number of people living on less than half the average income nearly tripled, before stabilising in the early 1990s. Yet statistics like these prompt more questions than they answer. In particular, can it really be the case that almost one in four people in Britain is living in poverty?
The answer is that these statistics, like all others, should (and do) carry a government health warning. Because of the way the figures are constructed and the concept of poverty derived from them, they give us only a partial picture of the pattern of living standards in…