Poverty in Britain

It is claimed in March 2018, that there are 13 million British people below the poverty line. But what is this poverty line?

Absolute poverty is defined by UN etc. as being when you can not afford the basic needs of life

Relative poverty is a comparison to median incomes in current year. This means if the median income changes the number of people in relative poverty changes even if their personal circumstances does not change.

The median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. It is not the same as average. It is not the same as “mean.” The British Office of National Statistics use 60% of median as indicator whether some one is at risk of poverty.

Relative means in a comparison to; and so not an absolute definition, it is also a moveable quantity. Apart from those people in the dreadful situation of being genuinely homeless and unable to obtain even the basic welfare benefits; very few in Britain are in absolute poverty. The benefits system with housing benefit and council tax relief, means that every person on benefit, even though they are poor in comparison to middle and high income earners, are not in absolute poverty.

If you compare the standard of living in say 1930 in Britain with now, you will find that those now described as poor, are well off compared to those in 1930. This is not a realistic measure of present poverty but it should cause some thought about relative situations.

Trying to get an understanding of what all the statistics actually mean is not easy, for example a statement that the average salary UK is £26,500 for 2016/2017 sounds clear then in the smaller print it says this is a median average. What does this mean? since average, median and mean are not the same thing. How are these numbers arrived at? Do they take samples and “extrapolate” or do they use tax information and add up all the incomes, declared for tax purposes, of every person in the UK? Then take all the money paid via the benefit system and add that in to the total before dividing by the number of the population? But that population number is known to be inaccurate. Even immediately after a census there is doubt about the reality of the numbers. Even the total of income over the whole population has to be questionable, what about all the bankers and celebrities who keep earnings off shore? What about all the cash in hand economy. If £26,500 is the median figure, then in danger of poverty is 60% of this so £15,900 a year £305 a week. This is well about the state pension in Britain.

Statistics generate more confusion than answers. For example it is claimed that figures show that the UK had one of the lowest rates of persistent poverty (defined as being at risk of poverty for three years) of all EU member states. Try wading though the Eurostat data on European Union statistics on income and living conditions (EU-SILC) data base and you will find this is for data junkies only. If you are paid by the hour to sort this stuff out; then you have a job for life, for a mere scribe, trying to find clarity for an essay, it is a nightmare beyond the call of duty.

If you walk through a housing association or council house estate, you will see satellite dishes on many walls. Yet it is probable most residents will consider themselves relatively poor, and they are, if compared to any income over the average, note over average not over the median. All things are relative. A millionaire is not wealthy compared to a billionaire. A person on state pension is not poor compared to a genuinely homeless person.

Trying to see if 13 million British people are suffering genuine hardship due to their poverty, is far more complex that it seems. Simply walking around most provincial towns, even in areas locally described as poor, you will see some occasional signs of neglect and even squalor, at a few properties but you will not see one in five people without shoes or obviously hungry and destitute. Visit the nearest bookmakers and they thrive, as do the fast food take away businesses. Poverty in developed nations is relative. Poverty in some other nations is not, it is absolute. Some areas in cities do show great poverty and deprivation but each area should bee examined with care before lurid claims that one in five Britain is poverty stricken. Many run down areas are being deliberately deprived, by organisations or businesses, who want to redevelop the area. Some are due to social divisions that are being exploited, to the detriment of the residents. The politics of poverty are a mess of lies, deceits, and exploitation. The statistics supporting any side of this political argument, are just as bad.

What can be done? As always the real solution is to take the politics out of the way and then deal rationally with it. Income (or the lack of it) seems to be the basis of deprivation and poverty. So reform the whole tax and income system. Make it simple. Each year decide on a basic figure. Everyone over the age of 18 gets this, if they earn more they get taxed on that extra, if they get less the state makes up the amount. No other benefits no other personal taxes. Duties, VAT, and business rates also need simplification and reform but that has to wait. The government of the day sets the basic value and the rates of tax for those with a larger income. I would guess the amount for Britain in 2018, this basic figure will have to be around £750 a week. No other benefits, no housing support no means-tested stuff. The saving in costs of running the welfare state would be enormous — providing the government were brave enough to make all the bureaucrats redundant.