A digest of the results from the new Households Below Average Incomes
Report for the period 1994/5 - 2000/1 is available for download at:
http://www.dss.gov.uk/asd/hbai/hbai2001/pdfs/FirstRelease.pdf
(The link to the full document appears to be faulty at time of writing.)
Among the findings relating to relative poverty (below 50pc median household
equivalised income) are that between 1994/5 and 2000/1
There was no change in the number of pensioners in 'poverty' (1m in both years);
There was an increase of 200,000 adults of working age in poverty (from 4.6m to 4.8m),
There was no change in the number of children in poverty (2.5m in both years).
These figures are after housing costs.
If one compares the years 1996/7 with 2000/1, then there is some improvement:
A slight fall of 100,000 in the number of 'poor' pensioners (11pc of the elderly in both years);
A similar fall of 100,000 in the number of poor working age adults (15pc to 14),
A drop of 500,000 in the number of children in poor households (23pc to 19).
(Under the widely-used relative poverty definition of 50pc of mean
equivalised HH income, the fall in the number of poor children is 400,000)
These figures are a far cry from statements and forecasts made by the
Chancellor and by several academics.
As long ago as 23 October 2000, The Chancellor, Gordon Brown claimed that:
'The Working Families Tax Credit…has taken a million children out of poverty'
Treasury Press Release 116/00
Then there is this from a Child Poverty Action publication, An end in
sight? Tackling child poverty in the UK, Feb 2001:
'It is possible to model the effect of Government policies on the numbers
of children living in poverty. Changes in the tax and benefit system should
lift 1.2 million children out of poverty by April 2001. An increase in the
number of parents in employment since 1997 may lift an additional 300,000
children out of poverty.' Prof Jonathan Bradshaw
The modelling was done by Prof David Piachaud and Holly Sutherland.
There were some voices questioning these optimistic assertions, however,
and not only Opposition politicians. I was one. In an article in the July,
1992 Liverpool Quarterly Economic Bulletin, ' New Labour's Welfare and Tax
Reforms: All That Glitters…', I wrote that Brown's claim was 'false' and
showed that, in fact, when you did the calculations of before and after
income, ' Very few two-parent families receiving Working Families Tax
Credit would...have been lifted out of poverty.' (Many single parents who
came off Income Support and into work would have, but I estimated their
numbers would be, and were, relatively small).
Why Piachaud and Sutherland got it so wrong, though, remains to be anwered.
Their microeconomic simulations were clearly not up to the job.
Paul Ashton
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