Poverty in Britain, past and present
By the early 1960s, the picture had changed a good deal. At that time, the leading poverty researcher Peter Townsend noted that “[t]he belief that poverty has been virtually eliminated in Britain is commonly held.”
But by the 1990s, poverty was again all over the place, or at least all over the news, political speeches, and NGO campaigns. A leading source speaks of “levels of poverty and inequality unprecedented in post-war history.”
How you view the evolution of poverty in Britain depends on how you measure it. The most frequently quoted measure of relative income poverty was stable over the 1960s and 1970s, suddenly exploded in the 1980s, and has remained on a high level since then. Real incomes at the 10th and 15th percentiles of the income distribution, in contrast, have increased continuously, apart from times of general economic contraction. Today, they stand at twice their level of the early 1960s.
But in fact neither measure tells the whole story. “Incomes” and “living standards” can be very different. If, for example, David Beckham decided to take a year off, he would appear in the poverty statistics, because in that year his income would be zero. In contrast, if your house burned down and your car was stolen, you would be no closer to the poverty line, because your income would be unchanged. Granted, these two examples are not particularly meaningful. But the correlation between income and spending has become fuzzier over time, making income a worse predictor of living standards than it used to be.
With most available measures riddled with shortcomings, we lack an exact picture of poverty. Nevertheless, it is safe to say that while material hardship in Britain has decreased much less than it could have over the last sixty years, it has decreased much more more than conventional measures suggest.
Today, even the least well-off spend sizeable portions of their budgets on items related to recreation, culture, restaurants and hotels, with clothing and footwear occupying only a small part. However, the income share which households at the 10th income percentile devote to housing costs has increased from 20% in the late 1970s to almost 30% today.
The crude, income-based aggregate measures which inform anti-poverty policies today encourage strategies based on transfer payments, notwithstanding their demonstrable side effects. A more detailed look at what people actually lack and why suggests we should rather tackle the root causes that make particular items, such as housing, unnecessarily expensive, and at the same time transform the benefit trap into a trampoline.