Kristian Niemietz writes for ConservativeHome

Imagine our government managed to enact policies that brought down the cost of essential goods and services in this country, resulting in a pronounced improvement in the living standards of the poorest. What do you think would happen to the national poverty rate? You’ve probably guessed wrong – because the real answer is nothing. Such is the madness of the current way that poverty is measured in this country.

The government could, for example, start by thoroughly liberalising the system of land use planning and building regulations, boosting the supply of housing. Artificially inflated housing costs hit the poor hardest, both directly and through their several knock-on effects.

At the European level, the government would aggressively push for an opening of agricultural markets, and for an abolition of quotas and price controls. It would be more concerned about the humble consumer than about the farmers’ lobby.

At the domestic level, there would be a clampdown on regressive taxes. On average, households in the bottom decile of the income distribution pay about £2,500 per year in ‘sin taxes’ and ‘green taxes’.

All of these moves would help bring down the cost of essential goods and services; but they would not help alleviate poverty because, when talking of poverty, governments over the years have been shackled to the idea of ‘relative poverty’.

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