What is true poverty?

Tory MP and member of the Commons Work and Pensions Select Committee, John Penrose, on child poverty

If you think you understand child poverty, try answering this question. If the Government cuts taxes for below-average earners, low income families will be better off and child poverty will go down, right? Er, well, not necessarily.

The problem is that the Government (and almost everybody else) says poverty is relative. Officially, a child lives in poverty if their household earns less than 60 per cent of the median income. So although cutting taxes would make most people better off, low income households that don’t pay taxes at all would be left further behind the rest of us. Even though their incomes and purchasing power wouldn’t have changed by a single penny, more of them would officially be classed as ‘in poverty’ if taxes were cut. Silly, no?

The problem is that, even though most of us can recognise poverty when we see it, measuring it is tricky. Experts discuss it for hours, like monks arguing how many angels can dance on the head of a pin. But rise above the intricate details for a moment, and a larger truth is clear.

Inequality is obviously an important part of poverty, but not the only thing. People who are truly poverty-stricken aren’t just earning less than their higher-paid neighbours. Other factors matter too.

One of the most important is social mobility. If you’re on a low income, can you earn your way out of poverty quickly, or are you and your children stuck there forever? A society which offers plenty of routes out of poverty is inherently fairer and more hope-filled than one where people are resigned to their fate.

And creature comforts matter too. Poverty isn’t just about how much money comes into each household; it’s about what you can buy with it as well. A low-income family in London is more likely to have trouble affording basic essentials like housing, clothing, food and heating than an identical family living somewhere where the cost of living is lower, which is why child poverty in our capital is 12 per cent higher than average. In the end, anyone who can’t afford life’s basics – ‘material deprivation’, in the jargon – is in poverty, no matter what they earn.

So, increasingly, politicians and poverty experts agree that poverty is more than inequality. Social mobility and material deprivation matter too. The Government has quietly accepted this by starting to measure poverty differently. They’re still – rightly – using the headline inequality measure, but they’ve added new figures which track the other factors as well. And the Conservative Party, which traditionally focused on social mobility and material deprivation, has met them halfway by accepting that inequality is a crucially important part of poverty too.

Of course, if these discussions were just rarified academic bickering between professors of poverty, it wouldn’t matter a hoot. But the consequences for low-income families in Britain will be real and profound.

Why? Because if you focus purely on inequality, the only sure-fire cure for child poverty is a big hike in the levels of benefits and tax credits, paid for with large tax rises. The Scandinavians have tried this recipe and it worked for them, but the Government can’t afford to follow their example. The number of parents claiming unemployment benefits is about to go through the roof as the recession hits, but the Government’s economic stimulus package already means eye-watering amounts of debt and higher taxes in the long term too. As a result, increasing benefits to Scandinavian levels would cost a bomb and reduce the Government’s already shaky finances to rubble.

But if you focus on fixing social mobility and material deprivation, as well as inequality, there are lots of other potential solutions to consider. The most obvious and important of them is work. Getting people off benefits and into work puts them back in charge of their destinies, so they’re less dependent on the dead hand of the benefits system. Their wages mean they can afford more of life’s essentials, which helps deal with material deprivation. And once they’ve got a job it’s usually easier to trade up to a better one, so social mobility improves too. That’s why both the Conservatives and – following rather more tentatively – the Government are focusing on a huge expansion of welfare to work programmes as the answer to Britain’s child poverty problems.

It won’t be easy to get enough people into work during a recession, of course. It means the Government’s target of eliminating child poverty by 2020 will be harder to hit. But if a broader and more realistic definition of poverty leads politicians to fix the obstacles that block people from getting off benefits and into work, and to provide help so they make progress and get promoted once they’re there, then it can still be done. For the lowest income families in Britain, it can’t come a moment too soon.

John Penrose is MP for Weston-super-Mare and member of the Work and Pensions Select Committee