FactCheck: Labour's poverty record
Updated on 11 November 2009
David Cameron claims poverty and inequality have got worse. FactCheck begs to differ.
The claim
"Poverty and inequality have got worse, despite Labour's massive expansion of the state."
Conservative leader David Cameron MP, Hugo Young lecture, 10 November 2009
The background
Tackling poverty - and in particular child poverty - has been one of Labour's totemic pledges.
But their record is coming under increasing attack from the Conservatives.
In his conference speech this year, David Cameron received a rapturous standing ovation when he said: "Who made the poorest poorer? Who left youth unemployment higher? Who made inequality greater? No, not the wicked Tories. You, Labour: you're the ones that did this to our society."
Cameron echoed this claim in a speech last night attacking Labour's "big government" approach to poverty.
"Poverty and inequality have got worse, despite Labour's massive expansion of the state," he claimed.
But is it true? High time for some FactCheck scrutiny of Labour's record on poverty and inequality.
The analysis
First to Cameron's assertion that poverty has got worse.
The generally accepted measure of poverty is any household getting by on less than 60 per cent of the median income. If all the households in the country were lined up, the median would be the one in the middle.
There are then two ways of measuring poverty - absolute and relative. Absolute poverty involves taking a snapshot of the country at one point in time and working out the 60 per cent poverty line. This is held as a benchmark over time, adjusted simply for inflation.
But Labour has based its targets on relative poverty. This reassesses the 60 per cent benchmark in line with the population's earnings each year - so if (as has happened under Labour), the country as a whole gets richer at more than the rate of inflation, the poverty threshold increases in line with this rather than being held constant.
Across the entire population, the number of people living in relative poverty has decreased slightly since the benchmark year of 1998-9: from 11.2 million to 11 million, or from 14 million to 13.5 million, depending on whether housing costs are taken into account. This includes a recent rise - the first figure fell to 10 million in 2004-5, for example, before creeping up again.
That's against a background of an increasing population, though. When looked at as a proportion of the population as a whole, the percentage of people in poverty drops by either eight or 10 percentage points, again depending on whether housing costs are taken into account.
A far more substantial improvement, although it's debatable how useful it is to think about those living in poverty as a proportion of the population, when even a decreasing percentage includes those millions of people having to get by on a low income.
So the total number of people in poverty has decreased - if unspectacularly - since Labour came to power. Poverty is often talked about in relation to smaller sub-groups. This is relevant as Labour's reforms have done most to target those in certain groups, notably families with children, and pensioners.
The number of children in poverty has decreased by 500,000 before housing costs are taken into account (to 2.9 million) and by 400,000 after housing costs (to four million) since 1998-9. The number of pensioners has also fallen, by 200,000 before housing costs, to 2.5 million, and by 900,000 to two million after housing costs are taken into account.
Both of these, however, include a recent rise or levelling off - the real fall came during the first two terms of Labour's reign.
So there would be some more traction in Cameron's claim if judged only on the poverty figures in recent years.
But it's worth noting that respected independent economists at The Institute for Fiscal Studies estimate that new reforms which have been implemented or pencilled in, but have yet to show up in the statistics, will pull more children out of poverty in the next couple of years.
There's one more sub-group for whom things are less rosy, though - working-age adults with no children.
These make up a large chunk of those in the poverty numbers - and have increased by 600,000 or 800,000 depending on whether housing costs are taken into account. (It's still a small increase - one percentage point - as a proportion of all working age adults.)
So what do all these numbers show? That to make the claim of rising poverty stick you would have to use a fairly narrow definition - either that poverty has risen slightly, recently, ignoring Labour's record as a whole, or that the number of poverty-stricken childless working-age adults living in poverty has gone up.
At least, that's assuming you use the conventional definition of poverty - that 60 per cent benchmark. There's another figure which the Tories are fond of quoting - the number in "severe poverty" - or those living on only 40 per cent of the median income, which seems to have increased under Labour.
We're not going to give too much credence to those figures here, though - the (comparatively) small number of people included means they are not thought to be reliable another to get the quality stamp of being published as official statistics.
Data on spending suggests that some of these "poorest" people are spending far more money than they should be able to. Severe poverty may well, therefore, bundle in people, who, say, are temporarily between jobs but wouldn't consider themselves to be living in poverty. We've looked at the issue in more detail in this FactCheck.
It is fair to say, however, that Labour has pulled a fairly large number of people from just under the poverty line, to just above it, rather than bringing a lot of very poor people up above the poverty line.
Which brings us on to the next point - inequality. This isn't something on which the government has been as vocal as it has on poverty, but an unequal society is hardly something to be proud of.
The most common measure of inequality - the Gini coefficient, which rolls incomes across the population up into a number between one and zero, with one being the most unequal - is now slightly higher than it was when Labour came to power.
It increased during Labour's first term, then fell back during Labour's second term, and has then increased over the past three years for which figures are available.
It's worth remembering, when we are talking about this in political terms, that this increase pales into comparison with that which took place under Margaret Thatcher. Still, it is now at a record high.
Much of this inequality seems to have come from an increase in the gap between the very richest and the very poorest.
If you look at another measure, the 90:10 split, which compares those with incomes 10 per cent from the bottom and 10 per cent from the top (so missing off the footballer types and the very poorest - notwithstanding the possible uncertainty about those with the lowest incomes that we mentioned before). On this measure, things actually became slightly more equal during Labour's first two terms, but have slipped back over the past few years to take us back to where we started.
This doesn't mean that Cameron is wrong, or that Labour can make too many boasts about zapping inequality. But it does mean that it has, at the very least, a couple of reasonable pleas in mitigation.
The verdict
Cameron's claim on poverty just doesn't wash - the number of people in general, and particularly children and pensioners, in poverty have reduced since Labour came to power, although progress seems to have stalled in recent years.
There's also a different definition of "severe" poverty favoured by the Tories, which suggests things have got worse under Labour - but there are so many uncertainties about these figures they merit a separate FactCheck entirely (which we've done, here: FactCheck - more in severe poverty?).
Inequality has got slightly worse under Labour, particularly in recent years, much of it made up of increased riches for the very richest, and a poorer deal for the very poorest.
This increase in inequality is nothing like that which happened under Margaret Thatcher, though it's debatable how much this ice this cuts in the 21st century.
It's worth noting too that Labour's tax and benefit reforms have been redistributive (Robin Hood-like). Had they kept the same system they inherited, there would be far more people in poverty today.
FactCheck rating: 4 (on poverty), 2 (on inequality
How ratings work
Every time a FactCheck article is published we'll give it a rating from zero to five.
The lower end of the scale indicates that the claim in question largerly checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.
In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.
The sources
David Cameron: the big society
Households below average income figures
Poverty and inequality in the UK: 2009
Have the poor got poorer under Labour?
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