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July 23, 2007

The Rowntree Foundation is wrong about poverty in Britain, argues William D. Rubinstein

Posted by William D. Rubinstein

On 17th July 2007 the Joseph Rowntree Foundation published its report, Poverty and Wealth in Britain, 1968-2005, which argues that levels of poverty in the UK have reached levels not seen for forty years. If some commentators are to be believed we are heading for levels of inequality last seen in the 1840s. William D. Rubinstein - professor of modern history at the University of Wales, Aberystwyth and the author of Men of Property: The Very Wealthy in Britain since the Industrial Revolution - takes issue with this analysis.

Considerable publicity has generated in the press and media by the release of a report by the Joseph Rowntree Foundation on Poverty and Wealth in Britain, 1968-2005 (17th July 2007). Its main conclusions were that rates of inequality are increasing and that, in particular, there is more geographical segregation in residency patterns between the rich and the poor than in the past. This latter finding, in particular, received very wide press publicity.

Without questioning the detailed and scholarly nature of this Report, it seems to me that there is much about it which is very dubious, and I would like here to highlight some of its more obviously questionable features. I should begin by stating that it goes without saying that any society must provide a decent and rising standard of living for as many of its citizens as is possible. If a nation's economy is doing this, then it is functioning properly; if it fails to do this, then it is not doing its job and needs adjustment - although how to alleviate an economy which is not working well is at the very core of economic and political debate.

One might begin by examining the Joseph Rowntree Foundation, which sponsord this study.

The Rowntree Foundation is a Quaker-originated and oriented Think Tank which is dedicated to sympathetically examining peace and social justice issues. That's fine by me, and it is quite possible that it might demonstrate sufficient lateral thinking for it to produce some interesting policy recommendations, especially if it bears in mind traditional Protestant concerns about individual responsibility and voluntary rather than state actions. But it seems obvious that its staff is unlikely to consist of members of the Institute of Economic Affairs. Its members are, on the contrary, virtually certain to be predisposed to oppose pro-capitalist policy changes such as cuts in direct taxation, but, in contrast, to favour confiscatory state economic policies and to be sharply critical of economic "inequality", however dubiously measured. It seems apparent that this has been the case with this Report.

There are two very glaring deficiencies in the assumptions and conclusions of this Report. First, its definition of geographical segregation is based on a comparison of what they term "tracts". A "tract" is, as they put it, roughly half of a parliamentary constituency: there are 1282 "tracts" in Britain, each with an average population of about 45,000. A tract can thus be rather large in geographical size. I live in the Ceredigion constituency in Wales: it would take me several hours to drive from one end to the other of its (presumably) two tracts. Of course, there are very many tracts which are closer together: Kensington, Notting Hill, and Kilburn among them probably occupy one five-hundredth of the area of Ceredigion.

The Report, however, asserts that geographical segregation based on wealth is increasing. By this it does not mean, as you might think, that west Londoners are leaving for Wales or for Bournemouth, but something quite different, that there are relatively more rich people in some tracts, and relatively more poor people in some tracts (although this has happened less often, since primary poverty has decreased), than in the past. Thus, in (say) 1970, 30 per cent of the inhabitants of Notting Hill were rich, while today the percentage is 50 per cent. Put this way, the claims of the Report are quite misleading: it says nothing about the propensity of rich or poor to move further apart than in the past, and nor has Kensington moved further down the road from Kilburn than in 1970, or 1870. The value of all housing in virtually all of Britain has risen astronomically in recent years, meaning that even the "poor" who own a house or flat, probably anywhere in the country, are vastly wealthier, on paper, than twenty years ago.

Even more importantly, the Report makes it sound as if, in the good old days, the rich and the poor lived cheek-by-jowl in perfect harmony. This is manifest nonsense - indeed, an Orwellian misrepresentation of reality. A century ago the rich lived in Park Lane, Mayfair, and Kensington, the poor in Whitechapel and Southwark, a state of affairs plotted on virtually a street-by-street basis by researchers like Charles Booth. The rich in Mayfair would have come in contact with the poor only as their servants or tradesmen and dealers. It is inconceivable that a century ago, a millionaire or aristocrat would have visited Whitechapel or Southwark, much less lived there: that no one on an income today of 250,000 p.a. lives in the Gorbals or on a sink estate in Tottenham is the opposite of a novel state of affairs.

The definitions and statistics of rich and poor employed by the Report are also just as questionable, maybe more so. According to it - I'm not joking - 27 per cent of the British population belong to what it terms the "breadline poor", and that's in addition to the 10 per cent (down from 15 per cent in 1970) whom it terms the "core poor", the really poor. In other words, 37 per cent of the British population appear to be no better off than the percentage found by social investigators like Booth and Rowntree over a century ago. So much for the Welfare State, Keynesianism, full employment, the "Affluent Society", and the Labour Party.

This conclusion is, of course, very close to sheer nonsense. Ambiguously and peculiarly, the "breadline poor" are defined as:

people living below a relative poverty line, and as such excluded from participating in the norms of society.
Huh? What is the "relative poverty line" and what on earth are the "norms of society"? Their percentage, needless to say, flies in the face of common sense as revealed by any statistical measurement of home or automobile ownership, the ownership of consumer durables, educational attainment levels, or the like, while their definition appears to be so ambiguous that it can be made to prove anything, and to my mind appears to have been tailored to fit the authors' preconceptions.

Hasn't the fact that unemployment has declined from around 14 per cent in the 1980s to only 4 per cent now made a difference? And do the statistics take into account the elderly, who are excluded from high income employment by their age, or the fact that there is a considerably larger pool of often uneducated immigrants, often with no marketable skills above the menial level, than twenty-five years ago?

To be sure, there is a great deal that is both worrying and wrong with the British economy and the way its evolution has affected the average person, especially the mountain of debt virtually everyone has contracted, the looming crisis over pensions when the "Baby Boomers" retire, and the total reliance of most people on a continuation of economic growth and full employment, which might of course cease at any time. But these are largely problems of affluence, not of poverty. To my mind, the most interesting statistic in the Rowntree Report is the one briefly noted above, that primary "core" poverty has declined, even by the Report's measurement, from 15 to 10 per cent in a generation.

One would have thought that it was this which should have been highlighted - it would have been by many other Think Tanks.

William D. Rubinstein is professor of modern history at the University of Wales-Aberystwyth. He is the author of Men of Property: The Very Wealthy in Britain since the Industrial Revolution, (Social Affairs Unit, 2006).

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Taking issue:
Maybe, but unemployment is set to wobble into the 10 to 12 percent bracket this year (2009), so I guess even if we say that poverty is not that bad and we are not as worse off as say the Victorians -well I would not want my five year old to have to go up a chimney or down a mine, mind you at least there were mines for people to work in then -the point being is that society has a problem that could be as volcanic in its eruption as city riots and nationalistic agendas take form. Because if core poverty has declined from 15 to 10 percent over a generation, 5 percent decline means nothing if you are still in the impoverished 10 percent. And lack of affluence can lead to poverty, so the two are connected, and can not be separated as irrelevant to each other when talking about poverty, wealth and access to means of society. Just saying.

Posted by: jan at July 10, 2009 10:34 AM

Not sure that now the unemployment figures are rising (something maybe unimagined in 2007 with unemployment at 4 percent), could be 12 percent this year - 2009 - that poverty and affluence are not related. The less affluence you have the more you are likely to fall into poverty.

As for primary core poverty falling by 5 percent within a generation, 15 down to 10, it matters not to those persons still in the 10 percent. Which goes to show the poor are still no better off. Not really. Just that now we can get ourselves into more and easier debt, in order to be seen to be with the affluent society of "I want it all and I want it now" breed.

What do you suggest is done?

Posted by: jan at July 10, 2009 02:22 PM
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