Sacred cows posted by Meaders

There wasn't nearly enough attention paid to this study:

The gap between rich and poor people in Britain has widened since Labour came to power if spending, rather than income, is used to measure poverty, a new report has claimed.

Since 1996/1997 the proportion of people living in households with less than 60 per cent of average spending levels had increased from 20 per cent to 22 percent, the study by the Institute of Fiscal Studies (IFS) found.

The government currently measures poverty according to the number of households whose income is less than 60 per cent of the average. Under this definition, figures show that the poverty rate has fallen from 25 per cent to 22 per cent over the same period.

But the IFS said that spending rather than income was a better measure of household wealth because it is a more direct measure of people’s material well-being and reflects their consumption of goods and services.

The full report can be found at the Joseph Rowntree Foundation site (PDF). One of the reasons the report didn't receive more attention, I suspect, is that it does not fit into the conventional left-liberal narrative about New Labour in general, and Gordon Brown in particular: that, yes, the Iraq war was bad, but (in the words of the Observer, talking about Brown):

...Unlike Cameron, he has a proven track record on social justice, child poverty, SureStart and daycare.

If reputable - and broadly Brownite - organisations like the IFS are starting to claim otherwise, the case for an orderly transition to Dr Prudence (and indeed NEw Labour's continued existence) looks ever more ropey. Unfortunately, even if it has not in general delivered, New Labour has so successfully colonised the squishy, leftish, liberalish sectors of politics that it will require more than a few academic studies to dislodge it. The increasing willingness of, for example, organisations like Telco to talk to Respect is heartening, but to get even this far required a real political slog. The choice, in the end, will be fairly stark: do you continue to support a government and a political programme that says all the right things, but delivers little; or do we attempt to construct an opposition to that programme?

...the Joseph Rowntree Foundation also have a little more on why the gap between income and spending appears, and why spending may provide a more accurate picture of poverty and inequality than income:

Using spending as a measure also alters the perception of who is poor. In 2002/03, the income poverty rate for self-employed people (23%) was much higher than the spending poverty rate (13%). The picture was similar for those seeking work. This suggests that low incomes were a transitory state for some of these people, and that they were using savings or borrowing to maintain their standard of living. For retired and pensioner households, spending poverty rates were much higher than income poverty rates, highlighting the fact that many older people spend well below their income level.

Income poverty and spending poverty are quite distinct states: only around half of people classified as poor on one measure would simultaneously be classified as poor on the other. Very low-income households (those in around the bottom 2% of the income distribution) on average have levels of spending much higher than their income alone would suggest (see Figure 2). This phenomenon could be due to two factors: either very low-income households have only temporarily low incomes, and are running down savings or accumulating debt to fund their expenditure; or very low incomes are measured with error. In contrast, very low-spending households tend to have very low incomes, commensurate with their spending levels. This suggests that spending might be a preferable measure of well-being for the very poorest in society. A more reliable impression of those with the lowest standards of living might be obtained by examining those recorded at the bottom of the spending distribution rather than the bottom of the income distribution.