The poorest poor are getting even poorer

Curves are in fashion. Not just in The Sun and Vogue, but also in The Economist, Prospect and, well, The Times. In a recent Spectator article William Skidelsky pointed out that many of the latest fashionable intellectual ideas are based on graphs.

It started with Malcolm Gladwell’s incredibly successful book The Tipping Point, for instance, in which he argued that the incidence of, say, criminal behaviour or the purchase of Hush Puppies travelled along a similar curve to that of an infectious disease.

More recently Chris Anderson’s book The Long Tail provided a graphical account of the rise of the internet. And Ian Bremmer’s book The J Curve plotted the route of emerging nations using an x and y axis.

Skidelsky was rather unimpressed with these devices. Me? I am a sucker for them. I think they can provide a very powerful way of representing complicated social developments. And bring big publishing advances.

I have found Anderson’s The Long Tail particularly useful. He observes that most coverage of popular culture centres on the big-selling hits, the blockbusters, but that these only account for part of the market. The internet allows the long tail of goods selling in very small numbers, niche products, to be made available to purchasers. On reading his book it occurred to me that the same was true about politics — that the future lies in catering to the long tail of diverse political opinions, each held by small numbers of people.

Now Greg Clark, the Member of Parliament for Tunbridge Wells and one of the most impressive of the new Conservatives in the Commons, has put to me another use of Anderson’s curve — that it helps to explain poverty policy.

Together with his researcher Peter Franklin, and using parliamentary questions, Dr Clark has been mapping the income distribution. He was interested in the impact made by government policy on the number of households in poverty. And his discoveries, to be published today as part of the interim report of the Tories’ social justice policy group, are striking.

Right. You knew this moment was coming. You are going to have to look at the graph. First, notice the median income line (that’s about £330 per week per household) — half the population earns more than this, the other half less. Now, look at the line at 60 per cent of that median. If your household income is to the left of this line then the Government defines you as in poverty. If, over a period, your household has moved from the left to the right of the line it has, officially, been lifted out of poverty.

There are two further important things about the 60 per cent line. The first is that it is virtually the highest point in the income distribution — more people are to be found round about there than at any other point. A policy, therefore, that moves people from just to the left of the line to just to the right will reduce the official poverty numbers dramatically.

The second point to note is that this is exactly what has happened. Look at the shift between the thin line from the mid 90s to the thicker black line ten years later. The graph now peaks just to the right of the threshold rather than just to the left of it. This is obviously a good thing, and praiseworthy, but it is not the whole story.

Because what I want you do now, is to look at the 40 per cent line. Yes, it is arbitrarily chosen, but no more so than the 60 per cent line. One might think of it as the point below which households are in deep trouble. And here the story is depressing. There has been a significant rise in the number of people to the left of this line in the past ten years — as many as three quarters of a million more.

The confusing thing is that this increase has taken place at a time when there has been a long period of economic growth, record employment rates and a very generous policy of tax credits to working households.

And this is where the long tail analysis comes in.

Government policy has succeded in dealing with what we might call blockbuster poverty, the poverty suffered by the greatest number of people. A large number of people working hard but still struggling have been helped. Some of them are not hugely better off, and the administration of the tax credits policy has been a scandal, but the money has come as a relief to many needy households.

Blockbuster policy is often fairly uncomplicated — it is caused by low income from poor-paying work and can be addressed directly by giving the poor more money.

On the other hand, policy has failed to tackle the tail end of the distribution. Dr Clark hypothesises that while blockbuster poverty can be tackled using big, simple policy instruments, the same isn’t true of the tail, where people suffer what what might call niche poverty.

The causes of each household’s difficulties are different, complicated, hard to tackle with simple measures. There is family breakdown, illiteracy, drug abuse, criminal history, abuse, nasty neighbours, mental illness and much else besides, all mixed in different combinations. Many of these households are too far away from prosperity to be easily moved back over the poverty line, official or otherwise.

If this long tail theory is correct, and I think it is, the next phase of poverty policy will be a hard one. The low-hanging fruit has been picked. Reducing the numbers in child poverty was relatively straightforward, but to “end child poverty forever”, as Tony Blair promised, will be much harder, requiring a very different programme of small-scale, precisely targeted policies.

Take a look at the curve. You can see it for yourself.

Daniel Finkelstein