Spending poverty and social mobility

Neal Lawson is at it again. I should know better than to rise to the bait, but some of his latest effort gives me the chance to discuss a couple of interesting research papers. Here we go:

“Poverty levels judged by household spending have risen since 1997, while social mobility has gone into reverse. New Labour is running desperately hard just to stand still at the levels of poverty bequeathed by Margaret Thatcher.”

Now, if I wanted to construct a couple of sentences that were extremely disingenuous but not outright lies, in order to rubbish the government’s record on poverty and social exclusion, I’d probably come up with something like this. Although I’d have made more of an effort to avoid the conflict between the first claim (poverty up) and the third (poverty unchanged).

Let’s take them one by one, then.

(1) “Poverty levels judged by household spending have risen since 1997”

This alludes to a study published in April by Institute for Fiscal Studies researchers, funded by the Joseph Rowntree Foundation (see here and here).

While poverty is normally measured in terms of income, this study looked at household spending levels, with a poverty line defined as 60% of the median. The researchers suggest that it might be illuminating to look at it this way. According to their figures, the proportion of households in ‘spending poverty’ went up and down (mostly up) pretty consistently with the proportion in income poverty for 20 years or so, but since Labour came to power, spending poverty has risen while income poverty fell.

I’m sceptical about the significance of this spending measure. For ‘spending poverty’ to increase while income poverty falls (as has happened), it means that richer people are increasing their spending-to-income ratio faster than poorer people, and/or that poorer people are increasing their saving-to-income ratio faster than richer people. So poorer people may be building up more savings and/or paying off more debt (which sounds like a good thing), and richer people may be spending more of their savings and/or running up debt faster (which, what with them being richer, is presumably not huge cause for concern).

Isn’t it good that poorer people can have more savings and less debt? Think about what would have to happen for the figures to be the other way round. If spending poverty fell but income poverty stayed constant or even rose, then poorer people would have to be eroding their savings and getting into more debt. Bad thing, no?

Lawson doesn’t say why he’s chosen to mention the spending poverty levels rather than income poverty; he has, however, managed to find an obscure and non-standard measure of poverty that can be waved around to make the government look bad. I wonder why?

(2) “social mobility has gone into reverse”

Presumably this refers to a study [PDF] published last year, which found that “intergenerational mobility has fallen over time in Britain; equality of opportunity declined for those born in 1970 compared with those born in 1958.”

The research looked at age cohorts born in those two years, divided up into sub-groups based on family income in childhood, and then asked where on the income scale these children were in their early 30s. The result was that “many more children from the poorest quarter remain in [the] poorest quarter as adults in the more recent cohort. Likewise among the most affluent far more stay among the most affluent as adults than was the case for the earlier cohort.”

I’ve seen several commentators remark on this finding, and making the classic media mistake of confusing ‘when things happened’ with ‘when information became public’. There was much criticism of the government for presiding over a fall in social mobility – which Lawson repeats now. But anyone who’s read a Polly Toynbee column on childcare should know that what happens in your earliest years has the biggest impact on your adult life. That Lawson doesn’t bother to take this into account before dumping the blame on Labour is a pity.

Look at the chronology of those born in 1970: they spent their early years under the Heath government, starting school under Wilson and then Callaghan. They went to secondary school under Thatcher, and in 1986-87 some went on into further education and some into the workforce. A minority completed university under Major, typically graduating into the labour market as unemployment rose to 3 million. When they were 27, Blair came to power and stuck to Tory spending limits, as promised, for two years. Labour’s redistributive policies only really got going in 1999. Then, one year later, the income measurements used in this study were taken.

I suggest that the current government has a microscopic share of the responsibility for the decline in income mobility found in this study. But you needn’t take my word for it. The same researchers published another paper [PDF] earlier this year, investigating the factors behind the fall. They looked at educational achievement, labour market participation in early adulthood, and psychological traits at school age. “The variables we use are able to explain three quarters of the rise in the intergenerational coefficient, with the increased relationship between family income and education and labour market attachment explain[ing] a large part of the change.”

In other words, most of the change can be explained by things that happened well before this government came to power. (If you were tempted to say that their “we… explain three quarters” would still leave one quarter to blame on Blair, I’d reply that no, it leaves a quarter to blame on everything – other than those few factors named above – that took place from 1970 to 2000.)

(3) “New Labour is running desperately hard just to stand still at the levels of poverty bequeathed by Margaret Thatcher.”

Now I know John Major wasn’t a particularly memorable prime minister, but there’s really no excuse for Lawson to skate over the grey years as if Labour were somehow responsible for everything that’s happened since 1990. As rebuttal, I think it apt to quote this week’s report [PDF] by Lawson’s own think-tank, Compass:

“Under successive Conservative governments poverty rose remorselessly. Between 1979 and 1996 the number of households without any assets doubled to 1 in 10. New Labour has sought to decrease poverty, and it is now 2 million below its peak of the mid-1990s.”

Why he chooses to ignore the better-informed report by two of his colleagues (for which he wrote the foreword) and instead spread defeatism about Labour’s policies raises serious questions about his motivation.

Having demolished the farrago of misrepresentation that Lawson somehow managed to cram into two brief sentences, I offer two conclusions: (a) Labour has significantly reduced poverty and there are no grounds for saying that it has reduced social mobility. (b) Neal Lawson is not a ‘critical friend’ of Labour, seeking to ‘renew’ the party; he is an enemy, seeking to get the party into opposition. His public statements are really only intelligible on this assumption; they seem carefully designed to rubbish the government’s successes and reduce its popularity.