Income and Poverty

Labour's record on poverty and inequality

  • Published: Nov 22, 2010
  • Author: Tom MacInnes
  • Category: Income and Poverty

The following article was written for September edition of The House Magazine, to coincide with the Labour Party Conference.

Looking back at New Labour’s record on poverty and inequality, one moment stands out as pivotal. Tony Blair’s pledge, made in 1999, to eradicate child poverty “within a generation” defined Labour’s goals but also their strategy. 

The goal was clear enough– that no child (later redefined to “very few children”) should live in low income households, but it was also very specific. No mention of working age adults, no mention of very low income, no mention of those just above the poverty line. In fact, as time passed, the focus became ever more specific, as policies such as the minimum wage and neighbourhood renewal were introduced and then allowed to drift. 

The strategy was, at least initially, wholly driven from the centre. Inherent in the target is the belief that government – a New Labour government or any other – has within its grasp all the levers it needs to effect such a change. This is not true. 

Take, for instance, the axiom that work is the best route out of poverty. Undoubtedly, households in work are less likely to be poor than workless households are. The government’s strategy centred around improving work incentives for people on low incomes, mainly the tax credit system. 

But the persistent rise of in work poverty (people living in low income households where at least one adult works) in the latter half decade of the new Labour government is surely a sign that the responsibilities of employers – not just to pay well, but to offer flexible hours and childcare arrangements for people on low incomes – were not taken seriously enough. 

So this double-narrowing of focus, targeting only children, via the means of tax credits, meant that the overall record is uneven. As mentioned, the number of children in in-work poverty has never been higher. The number and proportion of working age adults in poverty was higher in 2009 than 1999, a direct result of their out of work benefits being allowed to wither in relation to average earnings. 

However, the number of children in low income households was lower in 2009 than 1999, and this is deserving of recognition. The poverty rate among pensioners, whose incomes are most amenable to a centrally directed, targeted approach, came down even more sharply. Poverty among lone parent households came down notably as well. 

It is always tempting when a party loses power to assume that their rejection by the electorate represents a wholesale failure of every aspect of their previous manifesto. Even taking the specific area of poverty and low income, this was not true. There were obvious successes. The limitations came when one particular tactic, in this case tax credits, was made to carry the weight of the entire policy area. 

A final point. When we noted that central government does not control all the levers, this is not simply because the state is somehow remote. Devolving power downwards to local areas will have benefits, but cannot be the solution in itself. People in the most deprived communities may be, or at least feel, powerless to change their own circumstances. Withdrawing state support from such communities would be reckless. 

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