THERE IS NO POVERTY in Britain. Misery, futility, depravity, yes; but no poverty.

The poorest in Britain are the unemployed. They receive free housing, free medical care, free education for their children and small cash sums to pay for food, clothing and transport. Most own televisions, refrigerators, ovens, and stereos. Many even own cars. That isn’t poverty.

Why then does the Government have a target for reducing child poverty in Britain by 25 per cent between 1997 and 2005? Why did it claim last week that despite steady progress, 2.2 million British children continue to live in poverty?

The answer is that they do not mean by “poverty” what most people do. Labour does not think of poverty as being too poor to afford the basic material requirements of a decent life. Instead, they have a statistical definition: you live in poverty if your household’s income is less than 60 per cent of the national median.

This is a peculiar definition. It means, for example, that doubling everyone’s income would have no effect on the amount of poverty in Britain. Our incomes would all remain the same percentage of the median. Yet lowering incomes might significantly reduce poverty. If the median income fell, then those on the minimum wage or unemployment benefit would find their unchanged incomes closer to the median. To use Gordon Brown’s expression, they would be “lifted from poverty”. Using this definition, a recent Unicef report claimed that there is more child poverty in Luxembourg than in the Czech Republic.

Why would anyone use such a preposterous definition of poverty? Unicef gives a simple answer: if it did not, then there would be no poverty in rich countries such as Britain. This is my conclusion exactly. But it is not a conclusion acceptable to organisations such as Unicef and the Labour Party. The fight against poverty must go on, even after it is won.

Providing jobs for the earnest is not the measure’s only benefit. More importantly, it gives the Left an easy argument for more redistribution of wealth. What Labour and Unicef call poverty is really just income inequality. Labour does not really have a target for reducing poverty; it has a target for reducing income inequality.

Why is this a target worth having? That is a tricky question, especially for politicians such as Tony Blair and Mr Brown who claim to favour flexible labour markets. Flexible labour markets have two obvious benefits. They minimise unemployment and allocate labour resources efficiently across the economy. They do this, in part, by allowing incomes to vary with the supply of and demand for labour. A consequence is wide income variation. Eliminate this income variation and you remove the “price signals” required to make the labour market efficient.

Unicef’s “child poverty ranking” of OECD countries is roughly an inversion of a “flexible labour market” ranking, with countries such as the US, Britain and New Zealand at one end and Denmark and France at the other.

Perhaps the unemployment and inefficiency caused by inflexible labour markets is a price worth paying to reduce income inequality. But this is a difficult argument to make. And who wants to engage in difficult arguments? Better simply to call income inequality “poverty” and win the argument by default. Surely any price is worth paying to reduce poverty.

In some rare moments of intellectual honesty, Labour politicians admit that they are not talking about absolute poverty but only “relative poverty”. But this does not help. Calling income inequality “relative poverty” still doesn’t show why we should try to reduce it, especially when relative paupers are not absolute paupers. And the Government’s “60 per cent of median income” definition is still absurd, even if we are measuring relative poverty.

To see this, consider two ten-year-old boys. They live in the same quality of house, attend the same school, visit the same doctor when ill, wear the same brand of tracksuit and so on. Their material wellbeing differs in only one respect. Whereas Jimmy’s parents give him £10 a week in pocket money, Timmy’s give him only £5. Should we conclude that, since his disposable income is only half of Jimmy’s, Timmy is a relative pauper?

Obviously not. Jimmy’s and Timmy’s consumption are almost identical. Suppose the housing, schooling and so on that they both receive are worth £100 per week, and that both spend all their pocket money. Then Jimmy consumes £110 per week and Timmy consumes £105. Though Jimmy’s disposable income is double Timmy’s, he is only 5 per cent better off.

The same goes for British households generally. A large portion of their consumption is not paid for from their disposable incomes. Education, healthcare and housing (the cost of which is deducted from the Government’s measure of income) are all in this sense free.

Differences in disposable income therefore exaggerate differences in consumption. Yet it is consumption that determines poverty, including relative poverty.

The Government aims to reduce income inequality. That ought to be controversial. But it isn’t because everyone seems willing to go along with them and call income inequality “poverty”. Even the Conservatives castigate the Government for failing to meet its poverty targets rather than for having them in the first place.

It is a cheap linguistic trick, but it has worked.

Jamie Whyte is a philosopher and author of A Load of Blair

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