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How ONS Family Spending Data Punctures Poverty Myths

16/02/2017 10:59 | Updated 16 February 2017
Patrick La Roque via Getty Images

One of the more frequent justifications used for the huge gulf in wealth, income and power we see in our country is that such inequality is natural. Those who are rich are seen as intelligent, hard working, and good with money. Those who are poor are, at best, bright but indolent, and financially reckless.

The problem with this analysis is the total disregard it has for the mountain of evidence that contradicts it. Let's look at just one area - the myth of poverty driven by profligacy. Most will have heard stories of the opulent lifestyles those on social security apparently lead, struggling under the weight of new flat-screen TVs, designer trainers and the latest non-essential 'must-haves'. You'll also be familiar with stories of the thrifty 'middle class' (i.e. those on £150,000, or to you and me, the richest 1%) looking for the best options to squirrel away a nest egg for their retirement, or desperately trying to stretch those last few thousands.

But is any of this an accurate depiction of how people use their money? Actually, that's easy enough to find out. Every year the Office of National Statistics produces its Family Spending Survey publication, a huge release of data on the spending habits of households, broken down by income decile. It's an incredibly detailed account of household spending, and it provides a perfect opportunity to test these claims of rich diligence and poor profligacy.

Today, the ONS published its latest release. It shows that far from blowing huge sums of money on luxury items, unsurprisingly, most poorer households spend very little on anything beyond the absolute essentials. In fact, the richest 10% of households spend considerably more per week on furniture and furnishings (£34.50), than the poorest spend on food (£30.40). They also spend more on their pets (£7.90 a week) than the poorest do on clothing and footwear (£6.30). Before you ask, no, it's not all the money wasted on booze and fags either. The richest 10% spends as much on alcohol and tobacco each week as the poorest do on their gas and electricity bills (£17.70).

It's tempting to believe in the 'just world' account of inequality - the idea that it is an inevitable consequence of some people's abilities and others' failings. But it really is more complicated than that. Inequality has a range of drivers, including the decisions taken by our politicians and business leaders.

It seems how we understand wealth and poverty may be an example of the 'halo effect,' where a person deemed to have a favourable characteristic (like wealth or a high income) is assumed to have other desirable characteristics, like intelligence, industry and prudence. Unfortunately, the opposite may be true of how people imagine those who are poor. Not only are they poor, but they're also feckless and wasteful. As Adam Smith once noted, "[w]e frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent."

Anyone who has lived in poverty knows that it is not a life of luxury, but one of hard grind. Millions of people throughout the country are faced with desperate choices, not, for example, whether to buy Nike or Reebok, but whether to pay the rent or feed their children. Yesterday the Joseph Rowntree Foundation warned that inflation could push a further four million people below the poverty line, and our own research at The Equality Trust has found 6.5 million households are in debt, or face the prospect of falling into debt within a month, should they lose their jobs.

As the rungs on the social ladder have widened, it has become harder and harder for people to move up. Many find themselves trapped in low-skilled, low-paid jobs with little opportunity for promotion or advancement. As we've recently heard, many working in the 'gig' economy are not even earning the minimum wage. A decent day's work no longer entitles a worker to a decent day's pay. Alongside this many are squeezed by cuts to social security, and while they are doing everything humanly possible, budgeting carefully, and stretching every penny, they're still struggling. It's about time government policy stopped chipping away at their support. The vast majority of us pay into the safety net that is social security and most of us will use it, whether in the form of child benefit, universal credit or pensions.

The gulf in spending shown by today's statistics highlights the vast inequality we see in this country. This isn't natural, and it should be a source of national shame for a modern, wealthy country such as ours. It may be inconvenient and embarrassing for some people to accept, but grinding poverty exists in this country, and it isn't right, or good enough, to shrug our shoulders and blame it on poor people buying tat. We owe it to ourselves, and those who are struggling, to have a far more honest debate about poverty, inequality and their causes.

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