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Last Updated: Wednesday, 17 May 2006, 09:47 GMT 10:47 UK
Poverty rate 'rose under Labour'
Gordon Brown
The Chancellor is still devising a new measure of deprivation
Relative poverty in the UK may have risen since 1997, rather than fallen, says the Institute for Fiscal Studies.

The usual measure is the proportion of households whose income is less than 60% of the median household income.

That suggests that the poverty rate fell from 25% to 22% of households between 1996/97 and 2002/03.

But the IFS says that if household spending is measured instead, then over the same period of time the poverty rate rose from 20% to 22%.

Using spending as a measure, the IFS also finds that the poverty rate among children increased by 11% during that time, compared to the government's assessment that child poverty, measured by income, fell by 15%.

The IFS argues that "while the government has made some inroads into reducing income inequality, it is yet to reduce spending inequalities, which arguably better reflect longer term differences in society."

Does it matter?

Reducing relative poverty has been one of the key aims of the Labour government since Tony Blair was first elected in 1997.

The government has instituted sweeping changes to the country's social security system, largely driven by Chancellor Gordon Brown, such as the introduction of means-tested tax credits and pension credits.

This week, the government's National Statistics office reported that these policies - alongside changes in taxation - had led to a further shrinking in the income gap between the rich and poor.

Meanwhile, the government is still in the process of devising a new index of material deprivation to measure the effect of its policies, a plan which was first announced in 2004.

The IFS does not argue that the government's policies to reduce poverty have failed. Rather, it says simply that measuring changes in spending is a useful additional tool to find how many people are poor.

"Spending provides a more direct measure of people's material well being, since it more directly captures the consumption of goods and services," it said.

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