Daniel Mahoney: To narrow the life expectancy gap between rich and poor we must focus on absolute poverty

CPS head of economic research Daniel Mahoney writes for the International Business Times in response to comments made by former Prime Minister John Major, Thursday 12 November 2015. 

“In a speech earlier this week, former prime minister Sir John Major spoke of what he termed the shocking level of inequality in Britain that condemns poor families to lead “meaner, shorter lives”. Sir John is right to raise the issue of health disparities between rich and poor families in the UK. There are extreme examples – cited by Sir John in his speech – where the disparity is very large and should be of concern to policymakers. Professor Sir Michael Marmot, director of the Institute of Health Equity at UCL, estimates that the life expectancy gap between some rich and poor families in London can be as high as 25 years.

However, it would be misleading to suggest that this is typical across the UK. More recent research by The King’s Fund suggests that, on average, the differential between populations in poorer and richer areas stands at a life expectancy of just 4.4 years. There has also been a dramatic reduction in life expectancy differences in the recent past, falling by an impressive 36% from the periods of 1999-2003 and 2006-2010. The fastest improvement is being observed in areas with the highest levels of income deprivation, and this should be championed.

It is therefore regrettable that public figures are – perhaps inadvertently – attributing health outcomes to relative poverty or income inequality in society. During the period of unprecedented improvement of UK life expectancy for the poorest families, income inequality in the UK actually increased, according to the OECD. They estimate that income inequality grew from 2005 to 2010, suggesting no link between income inequality and life expectancy differentials between rich and poor.

Of course, since then income inequality in the UK has actually fallen – primarily due to the fact that, while earnings fell sharply after the financial crisis, benefit entitlements remained relatively stable. This has led to the UK’s Gini Coefficient – the most widely accepted measure of inequality – falling to a level lower than in 1990, according to the Institute of Fiscal Studies. But this measure of poverty should not be the focus of policymakers when addressing the life outcomes of rich and poor.

To narrow life expectancy and other disparities in outcomes, the government needs to focus on absolute poverty − the severe deprivation of basic needs. Previous administrations have struggled to reduce absolute poverty. Data from the Department for Work and Pensions suggests that children growing up in severe income and material deprivation remained steady in the UK at 6% from 2004/05 to 2008/09 – despite data from Europa suggesting a fall in child deprivation in the rest of Europe over the same period. This lack of progress occurred over a period of an unprecedented increase in tax credits from £4bn a year to nearly £30bn a year, highlighting the need for long-term reforms to a system that hits claimants with high marginal rates of tax.

Those in living in absolute poverty face immense disadvantage. Fuel poverty, for example, leads to a marked increase in winter deaths. The Energy Bill Revolution estimates that 30-50% of excess winter deaths are attributed to cold indoor temperatures. Furthermore, when it comes to educational attainment, the Office for National Statistics estimates that poorly performing children are 11 times more likely to be severely deprived than high performing students.

If the government wants to further reduce the disparity in health outcomes of poor and rich families in the UK, policies need to be geared primarily towards alleviating absolute poverty – not reducing relative poverty.”

Date Added: Thursday 12th November 2015