Julian Knight: Statistics hide the bare truth about poverty

Britain’s poorest people are being failed not only by the Government but also by the banking industry, something the Tories might not want to rectify

For once, poverty – not usually a hot topic around Westminster – has been at the centre of political debate. The all new caring, sharing, Conservative Party wants us to see that it takes the plight of those living on next to nothing seriously. The Tories say they want to see the state act as a "facilitator" (rarely has the English language acquired such a patently ugly word) for charities, community action groups and other non-governmental bodies to fight poverty. They conclude that Labour's approach of "let's chuck some money at the problem" has had an almost negligible effect – apart from some success with pensioner poverty – and that now the country is flat broke it can't continue.

With poverty-counting there are always lies, damn lies and statistics. The Joseph Rowntree Foundation defines a person as living in poverty if they have to live off 60 per cent of average income. As average incomes rise, then so does the bar that people have to leap over to stop being in poverty. It's possible to see your income grow at a healthy rate in one year, yet slip below the 60 per cent mark for being in poverty if some of those around you have seen their salaries grow by more. What the Rowntree poverty stats really measure is income inequality. It's better to measure poverty – in its broadest sense – through not just income but also a combination of literacy rates, body shape (yes, poorer people are more likely to be pear shaped because of cheap, high-fat diets) and infant mortality. I'd also throw in whether or not someone is on the electoral roll, or even being regularly prescribed antidepressants. These measures highlight how many people are currently adrift from the "norms" of our society, in social poverty if you like to keep the P word in play.

Getting back to money, you can target benefits more effectively – get rid of universal child benefits and give the money to poorer families, for instance – but the idea that government handouts will by themselves lift large numbers beyond even Rowntree's crude poverty threshold is a fantasy. What about focusing far more efforts on getting the banks and utility providers to change fundamentally the way they deal with their poorer customers and how people actually manage whatever little money they have? For instance, there are still millions of people in the UK without a bank account, which denies them access to all sorts of services you and I take for granted. Too many bank staff still ask for unnecessary identity proof, which people who are unbanked don't have. It's an odious catch-22.

Add to this poor bank branch coverage in deprived areas, lack of access to low-cost, low-value credit and those ghastly fee-charging cash machines and it's easy to see why poorer customers are on a hiding to nothing. As for the utility firms, the charges they levy on prepayment customers are grossly unfair and are a key bringer of misery to poorer families. The truth is, if you are poor in this country, you pay more for most services – another reason why income measures of poverty are inadequate.

As for helping people to manage their finances better – outside of schools where there have been some efforts – financial education is zilch. The Aegon chief, Otto Thoresen, proposed a network of free-to-use financial advisers, but guess what? No one wants to pay for a full roll-out, particularly not the banks and insurers who are happy cherry-picking high-value customers.

If the Tories are serious about tackling poverty, they must move beyond being a "facilitator" and get their hands dirty legislating against some of the practices of their friends in banking. And before I hear the big government refrain, it's about creating an even playing field (and everyone knows that utilities and banks are basically cartels – witness their actions over overdraft fees) and it's a good deal cheaper than Labour's 12-year poverty experiment, which has tried and failed to reduce a poverty measure which is of only limited use.