A number of readers have asked about Peter Saunders (the CIS one) and his claim that, with rising incomes, we no longer need the welfare state.* Although his argument raises a number of issues, the easiest response is to look at Saunders’ preferred model, the United States, and see what rising incomes have done to reduce poverty in the last 30 years or so. Here’s the data from te US Census Bureau
The measure used is an absolute one, calculated to equal a poverty-line budget in the 1960s. Price changes since then have had mixed effects, but the increased relative price of health and housing means that, overall, the standard of living associated with the poverty line income has probably gone down, not up.
You can read the whole Census Bureau report on poverty here (PDF file)

* In the comments thread, Peter Saunders takes exception to this characterization of his views and says his objection is to the *mass* welfare state. I don’t think this distinction is relevant to the point made in the post above. However, it is one of the more general issues, I mention, and hope to tackle later. Peter’s papers are available from the CIS website.