Why Britain's households got richer - and why they stopped

There are no signs of living standards for families getting any better. Brace yourself.

Before there is any prospect of shaking the economic pessimism that has engulfed the country we need first to alight upon a credible account of how working families will boost their living standards in the years ahead.

At the moment no-one is mapping out this course to a more prosperous future; but more surprising, perhaps, is the fact that we don't really know how it is that households got richer over the recent past. Even though recent history is unlikely to offer a clear guide to the future, it is instructive to understand why low-to-middle income households got richer over the last generation and more -- why it stopped.

Clearly, we do know what happened to headline economic growth over the last forty years, and that this resulted in an unparalleled rising tide of living standards, such that the average British household is twice as prosperous compared to 40 years ago. But we haven't, until now, been able to break down the sources of this rising tide of prosperity at the level of individual households, and tease out how they have changed over time -- for instance, between higher wages (for men and women), more people working, more hours worked, and more generous benefits and tax credits.

Now a landmark report by the IFS for the Resolution Foundation's Commission on Living Standards sets this out in forensic detail. It is a unique compendium of facts and figures about living standards -- and behind the statistics is the tale of economic and social change in late 20th and early 21st century: the rise of women, the relative decline of men and the emergence of tax-credits in low-to-middle income Britain. Any politician or pundit wishing to put the current squeeze on living standards into some meaningful context needs to put it on their Christmas reading-list.

A few findings leap out. Firstly, over the last forty years the great majority (over three quarters) of all the income growth arising from work in low to middle income households came from women. Indeed, women's contribution to total household income more than doubled from just 11 per cent in 1968 to 24 per cent in 2008. Much of this growth is accounted for by higher wages but a large share also comes from big increases in female employment.

Sources of household income growth 1968- 2008/09 - low to middle income households

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Over the same period the model of the male breadwinner has taken something of a battering. The contribution of men's work to this same group of households plummeted from 71 per cent of total income to just 40 per cent. As shown in the chart above, this means that income from men's work accounts for only 8 per cent of all the growth in household income in this period, compared to 27 per cent for women. It is well known that male employment plummeted during the 1980s, but male wage growth has also been massively lower for this part of the population -- with any gains here nearly wiped out by falls in employment levels.

Secondly, if we look at the pre-crisis period of economic growth, from 2002 to 2008, a period characterised by steady growth, the evidence is even more striking. Women's employment served to raise household incomes, as did fast-rising tax credits (by an even larger amount); but these gains were almost completely wiped out by losses from male employment income. The net result? The chart below shows that average household income for this group barely rose at all: it went up by a grand total of £143 over 6 years.

Change in income for low to middle income households, 2002/03 - 2008/09, in 2008/09 £s

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As with many reports, the conclusions you draw from it will to some degree reflect your starting point. Those favouring redistribution will, of course, point to the enormous importance of tax credits in helping lift family living standards, and be alarmed by the coalition's clear agenda of cutting them back. Whilst those instinctively opposed to using the tax-and-benefit system to mitigate market inequalities will take this report as proof-positive that some of the improvements in the Blair-Brown years were the product of unsustainable state spending.

But wherever you start from, several things jump out of this report as being particularly pressing to the current political debate. Most obviously we clearly have a gender problem -- in fact we have two. Given that income from female work is now so critical for families on low to middle incomes, and typical wages have been flat-lining over recent years, it is a uniquely dumb moment to reduce childcare support which has enabled so many women in low-to-middle income households to combine work and family life. Indeed, declining support for childcare, combined with falling public sector employment (which will affect women more), means that in the short-term female employment rates are likely to fall. Yet we also need to start talking about men. We all know that the UK suffered a strong decline in male employment in the 1980s, but what is less well appreciated is that male employment within the low to middle income group was still falling between 2002 and 2008. We rapidly need to halt this decline.

And -- perhaps this barely needs saying following yesterday's OECD report -- we are going to carry on having an inequality problem too -- indeed it will get worse. This is less a prediction, more a matter of arithmetic. Imagine for a moment that we find ourselves transported into an unlikely egalitarian future, in which pay increases (in per cent) at the top are exactly the same as those at the bottom (bear with me), well, even in this unlikely world, income inequality between households will rise. This is because households further down the income scale receive a significantly smaller portion of their budget from wages than the average household does -- never mind the most affluent. Consequently a given wage increase has a smaller impact on their overall income than it does for those further up the scale.

The only way this dynamic towards ever more polarised household incomes will be countered is either by more aggressively redistributive tax and benefit policies, or a disproportionately large rise in employment levels among this part of the population. And currently we're heading in the wrong direction on both these fronts. Brace yourself.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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MP Michelle Thomson's full speech on rape at 14: "I am a survivor"

The MP was attacked as a teenager. 

On Thursday, the independent MP for Edinburgh West Michelle Thomson used a debate marking the UN’s International Day for the Elimination of Violence against Women to describe her own experience of rape. Thomson, 51, said she wanted to break the taboo among her generation about speaking about the subject.

MPs listening were visibly moved by the speech, and afterwards Thomson tweeted she was "overwhelmed" by the response. 

Here is her speech in full:

I am going to relay an event that happened to me many years ago. I want to give a very personal perspective to help people, both in this place and outside, understand one element of sexual violence against women.

When I was 14, I was raped. As is common, it was by somebody who was known to me. He had offered to walk me home from a youth event. In those days, everybody walked everywhere - it was quite common. It was early evening. It was not dark. I was wearing— I am imagining and guessing—jeans and a sweatshirt. I knew my way around where I lived - I was very comfortable - and we went a slightly differently way, but I did not think anything of it. He told me that he wanted to show me something in a wooded area. At that point, I must admit that I was alarmed. I did have a warning bell, but I overrode that warning bell because I knew him and, therefore, there was a level of trust in place. To be honest, looking back at that point, I do not think I knew what rape was. It was not something that was talked about. My mother never talked to me about it, and I did not hear other girls or women talking about it.

It was mercifully quick and I remember first of all feeling surprise, then fear, then horror as I realised that I quite simply could not escape, because obviously he was stronger than me. There was no sense, even initially, of any sexual desire from him, which, looking back again, I suppose I find odd. My senses were absolutely numbed, and thinking about it now, 37 years later, I cannot remember hearing anything when I replay it in my mind. As a former professional musician who is very auditory, I find that quite telling. I now understand that your subconscious brain—not your conscious brain—decides on your behalf how you should respond: whether you take flight, whether you fight or whether you freeze. And I froze, I must be honest.

Afterwards I walked home alone. I was crying, I was cold and I was shivering. I now realise, of course, that that was the shock response. I did not tell my mother. I did not tell my father. I did not tell my friends. And I did not tell the police. I bottled it all up inside me. I hoped briefly—and appallingly—that I might be pregnant so that that would force a situation to help me control it. Of course, without support, the capacity and resources that I had within me to process it were very limited.

I was very ashamed. I was ashamed that I had “allowed this to happen to me”. I had a whole range of internal conversations: “I should have known. Why did I go that way? Why did I walk home with him? Why didn’t I understand the danger? I deserved it because I was too this, too that.” I felt that I was spoiled and impure, and I really felt revulsion towards myself.

Of course, I detached from the child that I had been up until then. Although in reality, at the age of 14, that was probably the start of my sexual awakening, at that time, remembering back, sex was “something that men did to women”, and perhaps this incident reinforced that early belief.​
I briefly sought favour elsewhere and I now understand that even a brief period of hypersexuality is about trying to make sense of an incident and reframing the most intimate of acts. My oldest friends, with whom I am still friends, must have sensed a change in me, but because I never told them they did not know of the cause. I allowed myself to drift away from them for quite a few years. Indeed, I found myself taking time off school and staying at home on my own, listening to music and reading and so on.

I did have a boyfriend in the later years of school and he was very supportive when I told him about it, but I could not make sense of my response - and it is my response that gives weight to the event. I carried that guilt, anger, fear, sadness and bitterness for years.

When I got married 12 years later, I felt that I had a duty tell my husband. I wanted him to understand why there was this swaddled kernel of extreme emotion at the very heart of me, which I knew he could sense. But for many years I simply could not say the words without crying—I could not say the words. It was only in my mid-40s that I took some steps to go and get help.

It had a huge effect on me and it fundamentally - and fatally - undermined my self-esteem, my confidence and my sense of self-worth. Despite this, I am blessed in my life: I have been happily married for 25 years. But if this was the effect of one small, albeit significant, event in my life stage, how must it be for those women who are carrying it on a day-by-day basis?

I thought carefully about whether I should speak about this today, and it was people’s intake of breath and the comment, “What? You’re going to talk about this?”, that motivated me to do it, because there is still a taboo about sharing this kind of information. Certainly for people of my generation, it is truly shocking to talk in public about this sort of thing.

As has been said, rape does not just affect the woman; it affects the family as well. Before my mother died early of cancer, I really wanted to tell her, but I could not bring myself to do it. I have a daughter and if something happened to her and she could not share it with me, I would be appalled. It was possibly cowardly, but it was an act of love that meant that I protected my mother.

As an adult, of course I now know that rape is not about sex at all - it is all about power and control, and it is a crime of violence. I still pick up on when the myths of rape are perpetuated form a male perspective: “Surely you could have fought him off. Did you scream loudly enough?” And the suggestion by some men that a woman is giving subtle hints or is making it up is outrageous. Those assumptions put the woman at the heart of cause, when she should be at the heart of effect. A rape happens when a man makes a decision to hurt someone he feels he can control. Rapes happen because of the rapist, not because of the victim.

We women in our society have to stand up for each other. We have to be courageous. We have to call things out and say where things are wrong. We have to support and nurture our sisters as we do with our sons. Like many women of my age, I have on occasion encountered other aggressive actions towards me, both in business and in politics. But one thing that I realise now is that I am not scared and he was. I am not scared. I am not a victim. I am a survivor.

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.