The entire middle class is being stretched, squeezed and polarised as never before. Photo: Flickr/Tom Page
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Politicians must address the fact that Britain's middle class is rapidly sinking

The idea of middle class decline is too often met with derision, especially among progressives, but all our politicians should be talking about it.

An interesting statistic crept out of the Department for Work and Pensions last week, while the pubs of Britain no doubt buzzed with discussion about Jean-Claude Junker or how someone in Ed Miliband's office may or may not have recognised someone at a FT summer drinks reception.

According to the DWP, the average household income in 2012-13 was £440, unchanged on the year before. It represents the third consecutive year of stagnation or decline (depending on how you cut the figures). As the IFS have noted, in real terms this leaves median household income in roughly the same place as it was in 2002, and comes off the back of painfully slow wage growth from the start of the 2000s.

In the same week the increase in the price of homes reached an all-time high. Add in that a majority of people on typical incomes now have less than one month's income as savings, plus the slow hollowing-out of middle income jobs, and a pretty clear picture emerges. The foundations of middle class life – a decent income, assets, savings, pensions – are getting harder and harder to attain, especially for those just starting out. In many cases, debt has filled the gap.

This goes beyond just failures of the private sector. The welfare safety net has also become residualised. People on reasonable incomes can work their whole life and receive only paltry amounts when they lose their job. When it comes to both work and the state, people in the middle have been putting more in than they've been getting out for a long time.

It should go without saying that working class communities have had it hardest over the last thirty years. But the idea of middle class decline too is too often met with derision, especially among progressives.

Part of this is down to a distorted view of what "middle class" is, a popular association with what is in effect the upper middle classes; the world of piano recitals and Waitrose where "struggle" means difficulty meeting school fees. Of course, the middle class contains many like this too and they are doing more than fine. In fact, the most interesting development that experts have pointed to in recent years is the fracturing and polarisation of the middle class, between the upper echelons and those at the lower end. And previous generations who started out at the lower end of the middle class, bought a house at the right time, settled into a profession and now face retiring near the top may well be the last to make that journey en masse. In short, the bottom is falling out of the British middle class.

There's been a lot of talk about "narratives" recently. There's also been a lot of talk about how Ed Miliband doesn't have "a narrative". But in his defence, he's one of the few at the top of British politics to grasp this phenemenon, whatever his other difficulties. He's not totally alone – some figures on the right, for instance, including the brilliant Peter Franklin at ConHome, have twigged too. But wider interest is otherwise conspicuous by its absence, in Westminster at least.

Instead we get slightly echoey outdated debates about Europe, whether X or Y is "pro-business" or "anti-business", whether a particular view of public services is sufficiently "reforming" and so on and so forth. But surely the shape of that discussion changes in the face of such huge societal shifts? No doubt this failure to catch up is partly because the senior ranks of the commentariat are largely made up of those at the comfortable end of things (themselves probably among the last who can expect to make a good living out of a profession like journalism) - but it's depressing all the same.

To be fair, the answers are neither easy nor obvious. The likes of Resolution Foundation have been fantastic at laying out the problem of stagnating wages and ways to ameloriate it, but no one has come up with a wholesale plan for reversing the trend. Some of this is because it rubs up against global head winds and the modern divorce between power and politics. It probably requires trans-national solutions, or at least a revisiting of the way Britain approaches globalisation – a debate that hasn't even been opened here.

But those who over-play the inability of national government to fix things are also wrong, and usually have a vested ideological interest in doing so (in this sense the argument between those favouring a "bigger" or "shrunken" Labour offer in opposition is mostly phony, and a proxy for a bigger one about what can be achieved in government). Ideas that would be both effective and achievable include wholesale reform of corporate governance to include a significant role for workers; profit-sharing and other ways of spreading wealth; lower-cost routes into home ownership; breaking up and remaking British banking; decentralisation to cities; the prioritisation of vocational "middle skills"; prioritising British industry in procurement; reform of takeovers etc. When it comes to welfare, there is IPPR's National Salary Insurance scheme or SMF's "flexicurity" proposals.

All of this can only start, though, with a recognition that our current journey back to basically the same political economy as we had before the crash is not what success looks like. It wasn't good enough then and it isn't now.

Marx famously wrote:

The lower strata of the middle class... all these sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialised skill is rendered worthless by new methods of production. Thus the proletariat is recruited from all classes of the population.

Things may not be as apocalyptic or revolutionary now, but they are bad, and contradictions within modern British capitalism mean the lower end of the middle class is sinking. The entire middle is being stretched, squeezed and polarised as never before. The result is entire neighbourhoods – which on the face of things look serene – in fact struggling to keep their head above water, facing futures significantly less secure, less stable and less well-off than their parents. This shapes millions of people's everyday lives and influences their political attitudes, and it should influence our political discussion too. At the moment, though, it doesn't seem to be. Future generations will surely look back and wonder what on earth we were talking about instead.

Steven Akehurst blogs at My Correct Views on Everything

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No, the Brexit vote wasn't just about immigration

The data shows that most voters want a fairer society. Labour must fight for this in the Brexit negotiations. 

The result of the UK referendum to leave the European Union has shaken the political establishment to its core. As I have argued since then, it should be a wakeup call to all political parties.

Some have also argued that the referendum result is having international repercussions, with the election of Donald Trump to the White House cited as "Brexit Plus Plus". With the imminent election in France, and Germany’s later this year, responsible analysts are trying to understand why people voted the way they did and what this means. Too often, there are knee jerk explanations without any evidentiary justification to back them up. 

Analysis of who voted to leave shows the majority of people who voted to leave live in the South of England, and 59 per cent were from the middle classes (A, B, C1). Only 21 per cent of people in the lowest income groups voted to leave.

Analysis of why people voted as they did is more complex. This includes an increase in Euroscepticism particularly from older, middle class voters; concerns about globalisation and the impact on jobs; inequalities and being left behind; and new voters who didn’t vote in the 2015 General Election, for whom immigration was a concern. When this analysis is overlaid on analysis of that election, some themes emerge. The attitudes and values of the majority of the British public are firmly rooted in the desire for a fairer society, based on principles of equality and social justice. Although immigration played a part in the election and referendum results, perceived competence, being "left behind" and disillusionment with the direction of change were the key drivers.

Whether people voted to remain or leave, they did so because they believed that they and their families would be better off, and the majority who voted believed they would be better off if we leave the EU. Labour accepts and respects this. We have said that we will vote for Article 50, but we intend to hold this Tory government to account to ensure we get the best possible deal for the country.

In his speech last week, Jeremy Corbyn set out the issues that Labour will hold the government to account on. We have been absolutely clear that we want tariff-free access to the single market, to ensure that Britain continues to trade openly with our European neighbours, and to protect the cost of living for families struggling to get by. Getting the best deal for the UK means that we must continue to have a strong relationship with our EU neighbours.

Under my work and pensions portfolio, for example, we know that 40 per cent of pension funds are invested outside of the UK. If we want to guarantee a dignified and secure retirement for our pensioners, we must ensure that savers can get the best returns for the investments they make.

We also know that many of the protections that have until now been offered by the European Union must continue to be guaranteed when we leave. Provisions that secure the rights of disabled people, or that protect worker’s rights are an essential part of British society, enhanced by the EU. These cannot be torn up by the Tories.

Defending these rights is also at the heart of our approach to immigration. The dire anti-migrant rhetoric from some parts of the media and certain politicians, is reprehensible. I reject this scapegoating, which has fear and blame at its heart, because it is not true. Blaming migrants for nearly seven wasted years of Tory austerity when they are net contributors of over £2bn a year to the economy is perverse.

Of course we need to respond when public services are coming under pressure from local population increases. That’s why Labour wants to reinstate the Migration Impact Fund that the Tories abolished. We also need to ensure new members of communities get to know their new neighbours and what’s expected of them.

We believe that migrants’ broader contribution to British society has too often been obscured by the actions of unscrupulous employers, who have exploited new arrivals at the expense of local labour. A vast network of recruitment and employment agencies has developed in this country. It is worth hundreds of billions of pounds. Last year over 1.3m people were employed in the UK by these agencies. In 2007, 1 in 7 of these people came from the EU. We should ask how many are recruited directly from the EU now, and offered precarious work on very low wages whilst undercutting local labour. Labour will put an end to this practice, in order to protect both those who come here to work and those that grew up here.

Importantly, however, we cannot let our exit from the EU leave us with skill shortages in our economy. Our current workforce planning is woeful, particularly for the long-term. We need to reduce our need for migrant labour by ensuring our young, and our not so young, are trained for the jobs of the future, from carers to coders. Again, the Conservatives have undermined people’s chances of getting on by cutting college funding and the adult skills budget.

Unlike the government, Labour will not shirk from our responsibilities to the nation. Our plans for Brexit will respect the referendum result, whilst holding the Government to account and delivering a better future for all our people, not just the privileged few.

Debbie Abrahams is shadow work and pensions secretary.