To Voltaire, the British class system could be summed up in a sentence. The people of these islands, he said, ‘are like their own beer; froth on top, dregs at bottom, the middle excellent’. A harsh judgment, perhaps, but one that might still have some truth in it today. Yes, we have horrible poverty in our council estates and toffery on our country estates. But Britain is a country that has always taken pride in what we think of as middle-class virtues — hard work, honesty, thrift and self-help.
Today, however, we are witnessing the strange death of the middle class. In Britain, as in the United States, it isn’t just being squeezed — it is actually shrinking and sinking. This is the most disturbing social change of our age and will probably dominate your children’s lives. The lifestyle that the average earner had half a century ago — reasonably sized house, dependable healthcare, a decent education for the children and a reliable pension — is becoming the preserve of the rich. Middle-class pensioners look on amazed at how their children, now into adulthood, seem to have a far harder time.
Just as Britain has an unwritten constitution, so the values of the middle class have been tacitly understood — even if they have proven difficult to define. ‘England,’ declared the Liberal MP Charles Masterman in 1909, ‘is the tone and temper which the ideals and determinations of the middle class has stamped upon it.’ Advocating the Great Reform Act, Lord Brougham put it even better. ‘By the people, I mean the middle classes,’ he said, ‘the wealth and intelligence of the country. The glory of the British name.’ The Conservative party, when it has been most successful, has sought to define and champion the middle class — or, more importantly, its ideals. David Cameron tries, still, now and again. His government, he likes to say, is on the side of ‘hard-working people who do the right thing’.
And how might you define the right thing? Studying hard at school and university, finding a job, getting married, saving money and buying a house. For those who did that, Britain has been — until recently — a superb place to live. Evelyn Waugh wrote Brideshead Revisited in 1945 as a requiem for a ruling class that he thought would be supplanted by a new, regnant middle. This seemed to arrive in the Thatcher government, in the ascendancy of a grocer’s daughter from Grantham who revered small businessmen and savers. It struck many as crude, certainly déclassé. But it seemed to represent a transfer of power from the well-born elite and towards a self-confident middle class.
How different things seem now. A look at the cabinet gives a fairly representative sample of trends in British life, with the sons and daughters of the elite again running the country. The Chancellor of the Exchequer is heir to a baronetcy. And alongside the Chancellor and the Prime Minister at the table are 21 fellow millionaires— including Nick Clegg, the Liberal Democrat leader. And Ed Miliband, as Labour leader, denounces them all from the comfort of his own £2 million house. The same trends are true in the media, judiciary and even the world of sport — a third of Britain’s 2012 Olympic medallists were privately -educated.
This trend seems set to continue. George Osborne’s so-called recovery is being driven by the incomes of the wealthy. For the best-paid 1 per cent, the boom years never stopped. They now collect 14 per cent of all the money paid in salaries in Britain, a record high. Meanwhile the average earner has taken a real-terms pay cut of about 10 per cent since the crash — and this is not expected to improve. Government figures suggest it will take until 2020 for the average salary to get back to where it was in 2010. The middle class is suffering what Sir Mervyn (now Lord) King described as the longest squeeze in living memory. But for the richest, these are the best of times.
It’s is no accident. Mark Carney, the new Bank of England governor, has said he’ll continue with the policy of quantitative easing, which explicitly aims to revive the economy by inflating the value of assets. Most valuable assets are, of course, owned by the wealthy — especially by the London establishment. While houses in Northern Ireland are still worth less than half what they were at the time of the crash, the value of property in the capital soars higher and higher. By some estimates, house prices in Westminster have risen by an extraordinary 70 per cent since the crash. For MPs who own homes near the Commons, it’s a bonanza.
Middle-class people don’t even enjoy talking about house prices at dinner parties any more; it’s just too depressing. But then dinner parties are becoming a difficult expense, given that child care now accounts for a quarter of all spending for the average two-income family. One fifth of people earning over £66,000 say that they cannot afford family holidays abroad. Two fifths of those people are failing to save anything, with their salary being entirely consumed by the basics. The middle classes who can afford to pay for school fees for their children often do so at the expense of all their own luxuries — yet they know it will be money well spent. Nothing defines the life chances of a British teenager more than whether their parents managed to afford fees.
Take Michael Gove, who was adopted by an Aberdeen fishmonger. His father noticed his talent and managed to send him to Robert Gordon’s College, a private school. The Gove family went without foreign holidays and new cars to meet the fees — an investment which paid off spectacularly. But not many fishmongers could afford to do that now. Gordon’s is charging £11,200 a year. That’s a third of the price levied by Eton and St Paul’s. But the average fishmonger earns just £15,000.
Respectable middle-class jobs do not pay what they once did. A number of factors are at play here, but the most significant is technology and competition from abroad, which wiped out large numbers of working-class jobs in the last century and threatens to do the same to middle-class jobs now. When goods and services can be imported at a pittance from overseas, the Brits who used to provide these services see their income squeezed.
Jaron Lanier, the Silicon Valley philosopher and author of Who Owns The Future?, has shown how technology and the free-flow of information are removing secure, middle-class jobs. Far from being egalitarian, the digital revolution has reduced financial rewards for those in the middle — and concentrated wealth at the very top. While outsourcing of clerical work is hardly new, it has started to affect the middle office — not just the back office. Once, it was production-line workers who found themselves laid off and their jobs shipped to the Far East. Now it’s research chemists, paralegals and clerks who are finding their jobs outsourced. Firms such as Microsoft, Pfizer and Philips increasingly carry out their research in China.
Stephen Overell of the Work Foundation has warned of ‘an ongoing hollowing-out of the middle ranks in the British job market’, as managers and administrators are being replaced by software. Michael Boehm, an academic at the London School of Economics and author of a paper on job polarisation, says that technology and ‘offshoring’ mean that the average American income ‘has not increased since the 1980s, and Britain is similar’. His conclusion: ‘The middle class is shrinking, in terms of jobs and wages.’
The rise of the super-rich has brought with it cultural and political changes, especially in an era when parties rely on the generosity of billionaires rather than mass membership. New Labour was an attempted middle-class takeover of the Labour party, which at the same time subverted all those middle-class values the uptight bourgeoisie held dear. Peter Mandelson famously declared himself to be ‘intensely relaxed about people getting filthy rich’. Neither seemed too worried about the destruction of pensions — and with it, the basic principle that those who put money away should be guaranteed a decent retirement.
In his book The Decline and Fall of the British Middle Class, Patrick Hutber identified ‘thrift’ as a definable middle-class virtue. But in today’s Britain, it is actively punished. The individual savings account — or Isa — seemed to have been invented in homage to thrift, allowing people to save cash tax-free. But Treasury policies have now floored savings rates, and the holders of all normal cash Isas must accept interest below the rate of inflation. So savers lose money, year after year, due to official Bank of England policy. It is as if the government is now at war with the very notion of thrift.
This changes a country. Children will no longer grow up watching their deposits grow in a Post Office bank account, and will struggle to understand the point of delayed financial gratification. In today’s Britain, putting cash into a savings account is a mug’s game. Instead, we seem to be nurturing a winner-takes-all economic model — middle-class children can be forgiven for adopting the ‘get rich or die trying’ ethos of gangster rappers. They grow up pinning their hopes on the scratchcard, the rollover jackpot or The X Factor. It seems impossible to save your way to a comfortable life.
Even work is essentially pointless if the aim is to live as our grandparents did. Unless they can get a job in finance, the next generation will find it very hard to live in the gentrified suburbs their parents still inhabit. Even the NHS cannot be relied upon as it once was, but private healthcare is out of reach. Little wonder that emigration levels are running so high in Britain, now at 400 a day, with Canada and Australia among the top -destinations. The exodus is ignored, due to our obsession with -immigration, but a disproportionate number of the leavers are from the skilled middle class, looking for good schools, decent houses and safe streets that seem beyond their reach here.
The recent protests in Brazil and Turkey reflect the frustration of the rising middle classes. The economies of Britain and America may now be transforming into the same hourglass shape that once characterised those of emerging countries. But unlike in the developing world, our middle classes — the great stabilising force in our society — are falling fast. It’s hard to imagine the British bourgeoisie taking to the streets, but someday soon they might turn around and say: ‘Sorry, but we’re really rather mad and we’re not going to take it any more.’