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The squeezed middle is a myth

Middle England is screaming about lost entitlements – but quietly doing rather well

16 August 2014

9:00 AM

16 August 2014

9:00 AM

Almost from the moment the coalition came to power four years ago, a mood of deepening grievance has gripped parts of the middle class, fuelled by a sense that they have been the biggest losers from the government’s austerity programme. They see themselves as ‘the squeezed middle’, the ones cruelly punished by rising taxation and the loss of state support. What makes their anger all the greater is the feeling of betrayal. David Cameron should be on their side.

This narrative of victimhood has become conventional wisdom. Only this week Radio 4’s Jenni Murray, the epitome of Middle England, wailed that she is ‘as cash-strapped as everyone else’. To attend a forthcoming party,  she confessed, ‘I will be throwing on an old kaftan bought for £50 online,’ then ‘hopping into a cheap-as-chips local minicab so I can enjoy the one treat I can afford: a glass of wine.’ As a licence-fee payer, I could barely hold back my tears.

The plight of the middle was also outlined in a recent article by Daily Telegraph columnist Judith Woods. ‘Here, in the realm of the crushed and the credit crunched, the taxed and the troubled, where there’s no child benefit, no help with university fees, no chance of getting the kids on the property ladder and no professional job security, aspirations are on ice.’

But middle-class self-pity is undignified and unjustified. A lot of people from Middle England suffered after the crash, but the idea an entire class was singled out is absurd. The ones who took the biggest hit were those much lower down the income scale, who had their living standards slashed, their wages cut and their jobs destroyed. Indeed, the whole concept of the ‘squeezed middle’ is a myth. According to a report in April by the centrist Social Market Foundation, no less than 41 per cent of families in the middle income bracket have become wealthier since 2008, while a further 40 per cent have maintained their affluence. Just 18 per cent of middle-class households fell to a lower income bracket. On publication of this authoritative study, the SMF’s director, Emran Mian, argued that ‘the middle has coped surprisingly well since 2007–08. Two fifths of them moved up the income distribution.’ This is hardly a surprise, given the rise in house prices, the reduced mortgage costs and low inflation.


The moaners ignore all that. They have a litany of gripes, from student fees to property taxes, which all reflect a spirit of entitlement as egregious as that of any benefit claimant or union boss. One of their most selfish complaints is the alleged ‘scandal’ of elderly relatives being forced to ‘sell the family home’ to pay care fees. If a family has a large asset, in cash or in property, why on earth should other taxpayers have to subsidise private care? This is about children who do not want to look after their parents themselves and seek public funds to protect their inheritances.

It is the same story with university fees, which, in one of the coalition’s first and bravest acts, were raised to £9,000 a year. Despite all the predictions of armageddon in higher education, there has been no drop in university applications. Yet too many of the middle class, whose families are by far the biggest users of this sector, regard the fee increase as an affront. In this twisted world, working-class taxpayers should be compelled to bankroll affluent graduates with far greater earning potential, the supermarket shelf-stacker from Hartlepool helping to pay for the law degree of the aspiring Hertfordshire barrister.

We see the same moral inversion over another sensible coalition measure, the gradual withdrawal of child benefit to individuals earning over £50,000. What particularly outrages the ‘squeezed middle’ is that a couple, both of them earning £49,000 a year, are still entitled to this payout, whereas a single-earner household on £51,000 is not. This is no dark injustice: a household with two working parents faces far higher costs because of childcare. Indeed, the very concept of ‘stay-at-home’ mums is largely a middle-class phenomenon. Because of financial stringencies, large numbers of working-class women have always been compelled to work.

Perhaps the most grotesque irony of the middle-class whingers is that, instead of celebrating their remarkable good fortune from the explosion in property prices, they present this as yet another burden. So they repeatedly carp about rises in stamp duty and inheritance taxes, both of which have gone up as a result of house-price inflation. A recent newspaper report revealing that 35,000 families are likely to pay inheritance tax this year claimed the figures ‘show the full extent of Britain’s death-tax time bomb’. Such hysteria is completely misplaced. Despite all the rhetoric about a vast swath of the middle class being sucked into its embrace, inheritance tax is charged on only 6 per cent of all estates. Families can still inherit £325,000, without paying any duties at all. All taxes are objectionable but a levy on the legacy of the deceased is surely preferable to a charge on the earnings of the living.

Nor do the ‘squeezed middle’ brigade deem stamp duty fair. Unlike many countries in Europe, where hefty capital gains charges operate, a seller in this country does not have to pay capital gains at all if the property is a main residence, no matter how big the profit from the sale, while buyers of homes below £250,000, roughly the average current price in England, face a maximum of only 1 per cent in stamp duty, no more than the commission of most estate agencies. Yes, the duty rises to 4 per cent above a threshold of £500,000, but someone who can afford to pay £900,000 for a property should be able to manage £36,000 in stamp duty.

There is nothing reprehensible about the government increasing its revenues because of the rise in property values. In the year to June 2014, the Treasury is expected to have pulled in £10.2 billion from stamp duty, in addition to £3.1 billion from inheritance tax, the highest levels since the financial crash. The increase in these payments has allowed the coalition to raise personal tax allowances to £10,000 a year, taking millions out of income tax altogether. Which is exactly the right approach. There is nothing fair about punishing hard work while indulging unearned wealth and privilege — whatever the middle-class warriors cry.


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