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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  • Streben80

    I noticed very little change in the habits of upper middle class people I know, perhaps the only difference was that the usual two year swapping of their expensive cars was extended to three years – but they still spent the thick end of £70k replacing cars that were barely worn. Horses were still ridden, gardeners still came to mow the lawn.
    There may be isolated cases of genuinely difficult circumstances, but I often read about such things and cant help but wonder why they didnt plan for it, nor why they lived quite so close to the financial edge, despite a healthy income that should have allowed for decent forward planning. We do seem to have a generation, now in their 40’s or so, that dont seem to save money like the previous generation and that will hit them in the end.

    • Jambo25

      These people are not the squeezed middle. The average ‘real’ middle class/upper working class person will earn 30K or thereabouts. They’ll be driving a 3 or 4 year old Ford Focus or VW Golf. They’ll be struggling, if young, to buy a house. They’ll be worried about job security and will be seeing their living standards stagnate or fall.
      When my wife and I were both working we had a joint income way above what the kind of middle class persons described above would be earning but we sure as hell couldn’t afford 70K cars or stabling a horse at the local stables.

      • Streben80

        I think in reality the squeeze depends on a whole lot more than your income. Where I live it is perfectly possibly to buy a home on the average wage and unemployment is 3%, but it may be very different perhaps in somewhere like Surrey.
        It is a bit general to say the middle class are worried about job security – that is very dependant on what sector you work in, nor is it especially a middle class fear as many working class jobs come under threat when a sector has a hard time.
        I would consider earning 30k a year to be untold riches, I cant even imagine what I would spend such an income on, it is another world to me.

        • Jambo25

          I agree. It depends where you live as well. Recently I read a survey of earnings in hitec jobs. London had the highest earnings average at £51,000 pa. Edinburgh came second at £48,000 pa. but you can buy a really nice 2/3 bedroomed flat in a nice part of Edinburgh for 300K or less and possibly be within walking distance of your work. What are the chances of doing that in London?
          As for job security. You’re right working people have that insecurity as ell. In fact, they’ve lived with it for a very long time and that’s what makes the middle class position interesting as they haven’t realty had to live with chronic job insecurity until recently. The last time the middle classes had to live with it to any great extent was probably in the pre war period. The poor dears aren’t used to it.

  • Gwangi

    I agree utterly. What these spoilt self-obsessed people mean when they moan and whinge about their supposed poverty is that they are not amongst the super-rich. Yes they may own a London property worth a million that they bought for 200 grand – but oh how poor they all are! They can only afford one Polish slave to clean their kitchens and only 3 holidays a year.

    The answer? An immediate punitive tax on property, especially second homes but also first homes – as in New York. Moreover, those in secure state-funded jobs like academia should have their pay cut immediately to reflect the greater security of their jobs and their huge pensions – no-one in the private sector or the self-employed get that! Then we can tackle immigration and foreign house buyers, and make sure native Brits get affordable and quality housing in London and elsewhere.

    This made me laugh: “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’.”
    Oh dear. Jenny Murray will no doubt blame everything on men, as is her role and doyenne of Radio 4’s Man-hating hour (and through her pity party feminists, where women always suffer worse hardship than men who are the cause of all badness and suffering in the world, she is well used to the victimhood pose!

  • davidofkent

    You can always argue for both sides of the coin. The idea that high property values is a good thing is valid only if you sell and downsize (a costly business) or go and live somewhere else in the world. High property values have been caused by inflation, immigration and family break-up, coupled with a period of low building. On the other hand, mortgagors have had a huge bonus for five years thanks to an artificially low Base Rate. At the same time, savers have been beggared. Many in the prudent middle classes have seen their savings income collapse completely. So it’s all a matter of where in the middle class you happen to be. One group who have benefitted greatly from the last few years of so-called austerity have been those who have made a career out of living on benefits. It’s time for interest rates to rise, then we will see if squeezing is the correct term.

    • rtj1211

      High property prices are due to population increases not being matched by analagous house building. Simple supply and demand. Oh, and letting the whole world buy UK property as well…..

      • Freedom

        True, but I give you the example of Houston, Texas, one of the very few parts of the USA to avoid a major housing bust which occurred when the Democrat-driven devil-may-care lending chickens finally came home to roost. (Prices did go down: I sold my house for much less than my neighbour, who was fortunate to sell just before the bust — but not as much as they tanked in other parts of the nation.) The reason for stable house prices — not like England’s, not like Florida’s — is and was high property tax. I resented the runaway property tax — most of it was to fund the plush pensions of school board plutocrats who were incompetent as well as expensive — but the fact is that higher house prices lead to an even higher property-tax assessment. This hits your income, hard, every single year. This is ultimately what puts a roof on house-price inflation in Houston, Texas. Property taxes in England are by comparison astonishingly low….

  • ohforheavensake

    The people you mention aren’t in the middle of the income stream: for that, you’re looking at an average household income of c.£25,000- and at this level, people’s living standards have declined.

    So sorry: nice try, but no cigar.

  • perdix

    Squeezed middle? Are they among the record number that are flying out of Heathrow/Gatwick for the holidays?

  • pointlesswasteoftime

    Have you sent a link to this to Mark Simmonds?

  • Mike Barnes

    Not sure I agree with everything, but your points are well argued and definitely something to think about.

    Child benefit was supposed to be a universal entitlement so it’s unfair that middle class parents lose theirs. They may not need it, but if you follow that logic why should any middle class citizen get a universal benefit (tv license or prescription for the elderly etc) if they can cope without it? It was a conniving move designed to cause resentment between the middle class ‘strivers’ and the working class who still get it.

    The one I completely agree with is about property in the south east. House prices in London have pretty much trebled in price in the last 20+ years. No homeowner was complaining at the time about their immense increase in housing wealth, so it’s a bit rich now to complain about getting sucked in to inheritance tax bands.

    • Jambo25

      What if you are trying to buy a house having moved down there due to work. Have those people benefitted?

  • Symbiosis

    Brilliant and so right on. The moaners make me puke. About time more pundits woke up to this pathetic self pity and stopped agreeing with it.

    • fundamentallyflawed

      Do you apply the same attitude to changes in benefits as well? I expect not as your post seems tinged with envy and jealousy…

  • Tom M

    So Leo it sounds like your not one of the squeezed middle then.
    A small point, the people who lost their jobs etc etc in the crash included quite a few of the people you criticise. They are generally proportionally less in the number of those employed so when a factory closes for example the number of middle class employees paid off is less but they still go and may well find it very difficult to be re-employed at the level they occupied.
    “….why on earth should other taxpayers have to subsidise private care….” “Cradle to the grave” was the deal I think I signed up to when I was 16. If the government wish to change this covenant with me then I’m all ears.
    “….Unlike many countries in Europe, where hefty capital gains charges operate….” Is that your logic? That we should aim to be taxed as much as the most heavily taxed in Europe?

    “…..Which is exactly the right approach….” When people like you write things like that I always assume you mean it should apply to everybody else.

  • JB_1966

    Those of us in the middle are really complaining that we don’t have what the exceptional or upper middle had in our parents’ generation. Well, tough shit to us – we decided to mince about electing rubbish governments and not paying attention to industry whilst hoping flogging everything off to foreign bums would look after us. Who could have ever seen that going wrong eh?

    • Kitty MLB

      Very well put.Was it not the middle classes who had their
      pensions raided, about the same time the working class were destroyed by labour who imported their replacement
      and the upper class can and do just flee.
      Middle England just quietly get on with their lives,
      not poor enough and not rich enough but an easy target,
      and alot of these employ half the country and pay their
      high taxes to support the other half.

      • JB_1966

        I didn’t mean in any way to diminish the evil role played by Gordon Brown in deliberately wrecking private sector pensions. He deserves a life sentence for that.

  • Dave Cockayne

    The poor luvvies.

    Meanwhile in working class land, we have veterans dying because they have no money for electricity to keep their medicine cool in the fridge and disabled/autistic people dying of starvation.

    In Britain, in 2014, people are dying of starvation. But they are only chavscum, tell me more about the suffering of the Tarquins.

    • Nele Schindler

      ‘The suffering of the Tarquins’ – awesome! 🙂

    • Kitty MLB

      Oh dear where is my violin, I’ve clearly mislaid it.
      What a load of twaddle.The working classes are now
      because Labour The Under Class and where they are today
      because of that party.And as for the rest, so awfully dramatic.

    • John Lea

      No one is dying of starvation in modern Britain. The only people living in poverty are (some) elderly people, who are too proud to ask for help or claim from the state. The chav underclass are certainly not poor – not materially poor at any rate, perhaps morally, yes.

      • Dave Cockayne

        You mean apart from the people that actually have died from starvation like Mark Wood earlier this year?

        When the autopsies are piling up saying that people are dying of starvation it is a little hard to ignore. An awful lot of disabled or mental disabled people (who are not mentally capable of jumping through the hoops required to get help) are in serious poverty.

  • John Smith

    The only thing that riles that group is funding Islamic State terrorists, the damn BBC, anti fracking protesters on benefits, funding rich landowners & farmers wind turbines and solar panels Oh and the same last groups subsidies via the EU’s CAP

  • Jackthesmilingblack

    Britisher pals, you need to grasp an obvious reality: You have been betrayed by your leaders/aristocrats, and by left wing intellectuals.

  • HJ777

    “Families can still inherit £325,000, without paying any duties at all.”

    No, you can leave £325,000 without paying any duties. We have a “Death Assets Tax”, not an Inheritance Tax (even if it is called that). Tax is not paid on the amount you inherit, it is paid on the assets of the deceased. You could not leave £325k to each of (say) three children and avoid duties.

  • Lydia Robinson

    “This is about children who do not want to look after their parents themselves and seek public funds to protect their inheritances.”
    With all due respect, would the writer of this article be able to look after someone with severe dementia or Parkinsons? Please have a little respect for the people who find themselves in this situation, especially if it is a spouse.

  • Freedom

    If the middle suffers, everyone else will… eventually. Some voice on ‘The View From 22’ asked Ed West whether we shouldn’t be more concerned about ‘the poor’. What a stupid question. The poor is what your middle class is becoming… when the middle class loses, it’s a sure sign that your free affluent society as a whole is going down the tubes.

    The beloved elders of my family asked me, once, why Americans were so much richer than English people. I was no economist, but I said: ‘We don’t have the taxes you do’. I’m an exile, see, and an immigrant. I was an exile first, but I learned the hard way that the country I’d been exiled from didn’t have all the answers, and was flawed. And after Blair and Brown and Cameron, and in Europe, the Greek disaster, you still don’t get it. Despite the shining example of Ronald Reagan (‘a rising tide lifts all boats’), who brought America back from the nadir under the Democrat president Carter, and considering that America has been the freest, most inventive, most industrially productive, most creatively prodigious, and most inspiring (yes, you can’t quantify that) country in the history of the world, Brits still say ‘HUH’? And I despair for my countrymen and my DNA. How on earth can you all be so dense?!

    • tjamesjones

      Yeehaw! and yet above you correctly say that property taxes are much higher in Texas than in the UK. curious-er and curious-er. You’ve definitely picked up some American style Hyperbole here.

      • Freedom

        Property taxes, TJJ, and in the biggest, Democrat-run city of Houston. In other areas (especially rural), the property tax is much lower. Sales tax throughout the sate is low, there is no state income tax either. It’s all in the details, pardner.

        • tjamesjones

          I don’t really get your point. Why is property tax better than stamp duty?

          • Freedom

            Well, in so far as it’s a big tax, it ISN’T. Apart from the fact that stamp duty is a huge one-time lump sum whereas property tax at least drips the agony year by year. My point was just to discuss the fact that high property tax (the equivalent of English council tax) can depress housing prices and prevent a housing bubble (Houston was one of the very few places in America where there was no bubble and therefore no serious bust, though there was an economic downturn which hit house prices as well). The subject was England’s runaway house prices. And I’m just observing that low rates contribute to that or at least make that situation more likely.

          • tjamesjones

            that’s probably true, so if we could have a higher property tax and commensurately lower income tax, that might be healthy. though it will suck if we end up with high income taxes and an annual property tax (the labor party mansion tax). Eric Schmidt was surprised at how low council tax is in comparison to US property taxes, when he was looking for a house in London.

  • Carol Hibbert

    and child benefit is not removed from people who earn over , £50,00 it is removed from their partners who can be earning nothing. and off course from the children.

  • dmitri the impostor

    ‘Jenni Murray, the epitome of Middle England’

    Er, no. The epitome of a feather-bedded beeboid and therefore the antithesis of Middle England.

    Nice try, anyway. The Spectator can always use another bit of troll journalism.

  • disqus_JXTaH3N9kU

    I agree with and enjoyed this article. But its nothing new. The middle class – and plenty of others – have long moaned about not having enough. Jenni Murray’s words could have come out of the mouths of plenty of people twenty five or thirty years ago.

  • Lina R

    Spot on article. The middle-classes are completely mollycoddled. They complain how hard up they are but have cleaners, go on holiday once or twice a year, and own 1-2 properties.

  • Pepe Turcon

    Thank God…they are doing fine. You wouldn’t want a Gaza situation in London.

  • Cymrugel

    This is pretty stupid and shows little insight into middle class life.

    Jenni Murray may call herself middle class but I suspect would be regarded as wealthy in strictly monetary terms by most people.

    I do a white collar job and earn a reasonable salary, which has allowed me to own my own home, which is now worth far more than it was when I bought it. As such I have no complaints, but I am pretty squeezed financially

    The value of my home is meaningless in the sense that to buy a bigger property or one in a better area I would need to take on a mortgage that would be impossible to pay even with the profit made from my existing home.

    The only way to make any profit from the situation would be to move to a remote area where prices are dramatically lower.

    This does not present a problem as I bought the house to live in and have no intentions of moving, bit others are trapped in tiny flats with no hope of improvement.

    You really need to look at your interpretation of middle class.

    BBC presenters married to wealthy husbands are not middle class, they are upper class.

  • tjamesjones

    I totally agree with this.

  • Mrs Josephine Hyde-Hartley

    It strikes me student fees and property taxes and/or the new expectation that everything one has worked for has to be used to pay for social care, rather than one’s own family, are not a reflection of any spirit ( if it’s true that spirits can really be reflected).
    To me these are symbols of that certain kind of preposterous and pretentious over-regulation that leaves one wondering what’s left for those who don’t use debt, or other people’s particulars, as a way to achieve goals.

  • mikewaller

    This article has far too narrow a focus. What it ignores is the pressures on the present generation of the comfortably off arising from their parents living much longer than in the past and their kids – themselves lumbered with debt – being much less certain of getting a well paid job that would give them some prospect of paying off their student loans, buying a home and building up a pension. Hence the label “the sandwich generation” i.e. the meat in the middle of two different kinds of dependency.

  • Mukkinese

    Raising the tax threshold only has a limited effect of poverty.

    What the right has a hard time understanding is that very many do not even earn enough to pay tax at the current threshold. That is how bad things are, for some…