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For the middle classes, things can only get worse

23 August 2013

In this week’s magazine Fraser Nelson and I look at the breaking of the English middle class, a subject so scary you’ll want to hold someone’s hand when reading it. The frightening thing is that in Britain, as in the United States, the middle class is not just squeezed but shrinking and sinking.

Even before the Great Recession began, middle-class jobs in the law, media and accounting have been melting away, outsourced, unprofitable or obsolete, while salaries are falling behind prices. This is not a product of the credit crunch, and it will not be going away.

Median hourly income in London is now below 2002 levels, real wages in Britain have not risen since 2005, and the median income has been static or in decline since 2004. The savings rate, a sure mark of middle-class respectability, has plummeted, while pensions are depleted.

Meanwhile house prices have increased 500 per cent in the past 25 years, so that the average London property is almost 20 times the average national income. Other major costs, notably energy and education, have also soared, part of the biggest squeeze in living standards since the depression of the 1870s, according to economist Roger Bootle.

Technology and competition from abroad, which wiped out large numbers of working class jobs in the 20th century, is doing the same with middle class jobs in the 21st. At least the miners were romantic; no one’s going to make a musical about middle managers in 20 year’s time.


But another, especially British problem, is our reliance on the housing market. David Boyle, author of Broke: What Killed the Middle Classes?, identifies house prices and falling pensions as the chief suspects, housing inflation chiefly caused by an oversupply of mortgage finances (thanks to the abolition of the “Corset” restricting lending) and runaway salaries at the top.

This has also encouraged ‘extreme education competition’, Boyle says, because ‘You’re no longer just competing against your peers but against a global middle class and to be part of a shrinking elite.’

As with the housing market, the foreign rich are coming to dominate private education as prices have risen at twice the rate of inflation this century. Yet people are still trying to get their children into those schools, perhaps reflecting the increased importance of networking, one of the few skills that computers cannot replace­ (unless the Chinese manage to design an android that can replicate Old Etonian charm).

The truly depressing thing is that, while George Osborne’s recovery is reliant almost entirely on the super-rich, he’s also encouraging yet more house price inflation. Things can only get worse.

In the piece we also look at the cultural impact of the new super rich, and declining ‘middle-class values’ like modesty; much of the anger towards the financial services industry stems from the very ethos of the City, and its conspicuous consumers who were treated like modern-day Stakhanov workers by New Labour; it’s all so unseemly. In contrast the values of the broader middle class –­ self-restraint, deferred gratification, patriotism, curtain-twitching neighbourliness –­ are sneered at by a wealthier liberal elite.

Likewise thrift, or prudence, a word so beloved of Chancellor Brown even while his government threw money around like an Anglo-Irish lord at the Hellfire Club. Another middle class value is honesty. Why did MPs steal from the public to finance their lifestyles? Perhaps for the same reason that charity bosses have awarded themselves absurd salaries – to keep up with contemporaries and Britain’s runaway housing costs.

But what can you do? Outside where my local bookshop used to be (killed off by online competition) I recently saw a poster asking “Is it time to rethink Marxism?” Well, it was such a success the first time, after all.  For a century and a half the followers of Karl Marx have been foretelling capitalism’s doom, yet while British and American trends give comfort to these secular end-timers, on a global scale capitalism has never been better for humanity; the decline of the British middle class is linked to a process of global embourgeoisement, as millions escape poverty in India, China, South America and even Africa.

But the danger is that the US and to a lesser extent Britain is developing the same sort of hourglass-shaped economy that has always marked places like Brazil, associated as it is with corruption and political extremism.

In Britain we don’t have the positive feedback loop of lunacy that is American politics but there is declining interest in mass party membership and against an elitist, professionalised political class. That is not good for democracy, a system of government that depends on a strong and healthy middle class.

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  • Jackthesmilingblack

    It appears that my contribution, below, which garnered so many “thumbs up’ has been deleted, almost certainly in error. How fortunate I have a back up.
    “Flash to 21st century reality Britisher pals. Trash culture is now the dominant mainstream culture. The middle-class values of education and learning are belittled as elitist. The middle-class has been totally marginalised. Have you noticed how difficult it is to engage in a serious conversation? It’s all soaps and football. The
lunatics have taken over the asylum. If you feel you have been pushed to the
periphery of society, trust your instincts. You feel you have very little in common with the vast majority of the population? Well that’s because it’s true. Three options; take the hint and fly the coop. Get into character and act mainstream banality. Or become a ghetto-mentality recluse. And besides, Britain`s a nation of bullies, so why
    hang around in that open prision known as the United Kingdom, an environment
    that is turning you into a seriously unpleasant person?
No prize for guessing
    which option I took some 40 years ago.

    Jack, Japan Alps”

    • Karla’s Man

      A very long-winded way of saying “I am a Troll” and “I am sorry but I haven’t a clue”, wouldn’t you say?

      • Jackthesmilingblack

        New username, same BS.

        • Toby Esterházy

          Why are you so pompous as to need 18 characters to say “I am a Troll”?

  • Sean L

    *That is not good for democracy, a system of government that depends on a strong and healthy middle class.*

    I think what you mean here is *legitimacy* – which isn’t the same thing. As we’re seeing in Egypt at the moment. Perhaps some form of democratic accountability is a necessary condition of legitimacy but by no means is it a sufficient one.

  • Dogsnob

    Recent BBC Radio 4 announcement that rail fares are to rise again, was treated to a very mournful investigation.

    Prior to that was the joyous assurance that house prices are showing signs of ‘turning the corner’, (and so we can all look forward to… our young people having even less chance of buying a home.)

    I’m not quite sure how I should feel if food goes up. Good or bad?

    • Daniel Maris

      Food? Bad.

      Housing is different because – certainly until recently – we could say that is where people put most of their spare cash. It was a good indicator of economic bouyancy, like foreign holidays as well.

      So if house prices are going up, all else being equal it means people have more spare cash. However, the reality in the UK is that a lot of the housing market is now being inflated by buyers from overseas, so it is not necessarily a sign of economic recovery. The overseas investment – together with mass immigration – is causing an artificial shortage in housing and so increased house prices are more a sign of economic distress now.

      • e2toe4

        The whole story since 2007 has been about the near desperation of the Government to support the apparent value of property, whether domestic or commercial.

        Commercial property is defying its book value and the rents able to be raised on it are (slowly) defining it’s true price. By having large scale immigration the government can slow this effect on domestic property, but it can’t halt it.

        Back in the day the housing market was a function of the economy…right now it pretty much is the economy.

        (Which is just your argument re-worded…so in along winded way I am saying I agree your analysis!)

      • Dogsnob

        Quite. Unfortunately, our leaders are clueless and can only hope we drift back to the artificial wealth machine which brought us to this parlous state. They would have us return to milking the labour which was done years before in the form of old bricks laid upon perishing mortar. The token newbuilds, when they come, will serve only to make us feel as if something is happening.
        Waiting for gobbo.

  • ChrisTavareIsMyIdol

    Welcome to the world of the working class for the last 15 years. I can tell you that if you think this is bad you haven’t seen anything yet. Why would a large bank pay for London lawyers to form fill at some exorbitant rate when they can hire people in India or China at £20k pa?

    Globalisation doesn’t look quite such a good idea any more, does it?

    • Daniel Maris

      Quite. My message of the last few years. As usual, the Spectator is just being to catch up…

      I am more and more convinced we will all be better off if we get out of the EU, reestablish control over our borders and reward our citizens over non-citizens.

    • e2toe4

      Is Tavare really your idol…did you watch him bat?

      That apart it’s good analysis…especially the idea that after the music and journalism businesses the other professions like Lawyers, accountants et al have largely not realised what digitalised information will mean for their careers.

  • Tiresias

    Old Etonian charm? I’ve yet to meet an Old Etonian who was charming,except in a slightly dishonest and smarmy way. Infinitely pleased with themselves, condescending, narrow-minded, out of touch, cliquish, but charming…never! As for competence, the horlicks that this OE-dominated Tory leadership is making of its relationship with the grass roots Party, treating them like a bunch of tiresome scummies, spells doom at the next election. Gay marriage, building on the Green Belt, useless wind-farms, Osborne cynically creating another housing “bubble”, no wonder this “charming” public school cabal is storing up an electoral disaster, laying the way open for the the truly odious Ed Balls and his fellow Labour incompetents who have landed us in our present plight. Even worse these callow boys from Oxford who have never done a proper job in their lives have not the first clue how to counter the appeal of the dangerous Nigel Farage, he of the glib tongue and spivvy velvet-collared overcoats, who would lead our once-great nation into terminal decline. In hindsight, the Party should have voted for someone sensible like David Davies, who represents “real” Tory values. I write, alas, as an ex-Tory.

    • the viceroy’s gin

      …so you think the others have and will bring on disaster, yet you think Farage is “dangerous”? I suppose there are other avenues for you, but you’ve likely ceded 90% of the current political ground here, haven’t you?

      • Daniel Maris

        What’s with the socialist nonsense laddie? Farage wants to preserve the NHS you wee Commie! We all know you Marxist Carameloon types like to come up with comments like that. Sorry VG – honest wee patriots with a love of Hayek are wise to your nefarious ways and will not be banjaxed or bamboozled. What was it Wodehouse said about a Scotsman and a ray of sunshine?

        • the viceroy’s gin

          …the voices up in your head are quite busy, apparently.

  • HookesLaw

    Winston Churchill – born in Blenheim Palace became a (failed) candidate at 25 and an MP at the age of 26.

    Atlee who went to prep school and private school and joined the Labour party at 25. Was mayor of Stepney by 36 (probably sooner but for WW1) and was an MP 3 years later

    Yet still we see people like you peddle this myth about a ‘elitist’ ‘professional’ political class being something new.

  • Vaughan Roderick

    I’m not quite sure which world you live in if you think the “middle class” in the UK have ever sent their kids to private schools. Around 7% of kids in the UK receive private education. They would no doubt understand the meaning of “middle”!

    • ChrisTavareIsMyIdol

      Nearly 20% of those over 16 go private, I think that shows that all the Pollys and Owens who send their kids to “state” schools until 16 realise that if they’re going to get their little Lenins into Oxbridge they need to send them private.

  • lgrundy

    New Labour was largely a middle class phenomenon. All those fin de siècle “I’m-so-la-di-da-and-I-vote-Labour” types have brought this on themselves. They went out and voted for socialism in their millions and now they’re going to have pay for it. All say “aahhhhhhh” for Britain’s Labour-voting middle classes.

    • HookesLaw

      Well yes – again true. Its a pity the ones like me who did not vote Labour got caught up in the mess.
      This is what happens when you have a mental breakdown and don’t vote Tory.

      • Damon

        Precisely correct.

    • rtj1211

      Well, all that money they spent on the NHS went to some folks in the economy didn’t it? Doctors salaries, construction companies. Oh: and all those pesky PFI financiers charging us an arm and a leg to do what the public sector used to do rather cheaper. That bunch were doing ok, weren’t they?

      Private sector education now adds more value to foreign economies than the UK one. It’s arguable that they do more harm than spies now. You won’t get Norman Tebbitt admitting it though. Chris Huhne’s lying is far worse to him. Lifetime ban from commercial life for him apparently. Not so for those who educate our competitors to beat our own.

      • ChrisTavareIsMyIdol

        But that will have to end. Wages are declining in real terms, and the slashing of middle class wages is next. Lower wages and higher house prices thanks to a growing population means a lower tax take for the state, and that means lower public sector workers.

        This will continue until our productivity increases or until wages worldwide equalise. Doesn’t that sound pleasant? Well if you’re rich it sounds super, lots of cheap staff!

  • PT

    Thanks to rising house prices, this nation is wealthier than ever according to the ONS and government. Whilst public and private debt may be 2.5 trillion or so, our housing stock is worth nearly twice that.

    (Yes, I’m aware of the absurdity of the above, but that’s the ‘wealth’ benchmark the government like to use)

    • HookesLaw

      Its not absurd. Once people have paid off their mortage they have a significant asset and they have acquired it by paying not much more (if anything) than they would have if they had paid rent for 25 years.

      • ChrisTavareIsMyIdol

        It is far cheaper than paying rent, ask anyone who rents out property (like me). I’ve a flat that pays for it’s own mortgage and mine that I bought back in 2000. Even during the slump it’s never been below 150% of it’s original value.

        Buy well and buy property

        • JamesdelaMare

          Yes – the cause of much of our trouble. Rents pay for two mortgages.

    • rtj1211

      That’s all just leveraging. What’s actually happening is that half of Britain is doing the worst investment strategy possible: putting almost all your eggs in one basket.

  • Cornelius

    The middle class in England began to die when they focused on money and material wealth above all else. The long term result is what we see now. Societal breakdown, hedonism broken families and the rest.

  • Makroon

    Many of your readers lived through the second world war, the cold war etc.
    Do you really imagine that some trivial scare story about “the disappearing middle-class” by some cub journo, will bother them ?
    As hundreds of studies have shown, the 1960’s “political satire” view of the British class system never reflected reality, let alone 40-50 years later.
    Silly season drivel.

    • HookesLaw

      Well said.

    • ChrisTavareIsMyIdol

      Well of course you’re all right Jack aren’t you? Jobs a-plenty post war, than some nice inflation in the 70’s and 80’s that made your mortgages pennies. MIRAS, married man’s allowance, free university education for the kids, retire at 60 for women, an index-linked pension plus a state pension, winter fuel allowance etc etc. Now you want free care in your dotage!

      None of those things will be available to my generation or any that follows it. But we’ll end up paying for it for you

      • Colonel Mustard

        “Well of course you’re all right Jack aren’t you?”

        Whines the man who in another comment here gloats that his rented flat pays for its own mortgage and his too, apparently unaware that many of those who rent do so not because they can’t afford a mortgage but because they cannot get one from the cartel-like finance industry.

  • andagain

    Meanwhile house prices have increased 500 per cent in the past 25 years,
    so that the average London property is almost 20 times the average
    national income. Other major costs, notably energy and education,

    Grat successes all!

    All things people have demanded and voted for.

    • HookesLaw

      The price of a house in London has no bearing on average national incomes, it has a bearing on incomes in London.
      The BBC say that Greater London average house prices are £454,644.
      The Guardian say the average income in Greater London is £38,299 – 40% higher than the national average.
      So its a rubbish point from an idiot who is sadly no savant.

      • ChrisTavareIsMyIdol

        Average income in London is skewed by bankers, top civil servants, whitehall mandarins, CEOs etc. The average man or woman in London does not earn £38k pa

      • chrisd87

        That’s still almost 12 times average London earnings, hardly affordable!

  • Tom Tom

    The Middle Class is disappearing in Germany too. It is inexorable, they are the ones paying the TAXES and The State is all-consuming. The Middle Class earns too little relative to its effective tax burden. It is just like the Third Estate in Pre-Revolutionary France.

    • dalai guevara

      Remembrement, you know this is long overdue.

  • William556

    The squeeze is really on for the Middle Class in the US now. All kinds of taxes and fees and mandates are being forced upon us from Obamacare to endless new business regulations. Food and energy prices are rising and taxes are rising to match because the poor need “relief.” The social spending is what’s killing us. Millions more on foodstamps and welfare and the Democrats are desperate and determined to add millions more immigrants to the rosters whilst leaving the borders wide open for more. Even the immigrants who do find work will mostly be replacing Americans already working reduced hours without health insurance because Obamacare capped the work week at 30 hours, and even then government is working around that limit in its mania to crush small business.

    Worst part is that both parties are working hand in hand toward all of this. Some Republicans oppose it, but enough RINOs are in office to service big government. Of course once they pass the amnesty, they will be gone along with the middle class.

  • David Lindsay

    A large and thriving middle class, like a large and thriving private sector, is an economic, social, cultural and political necessity which depends on extensive central and local government action.

    And with public money always come public responsibilities. Including public accountability for how those responsibilities are, or are not, being met.

  • dalai guevara

    There has not been a major uprising in the Western world for some time now as the Middle Classes have always been taken care of/ been in on it. Should this simple fact one day be overlooked, things will change.

    • the viceroy’s gin

      There have been many “major uprisings” in the Western world and in Europe over the last 20-25 years, with much violence and bloodshed.

      You perhaps missed these, but you should make a note of them, now that they’ve been pointed out to you. And please inform Socialist HQ, if you would. They’re likely ignorant of them as well, just as they were ignorant of their causing of the above-mentioned recent uprisings.

    • dalai guevara

      Ooops, I forgot to mention the Danish minority in Schleswig Holstein. They just keep voting in the socialist block.

  • willshome

    The thought “When they came for the working class I didn’t protest because I wasn’t working class…” comes to mind. The “squeezed middle” was deliriously happy during the Thatcher years to see a swathe cut through working class industries which saw jobs in heavy and light industry alike shipped abroad; deliriously happy to see the ideologically inspired destruction of the council house sector which, at a stroke, injected an insecurity and hysteria into the housing market that we still with a generation later. Unfettered capitalism was what you wanted; unfettered capitalism is what you’ve got. It has taken a while for the chickens to come home to roost in your own particular hen-house. But you can’t say you didn’t ask for it. Welcome to the world of anxiety and tightrope-walking that the working class has experienced for… well, ever. (Unless you count that brief post-war bubble of rising well-being for all that the Right found such a terrible, molly-coddling blight.) Oh, and for the bigot below who wants to blame “those immigrants” for everything, it’s the practice of squeezing working class wages by importing workers from abroad (a practice notably pioneered by Enoch Powell at the Department of Health) that is at fault. So blame the middle class employer of the “fantastic cheap Polish plumber” or the “sweet little Filipino housekeeper”, not the Pole or the Filipino. It’s all immaterial though, the internet is exporting all the high-paying work abroad. Soon the middle classes will have to be happy to clean each other’s floors and unblock each other’s loos to survive.

    • Mynydd

      To the above I would add, when Thatcher did away with the exchange control regulations money was taken out of industry (10bn in the first year) and exported to the USA to build shopping malls, Then came her ‘big bang’ oh how the City of London loved it, mega bucks with no risk. Now the middle classes are reaping what they sowed under their beloved Margaret.

      • Barakzai

        And then along came prudent Gordon to sort it all out; ‘no more boom and bust.’ Oh hang on . . .

        • Mynydd

          Better than the bust, bust and more bust under this government

      • Makroon

        You’ve added that nonsense in about 14 posts so far.
        It doesn’t become true through endless repetition you know.
        Go back to Labour HQ and ask them nicely for some new myths and lies.

    • HookesLaw

      Lovely hysterical drivel. Keep it up

    • ChrisTavareIsMyIdol

      Nothing was “shipped” abroad, people stopped buying British goods because a) they quality was awful b) you had no guarantee when they’d be delivered c) they were expensive due to massive overmanning. Even if we’d tried to protect those companies they’d be bankrupt now.

    • Jackthesmilingblack


  • Fergus Pickering

    I’m middle class and I haven’t dropped dead yet. I have two daughters who are strong and healthy and middle class. Reports of our decline are much exaggerated. If there wasn’t a middle class then who would buy your magazine, Fergus?

  • Daniel Maris

    Well I’m banging on about this for some years now on here. It is an easily predictable consequence of mass immigration. What the political consequences of this wanton act of destruction will be, no one can tell, but they are hardly likely to good. Has political good ever come from immiseration of the middle classes? I don;t think so.

    What annoys me is the way our political elite, you lot included, talk about these things as though they are inevitable. There is no reason why we should provide job opportunities for people from all around the world including energetic migrants whose children will outperform those of the established middle classes.

    • Fergus Pickering

      Nonsense. Our middle class cn hold its own. Our lower class is in dire straits, useless, idle, uneducated gits. (chunter chunter)

      • HookesLaw

        Well yes. fair point. Indeed your only mistake is to mark the article as highly as ‘nonsense’

      • dmitri the impostor

        Ferg, me old nodding donkey. You are, by a margin, the worst poet who has ever written in the English language, compared to whom William McGonagall was a metrical virtuoso and Martin Tupper a metaphysician of subtlety and wit. Give it up, Ferg. Take to your allotment and get down to some honest toil. Also consider suicide.

        • Fergus Pickering

          What a risible fellow you are, whoever you sre. Brownie points for havng heard of Martin Tupper though..

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