Opinion: How we’ve been going wrong for the last 20 years

Social mobility means more than whether people are in the same income group as their parents. It also means that the lives of people “below” look more like those “above” them as time goes on.

Most of the twentieth century saw a clear demarcation between blue and white collar workers. Blue collar workers were paid less, and their lives were much less secure. They were more likely to be on short-term contracts – labourers were often hired by the day. Their work involved a greater risk of injury, and thus loss of work. They were less likely to have unemployment insurance and a company pension. The employment conditions for white collar workers were much more reliable – and that, as much as the difference in income, meant that white collar workers were able to buy a house, giving them a security not enjoyed by blue collar workers.

On these measures Britain continues to go backwards. The number of people with a good quality pension has been falling for many years. The government is working on this, but increases in life expectancy make it hard to develop realistic plans that do not scare people off.

The number of home owners is also falling. This is bad news. Almost everyone with the means to own chooses to do so: ownership provides security and certainty that no other tenure can match. Owning your home is particularly useful when you retire and your income falls. As a tenant you may need housing benefit, which puts you at the mercy of rules on allowable bedrooms, allowable rent levels, and so on. The security that is a hallmark of “being middle class” involves owning your own home.

Social mobility, properly understood, means opening up the essential stability of middle class lifestyles to as many people as possible. We made real progress between (say) the 1930s and the 1990s. The proportion of white collar workers rose, and blue collar workers increasingly enjoyed more stable employment, with pensions and the ability to buy a house.

In contrast, we have gone the wrong way on these issues for twenty years. There is a real agenda for action here.

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17 Comments

  • I am 36, don’t own my own home and have no immediate prospect of being able to do so. We must halt the glorification of house price inflation – we must build many more new homes and restraint of house price inflation must be one of the key influences on the Bank of England when it comes to setting interest rates.

    I know Tim’s article is about a much bigger matter, so let me also say that I agree with him that there is a big body of work to be done here and the Lib Dems shld be setting about working on that (a) in government and (b) in preparation for the 2015 manifesto.

  • Duncan/Geoffrey – I also see no conflict between my post and Geoffrey’s. It is the stability that middle class jobs offer that I want replicates – not necessarily the job types themselves. Sorry for not being clearer.
    Stuart – as you may know, I have written widely that house prices should and can be lower.

  • Matthew Huntbach 27th Oct '11 - 2:45pm

    In the days of large scale industrial companies with a long-term commitment to this country, blue-collar workers also often had the sort of pension schemes and insurance which Tim now categorises as “white collar”. The Trade Unions fought to maintain them, but free marketeers derided them and to this day we see the idea put that job insecurity is a good thing because it increases fear levels and so increases productivity. We have been told these things are unaffordable, because companies can just skip off overseas if forced to keep them up.

    What we have discovered is that this level of insecurity is not liberating. People who don’t know how they will be supported in the future become fearful, they cannot make long term plans. It is contributing towards crippling the economy, because who will buy goods or services when they don’t know if they will have a job next year? We are told it will increase productivity to make employees even more fearful by being able to sack them at will. It will not, people will close down and refuse to take risks if this happens. Who will take the risk even of moving to a new job if it happens the boss takes against you, sacks you, you can then do nothing, and having the bad mark of a sacking on your record, no-one will ever again employ you?

    The rich, who dominate the current government and its thinking, cannot see this because they do not know this sort of real fear. They will always have their wealth and contacts to fall back on. Dog-eat-dog competition seems fun and games to them, rather than life and death as it is more those at the bottom.

    Tim says owning your home is security, well so it is, but only if you own it outright. If you have a mortgage you always have the fear of repossession, fear this government wants to increase by its wish to allow employers to ruin peoples lives by being able to sack them at will for no reason. Who would dare take risks in a job, suggest new ideas, point out inefficiencies, identify management waste, when if your line manager takes a personal dislike to you, you can get sacked, never work again, you can’t pay the mortgage, you end up on the streets?

    Even if you own a home, the insecurity of maybe having to face large scale repairs on your own is a big worry. So, the safety net of social housing, cost-only rents, pooled repairs – which was destroyed deliberately in the 1980s – though its destruction was hailed then as liberating has in the long term turned out to be enslaving. People forced to take on too much mortgage debt, or to live in insecure tenures, and large dollops of taxpayers cash put into the pockets of those rich enough to get into buy-to-let with its housing benefit cash for free subsidy.

    I am glad that Tim agrees there is an agenda here. Unfortunately, Tim, having been an outspoken champion of extreme free market policies, is part of the problem rather than part of the solution, unless this article indicates a Damascene conversion.

  • @Matthew Huntbach
    Well said.

  • Tim Leunig,

    The idea that this has been happening for the most recent twenty years rather than the thirty five that has actually been the case seems a little politically convenient rather than a truth. The pillars of the progress of the working classes: social insurance, unemployment insurance, free health care, comprehensive education, social housing, tenancy rights, union rights have all been under attack since 1979 with the exception of social housing which was undermined in 1978 by the then labour government changing its purpose from affordable housing for all, to cheap housing for the neediest. Since then there has been an inexorable move from universal benefits to safety net provision, the final pillar of universality, the NHS, is being turned into a system of safety net provision by the current government. The revolution is nearly complete in turning us back from the equality and social mobility of the 50’s, 60’s and 70’s to that which existed before. The breaks on this revolution were applied in 1997 by the last government rescuing the NHS and making massive improvement to it, by providing for the most successful attempt in the western world to tackle child poverty, by extending access to higher education partially mitigating the free market assault on the prospects for school leavers, by rebuilding the state schools that had been left to fall apart and much more. Timidity and leaders committed to the orthodoxies of free markets and light touch regulation removed the possibility of reversing the effects of the 17 years from 1979 but to claim that it was the most recent twenty years than have done the damage expresses an ignorance of recent history.

    Matthew Huntbach,

    Well said.

  • The lives of many working class children have been ruined by Thatcher and her Tory government’s selling off of council houses and giving people the right to buy them. The result is a complete contraction of the council housing stock. Council housing provides people with stability and security and enables them to plan for a future and eventually get on to the private housing ladder. The council home transfer system also enabled people to easily go anywhere in the country and settle there. This created the conditions for social mobility. And now this Tory led coalition is undermining the rights of council tenants further by removing their security of tenure. This will create further insecurity. The solution is to build more council houses and flats. It will create many more jobs, kickstart the building industry and give us a civilised society once more. Thatcher only wanted council homes sold off because she saw council estates as a Labour fiefdom and wanted to create a nation of working class Tories. It should be a crime against the people to promise to sell off social housing or council housing.

  • Matthew – you accuse me of being an “outspoken champion of extreme free market policies.” When? Which? As Geoffrey Payne says, I was outspoken against the caps on housing benefit.

    I accept that some of the changes go back 35 years – I merely meant that this had not happened overnight, and wasn’t a particularly party political failing. Labour did get housing more wrong than the Tories (measured by rents or house prices to income), however, and Labour hugely expanded means testing, which I see as a retrograde step.

  • @tim leunig
    “measured by rents or house prices to income”

    Er, rents are the same in real terms as they were two decades ago. It is house prices that they got drastically wrong. Gross yields (rent to price ratio) were above 10% when Labour came to power and are now around 5%. It’s house prices that need to (will) come down 50% from peak.

  • Matthew Huntbach 29th Oct '11 - 10:22am

    Tim Leunig

    Matthew – you accuse me of being an “outspoken champion of extreme free market policies.” When? Which?

    Well, I very often read about some new policy proposal coming from you, or from the organisation of which you are “Chief Economist”, and almost always that policy proposal involves some sort of market mechanism and is put forward with the argument that markets are always good, competition drives quality up etc. Over the past three decades, these ideas that the solution to most problems is to introduce more competition and market mechanism have become the political norm. It is like socialism was when I was young – in those days that was the political norm, one was thought a bit odd and behind the times if one did not endorse it, and if one wanted to look clever and modern one came one enthusiastically in favour of socialism, and when oddbods like me asked questions about the ever more obvious failings of socialism to deliver what it promised, one’s answer was that socialism had just not been implemented thoroughly enough, so what was needed was more extreme versions of it.

    It took its time to happen, the period I write of as “when I was young” was the mid-1980s when socialism was still pretty dominant amongst young people and trendies, but the political force to replace it as the dominant ideology was getting into action. The turning point in this country was the enthusiastic acceptance of the idea “markets good, governments bad” by New Labour. In the 1997 it was thought by many on the right that Tony Blair would rip off the New Labur mask and become a red-blooded socialist once in office, but he did not. His policies were very much a continuation of the line that had been started by the Thatcher government.

    Your policy ideas have been very much part of this push, you have achieved quite an amount of career success by pushing these lines, I doubt you would be where you are, demanded for nice think-tank positions, on worthy committees, quoted in the media as a “liberal spokesperson”, had you not been such an enthusiast for market ideology.

    I have myself been much more sceptical. Way back in the 1980s when I was arguing so passionately against the socialists who were the political elite at the university where I did my postgraduate study, I was also expressing my concern eleshwere at the way the push towards unrestricted free market mechanisms elsewhere would damage the chances of those at the bottom of society, and that this damage would gradually move upwards. I saw housing as a particular problem, since we were then in the1980s house price boom, it seemed to me to be insane that so many people just assumed house price inflation was a good thing, I could see how the inability to afford housing it was causing was already damaging young people, and I could see how the selling off of council housing, though it benefited those who were then tenants, would have long-term disastrous consequences.

    So what you are writing now about things going backwards, about this country going the wrong way for 20 years is what 25 years ago I was myself already pretty certain we were going to see. Yet not just people like you, enthusiasts for free market policies, but actually you yourself in a letter replying to one of mine in Liberal Democrat News, were pooh-poohing me, writing me off as some sort of fool, a political dinosaur, because I was sceptical about the directions our economy was going in and sceptical of the uncritical enthusiasm for simplistic free market ideology.

    On the particular matter here, personally I do NOT see high housing benefit as a good thing. It is just fuel for house prince inflation. It is part of the destructive mentality of this country that supposes we can get by on selling houses to each other, and that any profit made in that way is sacrosanct and ought not to be taxed in any way, and anyone who questions it is an evil socialist who would have us living in state owned rabbit hutches and wearing Mao suits. By pushing house prices up beyond the level where ordinary people can afford them, but making sure anyone rich enough to get into the “buy to let” market cannot lose because of the housing benefit guarantee of high rents and rich profits, it is part of the meachims whereby wealh in this country is being squeezed into a smaller number of hands, and the rest of us getting reduced to semi-slavery as our life options are cut and we must bow and scrape to the elite to sustain a living.

    And now the major party in this government wants to increase the bowing and scraping, increase the fear by scrapping employment protection, so even those who are lucky enough to have a job which pays the mortage must live forever in fear, one false move, one comment that does not go down well with the boss, and you can be thrown out, a black mark on your name, never to have a job again, and so moving inevitably to repossession – your house bought at auction cheap by a buy-to-let merchant, and you, if you are not in the streets, now in buy-to-let tenancy, the huge rents supposedly paid by you actually paid by the taxpayer and mostly as pure profit to the buy-to-let merchant.

    All of this, Tim, I saw coming and warned against, yet I was the silly fool whose politics were outdated, while you with your thrusting uncritical aceptance of the free market mechanism as the solutuion to everything were the darling of the elite, the people who have pushed this country down the way you now, belatedly, agree was backwards.

  • @Matthew Huntbach.

    I agree with your analysis. The greatest threat to equality and prosperity for the masses has been the so called “free” market. But, if you eschew Socialism how do you propose to address the iniquities of the free market which, by definition, predicates complete deregulation and whose proponents are implacably opposed to any form of regulation? And for how much longer can the Liberal Democrats continue to support a Tory party that has no mandate for the rapacious deregulation which is its aim?

  • Ed Shepherd 1st Nov '11 - 10:38am

    The working classes did have some important protection in the past: strong trade unions, education free at the point of delivery (including university education until the late 1990’s), the NHS, rent controls and council housing. Local authorities achieved much through building and development programmes. The state invested in British industry and saw trade union involvement as important. Post-war Britain was not perfect, no doubt, but a willing worker could enjoy an existence that satisfied the basic needs of his family and allowed hope for a better future for his children. Then we got told that the free market was the solution to all our problems. The result? Temporary contracts, collapsed industries that get hived off abroad (goodbye HP Sauce, goodbye British cars), no trade union access, housing bought up by speculators (and any more houses we build we also be bought up by speculators), wasted natural resources, education becoming a privilege that has to be paid for not a right of every citizen and health care that is no longer always free at the point of delivery. No wonder that vast numbers of workers have realised that a life living off benefits is more pleasurable than the slog of existing on temporary contracts on minimum wage.

  • Matthew Huntbach 2nd Nov '11 - 2:55pm

    Mack

    I agree with your analysis. The greatest threat to equality and prosperity for the masses has been the so called “free” market. But, if you eschew Socialism how do you propose to address the iniquities of the free market which, by definition, predicates complete deregulation and whose proponents are implacably opposed to any form of regulation?

    So, do you hold there are only two forms of politics – “Socialism” and that advocated by the economic right of the Conservative Party? That is one of the biggest things I had against “Socialism”, the way you had either to agree 100% with the fellow calling himself a “Socialist” ranting at you, or you were an evil capitalist pig.


    And for how much longer can the Liberal Democrats continue to support a Tory party that has no mandate for the rapacious deregulation which is its aim?

    It has a mandate, it is doing pretty much what the Tory party has been doing since it started on this move to being a purist free market party under Thatcher, its spokespeople put forward extreme free markets policies as the way forward before the election, they were written up in its manifesto as what it stood for. Anyone who voted Conservative but did not realise this is what they stood for is a fool.

    If your argument is that the Conservatives did not receive a majority of the vote, that argument has been destroyed by the 2011 referendum vote. The main argument the successful “No” side put in that referendum was that it was better for representation to be distorted in favour of whatever party had the most votes even if that party fell well short of a majority, because such distortion leads to more “decisive” government and that is better. Well, we have just that – a decisive extreme right wing economics government. The FPTP system may not have given the Conservatives an overall majority in Parliament in 2010, but it was enough to rule out any government which was nor Conservative dominated.

    So, the 2011 vote massively in favour of FPTP was a massive vote of confidence in favour of the government we have, a very clear mandate for the distortion in representation that led to it. You may say it wasn’t, but the “No” campaign made it clear they were against any sort of reform of FPTP even the minor reform that is AV. There was no-one on the “No” campaign, no “No” literature using the argument that AV was bad because it was not a big enough reform. It was assumed universally that the victory for “No” meant there would be no electoral reform of any sort in the forseeable future. That is why I say, again and again, anyone who voted “No” voted for the Tories, voted for the government we have now, voted to have such governments again and again and again. Anyone who voted “No” in the referendum might as well have put on a blue rosette and an “I love Maggie” badge, it was a profound expression of support for the Conservatives, a vote for the Conservatives not just now but for future elections as well, given as it is FPTP which so makes them unremovable.

    If you did not realise that then, as the good Lord said to the sinners bound for hell when they cried out “Lord, Lord, we didna ken” – “Ye ken noo”.

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