Raising social mobility: an opportunity to empower individuals to improve their own capability
There is a cross-party consensus that the UK has a social mobility problem. Gordon Brown has called it “the great mission of the next decade”. Recent discussion has focused on the abolition of the 10p tax rate which is seen as a blow to those on low incomes. The Liberal Democrats have called it a “betrayal of the most needy in our society”. However, income taxes are just one piece of the vast tax and benefits jigsaw puzzle.
What is required to improve social mobility is a comprehensive review of the system and a new and co-ordinated policy approach across government. If Gordon Brown does not take the opportunity to do this, he will leave the way open for the Opposition parties, and the Liberal Democrats could capitalise on the demand for a new approach.
A new report published today by the independent think tank Reform argues that successive governments have sought to address the problems of poverty and low social mobility through higher spending on poverty relief and public services. These policies have largely failed to deliver the desired long-term effects. The unintended consequence has been a “why bother” economy in which a significant proportion of the adult population have neither the capability nor the motivation to succeed.
While European counterparts have seen significant improvements in social mobility in recent years, in the UK it has remained worryingly static – the moniker of Europe’s “divided society” is fitting. Globalisation and technological advance have meant that education and skills have become vital for workers to be able to share in the growing prosperity. But top-down programmes implemented by successive governments have focused on direct intervention in individuals’ lives, and have largely failed to take advantage of the increased return to skills.
Public services are biased towards the affluent who are better able to shape the nature of public spending to their own advantage. The complex system of benefits and high marginal tax rates is reducing incentives to increase work hours and earnings, and to come off benefits. Increases in the tax burden are disproportionately falling on incomes and the upper rate threshold is a key “mobility block” discouraging people from taking more responsibility at a managerial and professional level. And increased central direction of state education has perpetuated inequity in attainment and preserved the divide between elite and inner city education.
The result is not only a negative social impact but a large economic cost of wasted talent – up to £32 billion per year or £1,300 for each household. A new approach is needed, starting from the point of raising personal capability and radical education reform. The key determinants of future success will be motivation and attitude as much as hard skills. The high social mobility countries in Scandinavia provide a better model of decentralised education systems based on choice and diversity.
A serious review of the vastly complex tax and benefit system is needed to shift the focus to incentivising work rather than trapping people with high marginal tax rates. A move towards lower government intervention and taxes would enable the development of the “capability margin” – the resources available to individuals to invest in themselves.
Over recent years the Liberal Democrats have moved in this direction. In January, the Liberal Democrats established a Commission on Social Mobility to investigate the causes of low social mobility and recommend policy changes to address these. In his key speech on social mobility in the twenty-first century earlier this year, Nick Clegg said that the solution lay in a more decentralised and diverse education system which “harnessed the energy and enthusiasm of private individuals” to drive up standards and choice.
At a time of global change, when all parties are considering their approaches to tackling poverty and the skills shortage, a party who adopts these ideas will become the most credible advocate of removing the blocks on mobility.
* Elizabeth Truss is Reform’s Deputy Director and Lucy Parsons is Reform’s Economics Research Officer. Shifting the unequal state: From public apathy to personal capability is available at Reform’s website.
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20 Comments
I think this is a thoughtful piece; the main question is how do we maintain a balance between a state which enables and still provides for those who need it. Traditionally the left is hide-bound in statist solutions it has to be said. It is worth saying also that if we dont find this balance then the right will shift the debate to ending and restricting provision.
You talk about incentivisng work through tax breaks but missing from your piece is the need to incentivise work by providing for a balance enviroment between the rights of employees and employers. Also, education has a role to play in this too by developing people in the direction they want to go.
A diverse education program would include a limited core of skills that were needed as a necessity but greater diversity of choice beyond that. Also, we have had a debate on faith schools on this side which do inherently provide blocks on mobility. Blocks like that need to be removed.
A creative partnership between the state and its people is what needed. However, we must never forget the need to provide that safety net for those who are in positions where the room for manouver is limited; that safety net is part of grouding people safely so they can become more mobile.
Social mobility is surely not so much about allowing people in jobs to earn more doing the same sort of thing as it is about giving people the opportunity to develop their own potential and thus get into a different role entirely: there is simply no social mobility to be had from the average shelf-stacking, chicken-packing or call-centre jobs that our working class now perform.
If we really want people to be able to move from those sorts of jobs into the lower-middle classes, then we need to make sure that the people at the very bottom can get the education and training they need *whilst still managing to live* in order to climb a rung. If you look at the lower-middle class jobs, then the people in those don’t need extra qualifications so much as specialist training in things like Prince, SAP, accountancy, etc, to get into higher-paid roles. The middle class on up can figure it out for themselves.
So what we really need is an education system that is massively subsidized at the point of use for occupational courses (perhaps paid for by zero-interest loans that are dependent on course completion – lots of FE courses have enormous dropout rates) and a basic income that allows people to take time out of the workforce in order to develop their skills.
I have also thought that there is a lot of merit in Ackerman & Alstott’s proposed “Stakeholder grants” in which every adult on the age maturity receives a grant of ~£40,000 to do with as they please. This lump sum would make a huge difference to social mobility, since it would guarantee a University (or equivalent) degree for anyone who wanted one, or provide startup capital for a business, or put down a deposit on a house to reduce mortgage costs / money “lost” through rental.
I’m with sanbiki and Nick Clegg on occupational education and training. The untapped potential out there is vast, I have trained up bright people from the shopfloor and they have astounded me with their capabilities.
The ‘upper income tax disincentive’ made me laugh. What planet is she on? In my experience managers can take on as much extra responsibility as they want – they will get very little extra money for it.
🙁 currently doing 4 ‘redundant’peoples jobs.
This has got to be our issue, ours. It isn’t a matter of taxing and spending more (Labour), or of leaving people to rot (Conservative), it’s a matter of unlocking their natural ability (a real Asquithian policy if ever there was one). Think of all the human talent thrown away every year, it should make you weak.
I think we should have a market economy in a global world. But we’d better make damn sure we can handle themselves.
This and the environment are my most passionate beliefs 🙂
I am interested to find out what people think on 2 issues;
Liberal Democrats want more social mobility, like virtually everyone else, but there may be some philosophical conflicts that get in the way of that. In particular I have in mind the right of parents to choose the schools their children can go to. If some parents really are making rational choices to ensure their children go to a good school rather than a failing one, what about those children who still go to a failing one? Parents who are poorly educated are less likely to make a good choice for their children, and that in turn hinders social mobility.
And then what about those people who do not want to be socially mobile? How do we value people on low incomes who often do essential jobs? It is not exactly a good idea that everyone in society becomes a chartered accountant. Isn’t there a danger that emphasising social mobility gives the impression you are doing something about inequality, but in fact you are ignoring a big majority of poor people.
Interesting questions you’ve raised there, Geoffrey Payne. We should certainly be very concerned with those from deprived backgrounds. They certainly don’t have “equal opportunities” or a “meritocracy” now, and they realise that at a young age. That is why I am not a libertarian, because libertarianism would utterly doom such people. Concrete policies like a pupil premium would help, and also fostering of a culture in which people know that being born into a deprived family is not a death sentence (as it is under Brown and was under Thatcher).
Yes, there are some people who will spend their lives in low-paid jobs and want no more. There should be a safety net, such as a national minimum wage. But yes, people should be discouraged from existing in this way. The main reason being that unskilled work simply isn’t there in the way it was in the 1960s. In those days, it was acceptable for people to leave school totally illiterate (and it did happen: the “things were better in my day” brigade are as totally wrong as usual, illiteracy was actually more common in the old times, it just wasn’t noticed) and go to work in a factory.
But it won’t do now.
The term social mobility is pointless and is simply being used to obscure the real issues. Consider: my father went to a public school and worked as a lecturer; I went to a grammar school and am a tradesman. I am therefore downwardly socially mobile. Does this matter? No. My daughter is a single mother living on benefits and constantly struggling to provide a decent standard of living for her two children. Her rent, paid by housing benefit, to a private landlord is £200 a week. In order to have the same income if she was working she would need to be earning at least £12 an hour. There was a lot wrong with the system of social housing that Margaret Thatcher destroyed but housing benefit has created a poverty trap that is much more difficult to escape from, and it was created in order to put public money into the pockets of private landlords, i.e. to widen the gap between rich and poor in our society. Social mobility is a code phrase for ‘what do we do about the underclass?’ Let’s tackle that head-on rather than pussyfooting about.
I disagree, Tony, I think “social mobility” refers to a very important principle, that the poor should be able to become rich if they try hard enough, and that the children of the poor are not necessarily poor themselves – entrenched advantage is unfair!
Of course not all of the poor can actually become rich (though we can hope to make everyone richer over time), and so of course equality of opportunity is not enough (and very difficult to attain nonetheless), but they must be given a fighting chance, otherwise we condemn that underclass of which you speak to the dustbin of history – forever – and that’s not right.
Tony Hill, the flaw with the right to buy scheme is that it barred councils from building more. Actually extending home ownership and breaking up monolithic estates was good. But they should have been replaced. It actually saves the state money in the end. We’ve learnt to our cost what it means when people buy houses they can’t pay for. Perhaps council tenancy should be resurrected to replace low-end private renting.
The ward I used to represent as a councillor consists almost entirely of part of a large council estate. About half the houses on it have gone into private ownership under the “Right to Buy”. For any tenant just to hand the keys back when the tenancy ended was madness. The usual racket was that if you couldn’t afford the mortgage yourself, there were private businesses who would help you out in return for a cut of the profit. Or the kids could club together to buy mum’s house, and pocket the profit when she died.
Anyway, the consequences of the “Right to Buy” is that many of the houses on the estate are privately owned and let out to people on housing benefit. So you have one house let out by the council to people in need, and next door let out privately to people in need with the rent paid by Housing Benefit. The privately let one has a rent three times that of the one which is still council owned, though it is otherwise identical. We the taxpayer are shelling out that extra rent to make pure profit for the private owner, while the tenant is trapped as s/he is never going to get a job which would pay that rent – it is pointless working as any extra income is taken away in reduction of housing benefit.
Obviously I am not arguing that we ignore the underclass, but to call the problem one of ‘social mobility’ is to put a jargonistic gloss on it and therefore obscure it. How do we tackle the problem of:
1. Single parents like my daughter who would have to be earning full time more than twice the national minimum wage in order to support herself without state assistance, and then what would she do about childcare?
2. The pockets of long-term unemployed with second generations of people who have never worked.
3. The substance abusers both legal and illegal and the impact on their families.
4. The chronically ill both mentally and physically.
5. The criminal elements like drug dealers who can often make a better living by their cancerous activities than by being part of society.
6. The people who have no intention of working.
7. The ethnic minority groups who are unintegrated or alienated from mainstream society.
This is probably not an exhaustive list of the groups we should be concerned about. There are no easy solutions to tackling the problems that these groups pose/suffer. The consequence of their situation is that they and their children are likely to suffer from low self-esteem and to have few expectations or aspirations. They will therefore be unlikely to be able to take advantage of the opportunities that they are presented with. The route out of poverty and deprivation most commonly (although not invariably) starts with education, but if you come from a background which is hostile to education, which all too many children do today, you are doomed to get nothing out of school and to end up even more alienated than you were to start with.
In my admittedly limited experience, there is one killer phrase from mainly older and middle-aged people which is a killer for employment potential.
“I’m hopeless with computers.”
Nowadays, it might as well be “I’m hopeless with pens”. It sounds cute, but it closes the door on virtually all high-earning jobs and a majority of low-earning ones. Not to mention most education and training. We should consider I.T. illiteracy as a distinct problem to be tackled, rather than just lumped with other ‘skills’. A manifesto pledge to reduce I.T. illiteracy would make us look spiffy and modern, whilst at the same time addressing a cause of unemployment.
It’s ironic that Tony ‘hopeless with computers’ Blair could be prime minister, whilst an ordinary person who can’t use a computer would struggle to get a job in a shop.
And once again, education is touted as the solution to all our problems. It is perfectly possible to have education coming out of your ears and still be in a shitty, dead end, minimum wage job. Educating people does not increase the number of high end jobs available.
Jennie, there is vocational education as well as academic education. We are always hearing about a skills shortage. I know it isn’t exactly easy to train craftsmen, but if the system is sorted out it can be done. Then, workers will be able to compete with immigrants. We know that the “they’re taking our jobs” brigade our misguided.
As someone who is generally supportive of immigration, I’m still aghast at Brown’s policy, which seems to be using immigration to hide mass unemployment because he can’t be arsed to help the unemployed into work. If we are ever going to compete in the global economy, we need to get out of the rut we’re in.
And I agree with Anax, computer illiteracy should be dealt with. Additionally, innumeracy and financial illiteracy are problems. They are seen as respectable, but they shouldn’t be because they drag people down and they drag this country down.
If we are ever going to get anywhere we have to overcome Thatcher and Brown’s myopia.
Also, we should put an end to the culture in which vocational training is seen as inferior, because it’s just as worthwhile. Yes, people say this. But it should also be made clear that people can do both. Why can’t a trained philosopher take up a career as a plumber? Why can’t an intelligent electrician do an English Literature degree in his spare time? No reason that I can think of, apart from the fact that everything in this country is wrong. We should be more European in attitudes.
Jennie, education has to be the answer. Sure, not education as sat in a classroom being indoctrinated to the irrelevant national curriculum, but as Asquith and others have said, a more vocational type of education for those it would suit better as proposed by Tomlinson, and rejected immediately by the Labour government. After all, education is really about developing each individual’s potential which is surely what we are in the business of doing as Liberal Democrats.
Just one example of how the system at the moment is failing to do that: one of my daughter’s class was marked as a failure from day one at secondary school. He didn’t want to be there and found difficulties in sitting still and concentrating, and he was certainly not in any way academic. He was, though, a very good runner. Now, any sensible system would have spotted that and concentrated on building on his ability, which would have given him more self-esteem and probably made him calmer in lessons. But it didn’t, so after five years of suspensions and mutual antagonism he leaves school with no qualifications and a hatred of education. He’s fundamentally a good person, but he will probably carry on disrupting society in one way or another, and he is typical of the problem we are discussing.
Jennie: it does, actually. By having a large base of intelligent people ready to take high-powered jobs, more employers that have those high-powered jobs are attracted to Britain. If you’re stuck in a mostly poorly-educated area and you’re well qualified, then sure, you’ll struggle – in my own experience Doncaster, York and Hull have all had to cope with decades of brain-drain, so that anyone who does have a decent education has to move away to find work.
However, it does work both ways – for those zones where educated people have been lost, it is up to government intervention in the form of way better education or tax breaks for companies to set up there, etc.
Finally, of course, a good education is (pretty much) a necessary but not sufficient condition to get a high-powered job – you might grumble that 1st class degree holders end up working in Tesco, but the number of people with no A-levels at all in technical or managerial jobs in the UK is awfully, awfully small…
I wouldn’t totally throw out Jennie’s point, there certainly has been an upsurge of credentialism during the Labour years. Burger bar A-levels or two-year degrees in selling beds are not worth encouraging.
They’re so specialised that they actually take away from the benefits of education; a flexible workforce. If someone has managerial experience at, say, a burger bar, they should have a fair bet of transferring to a tourist attraction or shop. But with the burger bar A-level, they get marked for life as a burger manager.
I dunno, I’m quietly confident about the MacDonalds management diploma – I suspect that managing a MacDonalds outlet is hard, complex work requiring a very wide range of skills, many of which – the general principles, and how to work with people – are transferrable not only to other restaurant management jobs, but probably into miscellaneous retail and beyond too. We shall see!
(The bed selling one is, of course, tragic)
Yes, but we don’t want to expand Brown’s education and training system, we want to replace it with one of our own which is better!